In my last post I talked about the importance for the CEO and the board to increase the value of the firm, and that this should be a key focus of their responsibilities. I also state that the focus on value creation is perfectly consistent with the idea that business is a spiritual journey.
Value is a function of earnings and earnings relates to profits and profit is a perfect metric of progress on the spirtual journey of business. Why do I say profit is a spiritual metric? First we must define spiritual and while there are many definitions for this term, a common theme among all the defintions is serving something greater than oneself.
When business focuses on serving their market above all else, making the unique contribution that only their organization can make, they are then serving something greater than themselves. When we serve the markets, above all else we are rewarded with revenue.
To serve those markets we must consume energy. Energy comes in the form of raw materials and in the form of people’s efforts, which is by far the greatest portion of energy consumed. When an organization consumes the least amount of energy to produce its goods/services in serving its market it, again, is serving something greater than itself, it is conserving the world’s resources. And this shows up as lower expenses.
Revenue less expenses equals profit.
Said another way profit is the maximization of serving something greater than oneself, serving a market above all else, while conserving world resources.
I cannot think of a more spiritual journey than that. Hence profit is a spiritual metric.