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Profits shouldn’t be a business’ primary goal

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Brian Mukalazi

Why should a company or business exist? This is what many people may say: To maximise profits or shareholder wealth! Indeed, when I look around in the general business world, especially here in Uganda, I see lots of business people mostly interested in making money and nothing else – they almost exclusively define success in terms of profitability, financial growth, and size.

However, faced with a similar question in 1960, here’s what David Packard, the co-founder of technology company HP, had to say to his staff: “The real reason for our existence is that we provide something which is unique. 

First and foremost, to make a contribution to society” and that, “our main task is to design, develop, and manufacture the finest electronic [equipment] for the advancement of science and the welfare of humanity.

”Yet, on the other hand, he made it equally clear that, because profit enabled HP to pursue those broader aims, “anyone who cannot accept [profit] as one of the most important [objectives] of this company has no place either now or in the future on the management team of this company.

”Why I concur with Packard’s words: Contrary to business school doctrine, I do not think that making money should be the primary goal of a business. Most successful, visionary companies have tended to derive their success from the constant pursuit of excellence, including the desire to deliver great products or services and real customer satisfaction. 

While profit is an important result of a company’s existence, putting it ahead of customers and products can be catastrophic. We have all witnessed many businesses – small and large – that have sprung up in the recent past, made money initially, only to fall a couple of years later due to mediocre products or services, low customer satisfaction, and no societal contribution.

What I am saying may sound impractical, especially to those entrepreneurs out there wrestling with problems of day-to-day survival of their businesses. But take it from me, having corporate goals purely oriented to financial growth just won’t solve the puzzle. 

Business success is largely judged in the eyes of the customer and by doing something of great value. And the logic is, if you can make real contributions to your customers, you will be profitable.

Here's another relevant example: When asked if he had founded Marriott Corporation (the current owners of Protea Hotels in Uganda) to make a million dollars or to build an empire, John W Marriott Sr, responded: “No, not at all. I just had three general ideas in mind, all equally important. One was to render a friendly service to our guests.

The second was to provide quality food at a fair price. The third was to work as hard as I could, day and night, to make a profit.”And as many Marriott clients would attest, these ideals have remained alive long after his death. 

There are also several other businesses on the local scene that are demonstrating exceptional service while generating healthy profits.Every business must be more than an economic activity, more than just a way to make money. 

The fundamental goal for any business, in my opinion, must be about creating an opportunity for greater accomplishment and greater service. 

This could mean building better products, relentless innovation, employee development and doing the right stuff. And yes, the business cannot pursue these things without profits; but profit should not be the “why” of it all!

Every business must be more than an economic activity, more than just a way to make money.

Ms Brian Mukalazi is the CEO, Talis Consults Ltd
[email protected]