If you ask 100 people what a business is for, you’re likely to get 100 different answers.
Some people would argue the purpose of a business is to provide goods and services to customers.
Others would argue it’s to provide rewarding and fulfilling jobs for employees.
Still others would argue it is to maximize shareholder value, to provide a good return for investors.
And others - especially startups, where I spent most of my career - would argue it’s to make a dent in the universe. To maximize impact.
I don’t think any of these are accurate.
The purpose of your businesses is to transform your life.
That’s it. That’s why an owner starts the company.
And yet most would be extremely unlikely to admit this.
A startup founder would never put their dream of owning a house in Vail and skiing 50 times a year into a pitch deck.
An entrepreneur would never tell a journalist that the goal of their company is to give them the time to hang with their kids while they’re still in the house.
A business owner would never put on a loan application that they honestly just really enjoy building stuff and want to express themselves creatively in their company.
We’ve been trained to believe that our business needs to serve everyone else. Or at least that we shouldn’t admit the main reason for our business is to serve our own lives.
I believe this does considerable damage to both our businesses and our lives.
After saying this enough times, you end up believing it. Perhaps not consciously. But in terms of your actions.
The world is full of business owners who confide in their closest friends over drinks that they feel stretched and overwhelmed. That they don’t remember why they started the company in the first place. That the spark is gone, replaced with drudgery and a sinking feeling that they can’t get out.
I believe this is because they aren’t willing to admit the reason their business exists is to serve them. And because of that they end up serving everyone else instead. They make choices about their business that hurt them because they are trying to serve a different purpose.
They work themselves to death because they know investors want their return.
They abdicate too much control to team members because they want those people to be fulfilled, and are left holding the bag when they bolt for greener pastures.
They make decisions that harm their employees, their bottom line and their personal well-being because they believe the “customer is always right.”
Something is desperately wrong.
But what about the other stakeholders?
A lot of people bristle when they hear this idea for the first time. They think I’m suggesting owners should ignore customers, employees, and investors.
Nothing could be further from the truth. The only way a business can accomplish the goal of transforming the life of the founder is to satisfy the needs of customers, employees, and investors.
I just happen to believe the best way to accomplish those goals for other stakeholders is by being clear on what the realpurpose of the business is.
Interesting things happen when an owner admits and owns the idea that the business exists to transform their own life.
They get focused on serving the type of customer that they want to work with. Their customer interactions end up energizing them rather than draining them.
They focus on products or services that they want to sell. Offerings that are valuable to the customer, able to be provided consistently and repeatedly without killing everyone on the team, and profitable enough to make the business more valuable. The business gets really good at those things, leading to superior customer satisfaction and a differentiated business.
The business ends up with values that are in alignment with the owner’s own values. And they attract team members that believe in those values.
The business develops processes and systems that allow it to scale profitably and without the direct involvement of the owner, giving them the opportunity to pursue other things in life that are meaningful to them.
A company like this is a much more attractive business for investors. It means the owner could step away and the business wouldn’t miss a beat.
And all of this leads to a healthier, more attractive business for an eventual acquirer, if the owner ever chooses to pursue that path.
Being honest and acknowledging why the business exists will actually accomplish the goals for every other stakeholder. And in the process transform the life of the owner, something each of those stakeholders should be happy about.
The Integrated Company
A business like this is what I call “integrated”. It aligns the interests of each of the critical stakeholders. It is not divided against itself.
There are three groups of people that have to be moving in the same direction in order for a business to be integrated. Those are the owner, the customer, and the employee. If any of them are out of whack - if any of them are not aligned with the business - then the whole thing crumbles.
If you build a company that accomplishes your goals and your employee’s but not the customer’s, you won’t survive for long.
If you build a company that accomplishes your goals and the customer’s, but not the employees, your team will walk. In some cases they’ll hurt your business on the way out, providing inferior service to your customers, spreading inside dirt on social media, poisoning the well internally.
If you build a company that accomplishes the goals of your customers and your employees but not yourself, you’re building a business that will ultimately burn you out and ruin your life.
A business that integrates all these needs moves forward with conviction, with momentum, without friction.
In rowing they call this “swing”. There’s a book by Craig Lambert called “Mind Over Water”, and he describes it this way:
“We are not so much swinging as being swung. The boat swings you. The shell wants to move fast: Speed sings in its lines and nature. Our job is simply to work with the shell, to stop holding it back with our thrashing struggles to go faster. Trying too hard sabotages boat speed. Trying becomes striving and striving undoes itself.”
Integrated companies feel like that. The business wants to grow. But in too many companies competing interests push against that. Create a state of dis-integration. So we want to design an integrated business. A business that swings.
But “integrated” doesn’t mean “equal”. We want the business to align the interests of each stakeholder. But not every stakeholder is equal in the equation.
The first and most important of those stakeholders is you as the owner. This is true because the purpose of the business is to give you the life you want. Everything should be in support of that.
If you subordinate your needs to the needs of other stakeholders, no matter how noble, you will ultimately resent your business.
So to recap. Your business exists to serve you. The best way to do that is to create a business that is integrated. It needs to align the needs of various stakeholders. Starting with your own as the first and most important.
Which begs the question - what do you want?