What is the purpose of a commercial firm?

[Art Kleiner <art@well.com>]

I have been lurking in this forum for quite a long time, reading messages
with much interest at times. I was very interested in the concept of "What
is the purpose of a commercial firm?" because I have been trying to answer
that question in my own mind for much of the last six months.

I'd be grateful for your comment on my perspective.

I think every commercial firm has three real purposes, and everything else
it does (including ROI to shareholders AND observing customers) represent a
means to these three ends.

Purpose 1. To make life wonderful for a "core group" of people. This core
group can vary in number from the CEO/Chairman alone to the entire
membership of the organization and its customers. Its makeup and
composition varies from organization to organization, and is always in
flux. Nor isthe "core group" necessarily the people in authority. It is the
people on whose behalf the company acts.

Rarely does the core group include the customers. Rarely does the makeup of
the core group, or the rules for entering it, get made explicit, and when
it does become explicit or semi-explicit, it can be explosive. Anyone who
has been an entrepreneur knows that the company exists, in part, to do
whatever the employees feel might help the core group leaders. As the
organiztaion grows and matures, the core group changes and may often
fragment, but it does not disappear.

This is one reason why organizational change is so difficult: The leaders
of a company must often convince their people that, not only do they want
to change, BUT THEY WANT TO BE MADE UNCOMFORTABLE BY CHANGE. Because the
organization will act to prevent the core group from feeling uncomfortable.

Purpose 2. To try something, at a scale larger than an individual could
accomplish, and see what the organization can do. Organizations exist to
act -- to build a car, to design a kind of loan, to capture a market -- and
then to evaluate their action.

Purpose 3. To fulfill a civic purpose; to exalt humanity and life. Often in
a way that neither the members of the company, nor the outsiders, fully
understand. What is the civic purpose of a cigarette company right now? I'm
not sure I can imagine one. Nor, perhaps, can the leaders of such a
company. But there is one.

----

These three purposes do not describe companies as they should be, but
companies as they are -- and as they are irrevocably. People who go to work
for companies and ignore the core group (purpose 1) get taken advantage of;
they become, in effect, "enablers" for the organization's abuses. People
who go to work for companies and never take the opportunity to act and
learn (purpose 2) get stunted. People who go to work for companies and
never begin to move toward their civic purposes (purpose 3) lose their
souls.

There's much more, but I don't want to overstep propriety with a super-long
message. I think this perspective is resonant with what I understand of Dr.
Deming's writing, but I don't pretend to understand them as well as many of
the participants on this list.

As I say, I'm grateful for reaction if anyone has any. -- Art Kleiner
   -- Art Kleiner, art@well.com, http://www.well.com/user/art
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