18 March Morality and Profits (...sufficient...)

[Paul Terlemezian]

The purpose of profit is not to bury it in the ground so that we have it and others do not.

 

As the previous day's chapter indicated the purpose of profit is to provide the capital needed to stay in business. Drucker asserts that in this sense "profit" is an "expense."

 

Without profit we cannot stay in business unless we are subsidized. Who decides whether or not to subsidize us?

 

What would happen if an internal training organization "partnered" with an external training organizaiton on a multi-year agreement and the external provider needed to explain how its profits would be used to assure that:

 

1. It would maintain its position as the best provider

2. It would stay in business (i.e. cover costs)

3. It would innovate for the benefit of its customers

 

We expect our providers to stay in business - not doing so may cause serious challenges to our customers.

[Paul Terlemezian]

If a business creates value (i.e. benefits for others) then does it "deserve" to stay in business"

To "stay in business" must a business innovate?

Where does the capital come from to fund the innovation?

What rewards are due to those that take the risk of providing the capital?