Why Corporations Exist LO10274

Mon, 30 Sep 1996 20:54:49 -0400

Replying to LO10220 --

> From: Glenn Waring <waring@zeus.franklin.edu>
> Date: Sat, 28 Sep 1996 10:58:40 -0400 (EDT)
> The late Maurice Mascaranhas, who was a Resource-of-the-Year for my
> organization which counsels 4,000 CEOs around the world, used to say,
> "Profits are like breathing. You have to have them.
> But who would stay alive just to breathe?"
> ....
> OF COURSE corporations don't exist to make profits. Stanford's research
> of 1994, compiled in a book called Built to Last, makes the point that all
> the great corporations have a well-understood statement of purpose.
> Merck, for example, says its purpose is to preserve human life. That
> becomes a field operating manual that really helps make decisions. By the
> way, it's also a pretty rewarding stock to hold -- true for most of the 18
> companies cited in the book.


I had asked in a previous post about how the shareholders' quest for
return on their investments drives companies to place profit above all
else. You've pointed out something that I've thought of since then,
namely that _over time_ a more stable company may provide the best
performance, and that risk is an important factor in investment decisions.
I expect this is obvious to people in business and finance, but since I'm
new at this I'll probably have to keep "discovering" such insights

Also, the quote comparing profits to breathing prompted another line of
thought: Someone said (basically), "An organism is a gene's way of
replicating." I wonder what the parallel with organizations would be,
memes, perhaps? And if one can take the gene's perspective in evolution,
might we take the meme's perspective with regard to organizations like

Just musing...



Jeff Brooks <BrooksJeff@AOL.com>

Learning-org -- An Internet Dialog on Learning Organizations For info: <rkarash@karash.com> -or- <http://world.std.com/~lo/>