Purpose Of Business: Solve Problems

There have been many thought leaders, economists and management gurus who have shed light on the question, "what is the purpose of business?". Adam Smith, an 18th century philosopher, and Milton Friedman, a 20th century economist, suggested on the lines of profit maximisation. According to Peter Drucker, arguably the most revered management thinkers of 20th century, purpose of business is to create customers. More recently, Michael Porter (no introduction required) built a case that business should create shared value by connecting business' success to social progress.

Reading the various views on purpose of business (more than the ones mentioned above), as an employee and then as an entrepreneur, I have often wondered how such profound statements impact my business, and more importantly impact what I do. I had to simplify the answer to the question - "what is the purpose of business?" (and as an extension, what is the purpose of me working in any business?).

At the start of my career, I was responsible for selling newspapers through independent vendors and a field-sales team. It didn't take long for me to realise my job was smoothest when I could solve problems faced by these independent vendors and my sales team. The more unsolved problems between these two groups, the more difficult it was for me to perform my task (which was limited to increasing sales of my organisation's products).

As an entrepreneur, I had a similar realisation - and I would say in a more wholistic sense. Dealing with designers, photographers, web developers, manufacturers, agents and finally the customers - there were variety of problems to deal with. The more unsolved problems among this group, the less successful I was at solving my problem of growing and improving my business.

After years of professional experience and continuous reflection on my actions (and outcomes of my actions) - I have come to believe that purpose of business is simply to solve problems. And as an extension, role of any business executive is to solve problems.

Interestingly, this rather simplistic view towards purpose of business seems to fit with some of the views stated in first paragraph. If I as a business owner decide that the problem I want to solve is my own income, then I will work towards business' profit maximisation. I may quickly realise that more customers I have, the higher my profit - thus I may decide to solve the problem of getting (creating) more customers. However, if at a later stage of my business I realise social set-up has changed and that there is a new problem on the horizon - longevity of my business (continued support of customers, through changing values and needs), I may solve this new problem by creating shared value.

In their HBR article - Reinventing Your Business Model, authors Mark W. Johnson, Clayton M. Christensen, and Henning Kagermann introduced the concept of "job to be done" under Customer Value Proposition (CVP). Essentially, asking business executives to define the customer problem that their product / service is trying to solve.

I think the aspect of problem solving should be extended beyond CVP, to the whole business spectrum.

Irrespective of line of business, each business is trying to solve problems. A school solves illiteracy issues, a hospital solves medical issues, a restaurant solves hunger issues (hunger for food / experience), a builder solves roof over the head issue, an author solves ignorance amongst readers, and a management consultant solves problems that other businesses find difficult to solve for themselves.

Keeping this in mind, it is important for new businesses to know exactly which problems are they going to try and solve. If there is no problem to solve to begin with - well, don't launch the business. If the current solution isn't solving the problem, change / innovate. Problem solving ability is a good measure to know relevance of a suggested business, especially for first time entrepreneurs.

Problem solving is a call to action - giving sense of value to each member of the organisation, irrespective of role, function, hierarchy. When problem to be solved is defined, performance measurement will be against the defined (and stated problems)...not against a subjective measure that may have been in use out of legacy. Problem solving attitude can help give appropriate direction to effort of action and effort of thought separately.

Needless to say - by focussing on problem solving, business executives will need to sharpen their skill of defining the problem. When the problems are correctly defined, solutions will not only lead to desired business results, but also possible innovations (in both, products & processes). However, when the problems are incorrectly defined then results will be far from desired and this scenario may become fatal for the business.