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.
To those who are engaged in commercial dealings, justice is indispensable for the conduct of business.
I think that business practices would improve immeasurably if they were guided by "feminine" pinciples, qualities like love, care, and intuition.
A company has a greater responsibility than making money for its stockholders. We have a responsibility to our employees to recognize their dignity as human beings.
The central task for a business is to make a profit. The challenge is to make a profit by doing things which are genuinely good for people and good for societies.
The buyer is entitled to a bargain. The seller is entitled to a profit. So there is a fine margin in between where the price is right. I have found this to be true to this day whether dealing in paper hats, winter underwear or hotels.
The companies that survive longest are the one's that work out what they uniquely can give to the world-not just growth or money but their excellence, their respect for others, or their ability to make people happy. Some call those things a soul.
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