You go to any MBA program, and you will be taught the theory of the firm, that the purpose of the firm is the maximization of return on invested capital. I always thought this was a kind of lunacy.
Interpretation
The primary goal of a business should not solely be profit maximization, as taught in many MBA programs.
Peter Senge challenges the traditional business doctrine that prioritizes maximizing returns on invested capital as the sole purpose of a firm. He suggests that this narrow focus is misguided and may lead to ignoring broader responsibilities to society and the environment, indicating that companies should consider their overall impact rather than just financial success.
In practice
In a speech on corporate ethics, one might quote Senge to emphasize that companies should think beyond profits.
[Seeds Are Small.] Becoming a force of nature doesn't mean that all of our aspirations must be "grand." First steps are often small, and initial visions that focus energy effectively often address immediate problems. What matters is engagement in the service of a larger purpose rather than lofty aspirations that paralyze action. Indeed, it's a dangerous trap to believe that we can pursue onlhy "great visions."
I do not believe great organizations have ever been built by trying to emulate another, any more than individual greatness is achieved by trying to copy another 'great person'.
All human beings are born with unique gifts. The healthy functioning community depends on realizing the capacity to develop each gift.
Learning to see the structures within which we operate begins a process of freeing ourselves from previously unseen forces and ultimately mastering the ability to work with them and change them.
New insights fail to get put into practice because they conflict with deeply held internal images of how the world works...images that limit us to familiar ways of thinking and acting. That is why the discipline of managing mental models - surfacing, testing, and improving our internal pictures of how the world works - promises to be a major breakthrough for learning organizations.
In the absence of a great dream pettiness prevails. Shred visions foster risk taking, courage and innovation. Keeping the end in mind creates the confidence to make decisions even in moments of crisis.
Too often, executive compensation in the U.S. is ridiculously out of line with performance. That won't change, moreover, because the deck is stacked against investors when it comes to the CEO's pay. The upshot is that a mediocre-or-worse CEO - aided by his handpicked VP of human relations and a consultant from the ever-accommodating firm of Ratchet, Ratchet and Bingo - all too often receives gobs of money from an ill-designed compensation arrangement.
Helping doing business easier, we choose the name Alibaba because it is a global company. It is founded in China, but it was created for the world.
If you don't understand the details of your business you are going to fail.
When an entrant competitor attacks the low end of any market, the rational reaction of the incumbent firms is to abandon rather than defend it - because the low end is the least profitable of their possible investments.
A well-run restaurant is like a winning baseball team. It makes the most of every crew member's talent and takes advantage of every split-second opportunity to speed up service.
If your goal is anything but profitability - if it's to be big, or to grow fast, or to become a technology leader - you'll hit problems.
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