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Preliminary Introduction to “Volume 2: Profit & Values”

by Imdat on May 16th, 2013

Far out in the uncharted backwaters of the unfashionable end of the Western Spiral Arm of the Galaxy lies a small unregarded yellow sun. Orbiting this  […] is an utterly insignificant little blue-green planet.[…] – This planet has […] a problem, which [is] this: most of the people living on it were unhappy for pretty much of the time. Many solutions were suggested for this problem, but most of these were largely concerned with the movements of small green pieces of paper, which is odd because on the whole it wasn’t the small green pieces of paper that were unhappy.”

(Douglas Adams, Hitchhiker’s Guide to the Galaxy)

 

Yes, we do indeed believe that the exchange of small green pieces of paper can resolve our unhappiness. It seems, for ages now, we have had a rather ambivalent relationship with money: on one hand, we believed that we needed more of it at any given time; on the other, we believed wholeheartedly that money was the source and root of all evil.

What we slowly seem to realize, not least because of some great books that have been written about meaning, that money is neither the cause nor the solution of our unhappiness. It is rather a means of making exchanges, i.e. transactions done between people, easy.

Money itself, as I have mentioned in Volume 1 of Wealth & Wellbeing, has no value. Only by the fact that people can obtain other goods and services that they can use to increase their wellbeing does money have a value. Only because other people are willing to provide services and products does money become something valuable. One cannot eat or drink money; one cannot cloth in money (well, one could, but it wouldn’t make much sense), one cannot use money for anything else than burning it to keep one warm – for a very brief period; and this only since the invention of paper money.

Money itself makes transactions easy, makes global, scalable transactions possible at all. Money provides for globalization, for indirect transactions and also for storage of wealth – for creation of wellbeing in the sense that the more money one has, the more options in the future one creates for oneself. By having some money (savings) man creates possibilities, potentialities that he can then change to become realities. By saving money for retirement, we can create the potential of having a good (from wealth-perspective) old age. That doesn’t necessarily mean that it will be so. It is up to each person to have a good life, but most people believe (and probably quite true so) that having some amount of money saved will make their lives easier.

If money, by itself, doesn’t have a value and instead helps us creating potentialities, why are we chasing so strongly after more and more small green pieces of paper?

I doubt that it is in fact the chasing itself; I came to believe that in most cases the chase for small green pieces of paper is a side-effect of what we are doing – day-in, day-out. In most cases, at some point in time, the side-effect becomes the main cause and people forget why they are becoming more and more unhappy.

Once people realize and internalize that money, by itself, is not worth anything and that there must be something else to life, their life becomes significantly more complicated and they enter, what Viktor Frankl calls, into an “existential vacuum”. They start questioning “the meaning of life”, with that meaning the meaning of their own lives.

The meaning – this is the key in determining what we do and how we do it.

The first part of this book will be about The Meaning – more concretely The Meaning of Managing Companies (or having companies at all). The Meaning of Managing for Profit.

In this part, I am outlining, less from an ethical or moral point of view, but more from an economic point of view, the reasons why we have to operate companies (i.e. for-profit organizations) and why growth is necessary. I touch topics such as the importance of profit, the right amount of profit, the (right) usage of profit and so on.

I also outline what happens with money in general – even if it resides on a bank account and is, seemingly, not used for any productive activity.

The second part of the book is about Managing for Profit, i.e. the practice of managing a company and running a profit-oriented organization. In one of my future works, I will try to describe managing a not-for-profit organizations in contrast and outline the differences.

But in both cases, managing for results will be the key activity of every manager. Whether it be in for-profit or not-for-profit organizations – the result-oriented management is the only right approach.

This second part of the book will also concentrate strongly on the consumer, on product management, life-cycle management and so on. After all, these topics are what (positively or negatively) impact the profitability of any company.

The third part of this book is Managing for Value(s). This is probably the most controversial part as I try to delve into ethics, moral values and contrast these with the society’s values. More specifically, I try to show the discrepancy in society’s overall principles versus interests, principles versus actions and interests versus actions.

I believe that many of the readers will recognize themselves in one way or another in the third part of the book. Especially when it comes down to managing for values versus managing for profit – how do we approach this question, how do we solve some of the (seeming) dilemmas, etc.

The first Volume in the Wealth & Wellbeing-series was more concerned with the internals of management, i.e. the internal view. It was about the economy as such but also about processes, budget, employees, tasks, self-management and so on. It was oriented towards what impacts the organization from within (apart from the knowledge part).

This second book is more external-oriented, i.e. the customer, the consumer, the environment, the shareholders and every other stakeholder.

In this book I look at the value of the customer (all value comes from him or her), at the need for profit and the type of profit, at the market, at consumer’s behavior and so on.

This book, being mainly about profit and its driver, looks at where value is really created and how.

This book is also about the meaning of value as well as values and why both are not only important but quite literally interlinked. I argue that without values there will be no value and thus no profit. In the values-part, it is not so much about morality (though it also is) but rather about the “self-interest-driven need for values-oriented management”. I disagree with various philosophers and scholars on, what they say, that there is an inherent feature of humans called “other-interest” and argue why “self-interest-driven other-interest” is what drives the economy. I also argue, on the counter-side, why “other-interest-driven approach” is, in fact, the right approach as it is derived from “self-interest” (in my previous book I argued quite adamantly for self-interest. The arguments in this book are not countering my arguments there but rather confirming or cementing those arguments).

I hope to shine a light on the psychology behind societal, individual and company behavior. Additionally, I hope to show the ongoing manager what lies ahead for him in the 21st century and how he can cope with the faster and faster growing challenges – in the age of the informed consumer, globalization, digital businesses and especially … in the age of the knowledge worker.

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