Nature and Purpose: Part 2

E J Gulda, 2012-06-018


In part 1 we suggested a simple model to address the difference between the nature and the purpose of business. Effective and ineffective refer to the performance of the business according to its nature: to make money. Bad to good relate to the purpose of the business. In part 2 we’re going to unpack each element of this matrix.

Ineffective Effective
Good Promising GREAT
Indifferent Failing Unfulfilled
Bad Evil Dangerous

Evil: An incompetent drug dealer may not be doing devastating harm, but only because of ineffectiveness. They are certainly up to no good and could get more effective with practice, or could be used by people who are already effective.

Dangerous: Human trafficking is highly profitable and there are well established, very effective organizations in this business. They are not only just evil but also dangerous, because they are so effective … in sustaining and growing a cancer on society. Make no mistake, this business has huge market demand (lust) and a strong motive (greed) to meet that demand.

Most would agree that these are bad businesses. Those who don’t agree won’t be interested in what we have to say here. Bad businesses must be attacked on both the supply and demand sides and eliminated through moral and legal means, but that isn’t our interest here.

We could simplify this matrix by eliminating the indifferent category, but unfortunately most businesses in my experience are in this category.

Failing: These are disappointing their investors, their creditors, and their people. Their investors are their owners have the right to define their purpose. If they are indifferent about the purpose, the nature (to make money) also becomes their only real purpose by default. Their focus is on survival by all means until they are out of the hole dug by being ineffective. Often hired guns, like I have often been, are brought in to make them more effective. We do, but to what purpose?

Since 1979 I have been fixing businesses which were ineffective (losing money or making too little) and indifferent about their purpose. My role has been to assess the situation, set a strategic direction, build an effective team, and lead this team to success – monetary success and purpose success. We have done this in every case but one, but I have failed to achieve the real purpose I had in mind on many occasions. Did I really say failed? Yes.

Most of my work has been getting businesses out of the failing box. That can lead to GREAT, and that was always my intent, but I missed the reality that the first steps were necessarily through unfulfilled, and the later steps are not necessarily turning upward to greatness, often settling to move further right to more wealth. Sadly, that was also true when I was the owner, so I can’t just blame the other owners.

Unfulfilled: I can honestly say that in over forty years of business I have never encountered anyone who was fulfilled by even massive wealth; quite the contrary. I have worked for CEOs who were highly successful in business but totally miserable with their lavish lifestyles. I have seen owners, CEOs, executives, and others with substantial wealth who also led fulfilled lives, but the wealth came from the fulfillment, not the other way around.

I consider the businesses in this category unfulfilled because they aren’t doing the good they could do. This doesn’t mean compromising effectiveness, just better directing it better. When businesses reach this stage there can be unintended outcomes.

One too frequent outcome is that the owners, having baited the team with false enthusiasm for the purpose, will now switch to their real purpose. Another possible outcome is that the team members, including its leader, becomes distracted by personal prosperity and lose their drive. Another unfortunate possibility is that the business continues its success and the owners and/or management become indifferent to the collateral damage to associates and others. None of these is good, and all are manifestations of the absence of a purpose which is good, focused, clearly understood by all, and fully committed to by every member the team. All these outcomes are the responsibility of the leader whether or not it was the leader’s “fault”. If it sounds like these outcomes are real and that I have personally experienced them, you hear correctly. In situations like these I was the leader, and these are my failures even though they were cloaked in success.

Once businesses reach this stage it’s often difficult to get everyone to agree to start doing great things. Usually, they want to go further right in this matrix, not to turn upward.

Promising: These businesses hold promise because they will help people in some way, but they are not delivering because they are ineffective. It will be truly worthwhile helping them to become successful so that they can deliver.

GREAT: These businesses are successful both financially and in delivery of good things for people. They are great places to invest, great places to work and great partners with whom to do business.

Money is a powerful resource, and it can be used to do great good. That’s why I continue to use business as a primary vehicle to fulfill my purpose, but why I’ve changed course. I’ve decided to surrender to and commit my energy to the purpose, which means continuing to be very effective leading the business to making money but avoiding its seductions.

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