Why are businesses set-up?

" Not everyone is so complacent. Markets rely on rules and laws, but those rules and laws in turn depend on truth and trust. Conceal truth or erode trust, and the game becomes so unreliable that no one will want to play."                                                                                                         -Charles Handy

This week's reading talked about truth and trust and what our aim of setting up businesses would be. Who would have thought that they would be so important? Charles Handy seemed to think that virtue or truth and integrity or trust are the key ingredients for a successful economy. Why? Virtue and integrity are essential ingredients for an economy to flourish because they ensure that rules are obeyed and that shareholders can go to sleep with both eyes closed and not have to worry about their investments. It also ensures that the entrepreneur can operate a legitimate business and succeed all things being equal. Havin experienced this feeling of distrust, I know how it feels. You begin to question every move made by an entrepreneur and there's the panic buying and ultimate fall in the value of shares. When there is no trust, things fall apart immediately. The starting point is to find out as suggested by Charles Handy what business are set up for. Most people set up businesses to amass wealth and it becomes the driving factor for every decision that is made, some to gain monopoly. Charles says that the real justification is "to make a profit so that the business can do something more or better" The truth is we are agents of change, and that change can only come if the world is a better place by our actions and not a minefield of disaster. 

To achieve this new purpose Charles suggested two things.

1. Entrepreneurs must bind themselves with an oath to be a force for good. This is similar with the ethical guardrails suggested by Jeff Sandefer. If entrepreneurs are to encourage sustainability, then it must be something that they have committed to do. My suggestion is that it be included in the mission and vision of the organization, employees and employers begin to see the bigger picture and key into it. Every process would undergo scrutiny so as to align itself with  the firm's objectives. This is not limited to products and services but people also. Sustainability extends to the workforce, a healthy workforce make a healthy company.

2. The contribution effect: Businesses are set up mainly to meet the needs of people. Charles said that: "The contribution ethic has always been a strong motivating force. To survive, even to prosper, is not enough. We hanker to leave a footprint in the sands of time, and if we can do that with the help and companionship of others, so much the better. We need to associate with a cause in order to give purpose to our lives. The pursuit of a cause does not have to be the prerogative of charities and the not-for-profit sector." When profit is the major aim of a business, people become the means to an end and not the end in itself. This is not to suggest that making profit is bad, no. It helps us do much good, however it is always better when profit is made with the aim of contributing to a just cause.

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