Friday, October 28, 2016

Money And The Role of Business


Making money shouldn't be the goal of an enterprise;  as Plato once wrote, the shepherd's concern if for his sheep, not the money he can sell them for (paraphrasing)

Money is not the goal for a business, but a constraint.  If my goal is to make my customer's life easier through software, or a better mousetrap, then I need to make enough money to keep the organization healthy in order to achieve that goal. But the goal is to provide some value to customers through the efforts of a team of people.  

Money is a (uneven) measure of value,  but it is not value.   

The guiding principle behind the stock market is that businesses will try to maximize shareholder value.  In fact, the laws tend to enforce this with public corporations.

But there are many stakeholders in a business.  The shareholders are one group, but other stakeholders include employees, customers, and the community.  

There is no logical reason why the interests of the shareholders should be given priority over the others.

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