To be fair, it was a simple question posted by Diane Nice on the Globe and Mail's LinkedIn Group.
I find this type of comment irritating for business owners who are fallible human beings. They have enormous pressure from their family and also their employees which is rarely recognized or appreciated, it seems. Naturally, they need to be about profit. Why mortgage your house? Why work long hours? Sure, they enjoy their product but there also has to be a pay off.
Owning a business and trying to mobilize others to achieve a vision is very, very hard. People like Steve Jobs and the heroes running small companies, are rarely for the profit only. It just will not sustain the business going forward if your only goal is profit.
Where Profit fits into Strategy
Profit is the blood to keep the body going, but every strong business also has a purpose which - to continue the image of the body - is about what you are going to do with that body, where you will take it and how to make an impact on the world. Darn right your vision must have a defined financial hurdle to meet. Without profit, you are out of business. Dead. Kaput.
When I worked as a corporate strategist to a growing bank, part of the Vision was the ROI of 21%, high for today. Some employees mentioned they did not like the financial benchmark being part of the vision as it seemed to give a whiff od money and greed. Yet this target stated so boldly did drive growth and the bank became the fastest growing company and is now international and still doing well.
Likewise, Entrepreneurs who are creating a product, and having to meet a payroll, experience pressure cooker pressure to keep their business afloat, never mind growing. This level of effort required too often goes without comment by the anti-business groups. If these businesses do not have a profit, bam - their bank manager will close them down. Game over. The consequences are huge because the business owner is very aware of their responsibility to employees and their families.
We have been seeing the American Government trying to step into the entrepreneur space and actually participate. The US government officials giving the push for loans to green companies like the disastrous Solyndra start-up, are finding out that failure is more often the result than success with business. Since Solyndra was green though, does it justify not checking that profits would be in the cards before the half a billion dollars got spent? The goal of being environmentally green is a better goal to putting profits at the top of the list?
The US Government is finding out how hard it is to make a product, find the market and sell it for a profit, not a loss. The case of Solyndra certainly screams what happens if the profit goal is not at the top of the strategy. This was a green solar panel manufacturer given half a billion dollars as start-up capital by the American government. To put this in context, our Canadian government does not have that much in any, probably in all funds to help Canadian business owners.
Second, Private Equity would not loan that amount to any start-up. If Private Equity did partner with Solyndra, it would give money in tranches of ten to fifty million, not the whole cash bonanza in one payout period. It is truly shocking to US Private Equity to hear about this story. It smacks of Crony Capitalism and how the system is getting rigged. The Government does not have skin in the game; they are playing with other people's money (tax payers) and the sheer size of their loans boogles the mind. Who was making the decisions? Who made money? Who would be financially driven to make the solar business find paying customers?
Business owners put their blood into their companies. Pundits, like Deepak Choprah, need to recognize the challenge to get things done and to make any change. Business that is out for profit will not keep going.
Profit is the score card. The Government is finding out that the score card does not get improved by throwing wads of cash at a beginner business, no matter how much you loan to them or how noble the goal. The Private Equity investors will want to know about profit goals first and foremest. They will ask"
Can you make a profit, how soon and when can I get my money back with how much profit?Deepak may find these mean questions to ask but without the profits, there is no business. No blood, no body to move around.
As a quick aside, I enjoyed this insight from an anonymous comment on the topic of private versus public ability to achieve innovation. Business must focus on profits, even if the US government does not have that pressure:
The somewhat free market produced innovation of the electronic book reader that reduces the energy and waste in the production process of paper books and articles is superior in "Greeness" to just about any innovation in the subsidized electric car programs of the Government-Selected Business consortium.
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