Email Exchange with an MBA Student
Professor Hunter: Dear A, I see that you linked to one of my posts on my blog, "The Business of America is Business". In that post you wondered about the title. Here's a brief story behind it from Bartleby's New Dictionary of Cultural Literacy:
A statement made by President Calvin Coolidge in the 1920s. Coolidge's words are often mentioned as typical of the overconfidence in the American economy that preceded the Great Depression.
If you google this phrase in quotes you'll find well over 30,000 links. In the US it is a well-known phrase. Thanks again for linking to my site. I'll add yours to my blogroll the next time I update it. I invite you to do the same.
MBA Student: Dear Professor Hunter, Thanks for the mail and the explanation. This is an interesting phrase and frankly provides the wrong impression. I will surely add to my blogroll, which is non-existent now. I will need to update mine.
Professor Hunter: Dear S, good to hear back from you. As you will now notice, I have added your site to my blog roll. I do have one question for you. You mention that the title gives the "wrong impression". I find that an intriguing statement. Given the United States' leadership in business and business education, I didn't think this title would have any negative connotations. I may be mistaken. Perhaps it sounds arrogant? I am not trying to start an argument with you, but rather genuinely curious about how one non-US MBA student viewed the title.
MBA: Thanks for adding my site. ... I appreciate you asking me about my statement on the "quote". There a couple of things here and please bear with me as this is my personal opinion.
I agree with you with the fact that America has been the leading country in the world to do business, for technological and business innovations, for consumerism, for marketing and for the mecca of hi-tech - Silicon Valley. America has proved that "business" is a powerful force. With the creation of the MBA by Wharton and by the subsequent thinkers like Drucker and the following of the MBA program in the last 50-60 yrs in America there is no doubt that MBA is the creation of America and I believe it is an admirable creation as it has been successful in creating many professionals in the business.
Now comes my belief that a business is a force of good. It is a powerful force. In a society of organizations "business" has showed considerable progress in managing it and it is slowly entering the other organizations - not for profits, health care, education etc. However, and here comes the problem, a business focussed America is looking for "mazimizing shareholder's returns" or maximizing profits as the goal. Profits as such are not bad, in fact they are needed. As the proof of Economic sustainability or the reward for risk taken. But, the emphasis on maximization is the problem.
This may not be the same goal for other organizations and this will effect its progress. If I may say, I would not believe this to be the right goal for all business organizations. Considering that we could have hundreds of "cereals" for breakfast in developed countries and nobody could design and market basic necessities for the "poorest" of the consumers in the world - "bottom of the pyramid", shows the effect misplaced emphasis on profits has created. It has taken away a viable medium of providing services to the vast majority of people in the world. These are some of my thoughts. I would like to here form you, and may be continue this discussion.
Professor Hunter: Dear A, in your email you said something very interesting:
"Considering that we could have hundreds of "cereals" for breakfast in developed countries and nobody could design and market basic necessities for the "poorest" of the consumers in the world - "bottom of the pyramid", shows the effect misplaced emphasis on profits has created. It has taken away a viable medium of providing services to the vast majority of people in the world. "
We agree on the basic phenomenon- the developed countries have hundreds of cereals and the poorest barely have the basic necessities of life. Where we differ is on the cause of that problem. As I see it, the problem with poor countries is that they dont have enough people with the "misplaced emphasis on profits" as you put it. This is not just my opinion, there is substantial empirical evidence to support that conclusion.
For example, as you are no doubt aware, the poorest countries in the world are the ones that are least capitalist. You probably know about research by Amarta Sen who studies famine. He has found that no democracy has ever experienced a famine. Now I recognize that democracy and capitalism are not necessarily the same thing, the latter can't exist without the former. The point being that the poorest are poor because their countries do not have in place the necessary institutions to ensure a production, transportation, distribution, and retailing infrastructure that prevents people from starving or being severely deprived.
What you consider the "misplaced emphasis" on profit maximization is not that at all. It is nothing more, or less, than a recognition of the fact that people need incentives to produce, transport, distribute, retail, etc. , they need prospect of making a return on their investment, even a very, very good return, as a potential reward for having undertaken a subtantial risk. Interested to hear your thoughts.