We must abandon the idea that profitability is primary goal of company and replace it with a compelling definition of our sustainable contribution to the world and our approach to delivering.
Many Westerners find it puzzling how spirituality and materialism coexist in India. Pavan K. Varma's book 'Being Indian' helps clarify this complexity by showing that Indians, despite being seen as spiritual, are actually quite focused on material matters. The idea in Hindu metaphysics that everything that is material perishes and hence is unreal is “a theoretical construct, valid at the level of hypothesis but spectacularly ignored in practice”, he writes. The spiritual and the material are divorced in daily life.
Yet, the situation in capitalism—in which the friction between business and society is changing both—forces a deep reevaluation of the relationship between the tangible and the intangible. Society is under pressure, the environment is threatened, artificial intelligence is seen as posing an existential threat to humanity, and an obsession with short term profits in business is imposing tremendous costs on society, investors and the climate. At the same time, we expect more from business than ever before, as companies must now contribute to the common good. How are we to resolve this contradiction?
The core problem might be our deep rooted belief that profits are the primary goal of a company. This is a self undermining idea. ‘Profits first’, introduces a decision making algorithm into a company, which systematically neglects the causes of profits. It shifts the focus of a company away from meeting the interests of customers and other stakeholders, who drive profits, towards its own wants. Profits first or shareholder value maximisation places the company’s own interest before the self interests of those on whom it depends. It is therefore not just the world’s dumbest idea, as Jack Welch once said. It is a fundamentally illogical and irrational objective, inconsistent with the view of human nature that most people pursue their self interest. Profits first is one of the great misunderstandings in capitalism.
One must abandon the idea that profitability is the primary goal of the company and replace it with a compelling definition of our sustainable contribution to the world and our approach to delivering it. As lofty as that may sound, it may be a more profitable and certainly a more logical course of action. Because it places the interests of those who pay for profits at the centre of the company. ‘Purpose first, profits second’, should be the rational mantra of business.
An equally interesting aspect of this idea is that it carries a strong spiritual dimension. When a company devotes itself to a purpose beyond making money, it defines itself in terms of an objective outside of itself. It aims its activities at a larger cause that transcends its own boundaries. In Indian philosophy, this is called Karma Yoga—or the path of enlightenment through action—which is one of the three ways of reaching enlightenment, and sometimes seen as the most powerful one. By focusing on a goal that is meaningful for the larger world, the company acts from aims beyond its narrow corporate self interests only and works for the benefit of others. It unifies its own interests with the larger good.
When employees find that purpose truly meaningful and work towards it, they, in turn, act less from their personal and self centred desires and likes and dislikes. And they become less emotionally attached to the immediate fruits of their actions. To use a soccer analogy, we become focused on the ball instead of the scoreboard. And that is accidentally also one of the main recommendations of perhaps the greatest Indian spiritual text—the Bhagavad Gita. As a result, the quality and productiveness of our work increases.
Of course, we may still be motivated by an expectation about the outcome. But the expectation is less for immediate self gratification and more to help the larger, common purpose materialise. Profitable business as Karma Yoga. There are Indian companies who practice it, and those that do are extremely ‘successful’. As Indian companies enter the world stage, this may come to be seen as India’s enduring contribution to the world of business.
