The Origin of a Noble Business Model
Here I go, starting a blog – something I’ve never done before, but here goes….
I recently came back from the World Premiere of the Noble Enterprise seminar at the Olin Business School at Washington University in St. Louis, and it was a very affirming experience. But more about that in a later post.
First, I want to introduce you to what I’ll be blogging about by answering the questions: What is a Noble Enterprise and how did it emerge?
Sometime in the distant past, despite much study of mainstream business theory & practice, and experience in various corporate positions, leadership roles in smaller companies and consulting to Fortune 100 and privately owned companies, I grew increasingly unsatisfied by “business as usual”. The accepted “business model” seemed in my mind to need a major overhaul.
Consider this question: What is the goal of a business corporation? The notion that corporate purpose is supposedly “profit maximization” (well taught at the Chicago Business School where I earlier got my MBA) lost its luster for me many years ago – not because I’m against profit – but in part because that corporate goal lacks the power I thought a goal should have to motivate people. I began (even if subconsciously) to replace that with such goals as to grow the business, or become the best company in the industry – with profit being the desired result of that.
In the mid-1980’s, as I was leading a planning conference for the senior management team of Reader’s Digest, this became fully conscious. I asked the group of about twelve executives, what do you see as the purpose of Reader’s Digest? I expected them to answer something like, “To create (and distribute) products that inform, enrich, entertain and inspire people of all ages and cultures around the world” (which is basically its current mission).
Immediately, however, one of them (like a good student of traditional business theory) spoke up: “To generate a return on capital of at least 15% a year.” This was not surprising I suppose because Readers Digest had only recently become a for-profit company, so they were getting used to what that might mean to them as executives.
I responded, “Well that’s certainly the goal of the provider (or owner) of the financial capital you are using. But how do you do it? How will you use that capital – to do what for whom?
Thus began my quest to find a better business model than the then-current, financially-based model.
But that was just the start of a long and interesting trek.
