Talking garbage and the purpose of business

Fri, 15 May 2015 00:00:00 +0000

The third in a series on the topic of the purpose of business. Follows:

Business exists to establish and drive mutual value creation. Steve Denning challenged this statement, preferring Drucker’s assertion that the purpose of business is to create and keep a customer. I responded, and he has challenged my response:

we may be talking about different things: theoretical purpose of a firm and how to run it

“satisfying all the stakeholders” isn’t a viable heuristic to run a firm. See Making Management as Simple as Frisbee

“satisfying all the stakeholders” was tried in mid20thC. It led to Garbage Can firms.

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Garbage

Steve refers to “garbage can firms” in his Forbes article, Is The Tyranny Of Shareholder Value Finally Ending? , an eloquent take down of prioritizing the pursuit of shareholder value. When it comes to garbage it quotes a trio of academics – Cohen, March and Olsen – who in 1972 explained:

Shareholder-Value on Philip Sheldrake

Talking garbage and the purpose of business

Garbage