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In this episode of The Soul of Enterprise, Ron and Ed dive into the long-standing debate: Is the purpose of business to make a profit, or is profit simply the result of fulfilling a deeper mission? Drawing inspiration from the wisdom of Peter Drucker—who famously stated, “There is only one valid definition of business purpose: to create a customer”—they explore the implications of this perspective for entrepreneurs, executives, and professionals.
Does a relentless focus on profit lead to short-termism and ethical compromises? Or is profit the natural outcome of serving customers, creating value, and building a sustainable enterprise? Join us as Ron and Ed unpack these ideas, challenge conventional wisdom, and discuss what this debate means for the future of business.
SHOW NOTES
Segment one
You can record and submit questions for future shows using any device. Just visit https://www.thesoulofenterprise.com/questions
William F. Buckley wrote a single children’s book. He considered it the hardest book he had ever written. https://www.amazon.com/National-Treasury-Classic-Childrens-Literature/dp/096278415X
We had a GREAT question submitted today from a children’s book author, Melquea Smith. Check out some of her work here https://www.prettykittypaintings.com/
Speaking of children’s books, Ron and Ed had the pleasure of interviewing Connor Boyack on episode 292. He is the author of the Tuttle Twins books. https://www.thesoulofenterprise.com/tsoe/connor-boyack-tuttle-twins
Thank you Peter McCleskey for the question today! We’ve dedicated almost the entire show to the idea that profits are the result of a business and not the purpose. But Peter had other thoughts and we TRULY appreciate it. So much so that his question is the basis for our show today.
Segment two
“Purpose is bigger than tactics. Purpose is bigger than strategy. It is a choice to pursue your destiny, the ultimate destination for yourself and the organization you lead.” —from Purpose: The Starting Point of Great Companies by Nikos Mourkogiannis https://www.amazon.com/Purpose-Starting-Point-Great-Companies/dp/0230605303
TIL Peter Drucker coined the term “profit center” and wrote, years later, that he was ashamed of it.
“Profit is the oxygen for the body but it’s not the point of life.” —Ron Baker on today’s show (possibly non-attributed)
“Business must be run at a profit, else it will die. But when anyone tries to run a business solely for profit, then also the business must die, for it no longer has a reason for existence.” —Henry Ford
“There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.” —Sam Walton
Segment three
Ed mentioned the 7-s framework on the show today. Introduced by McKinsey in the 1970’s, here is some historical background on the model: https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/enduring-ideas-the-7-s-framework
Stanley Marcus, the former president and chairman of the board of Neiman Marcus, famously said "Consumers are statistics. Customers are people,"
Here’s a fun exercise: How much would you have to be paid to not be able to use your iPhone ever again? THINK about that. There’s is a flip answer (thank goodness!) but what is your real number?
Robert Wood Johnson, former chairman of JNJ and a member of the Company’s founding family, crafted the JNJ Credo himself in 1943. More here and in the image (which is the credo carved in stone at the JNJ headquarters) https://www.jnj.com/our-credo
Segment four
Ron and Ed talked about the seven internal responsibilities outlined in “Business as a Calling: Work and the Examined Life” by Michael Novak https://www.amazon.com/Business-Calling-Work-Examined-Life/dp/0684827484
Also reference in segment four today, “Wealth’s Way — The Wisdom and Wonders of Shareholder Capitalism” which is episode 488 of The Soul of Enterprise https://www.thesoulofenterprise.com/488
Ron and Ed mentioned their new venture today towards the end of the show. They are looking forward to working more closely with people who are interested. Learn more at https://thresholdnow.com/ and hop on the free membership level.
Bonus Content is Available As Well
Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.
Click the “FANATIC” image to learn more about pricing and member benefits.