THE BLOG
09/02/2014 11:01 am ET | Updated Nov 02, 2014

The New Cult of 'Goodness' in Business

"It is not from the benevolence of the butcher, the brewer, or the baker," Adam Smith famously wrote, "that we expect our dinner, but from ... their own interest." If Adam Smith was with us today, he might fairly point to the case of Steve Jobs to support his thesis that moral qualities are irrelevant in business. Jobs had many sterling qualities, but niceness wasn't one of them. Every day, he bullied, insulted, and humiliated his colleagues. His official biographer, Walter Isaacson, deliciously says that Jobs was "to use the technical term, an asshole." Yet who can doubt that Jobs made the world a richer place in many different ways?

What is "goodness" in business?

We could, of course, redefine "goodness" in business to mean "inspired leadership" and "the creation of insanely great or insanely inexpensive products." In those terms, Jobs was not merely good, but outstanding. Just as, in the age of chivalry, Christians redefined moral strength to include muscular military qualities, so we could define goodness in business by the results it brings. "By their fruits shall ye know them."

There is a strong case that individuals and companies thrive, and are most socially responsible, when they use the fewest possible resources to generate the best possible results. This is what the 80/20 principle is all about. And it is the argument that both F A Hayek and Milton Freedman used to argue against the fashionable notion of "social responsibility" in business. Firms, they said, are behaving responsibly when they generate the highest possible profits within the law. Naturally, I have a lot of sympathy for this view.

Yet, it will not really work. Firms are not calculating machines, and neither are the people who work in them. The pursuit of profit is not a noble or inspiring end -- it fails its own test of judging by results. To do great things requires emotion. Companies are best when they pursue an end outside themselves, beyond their own self-interest. This is when human creativity can be engaged and miracles such as the Mac, the iPod, iPad or iPhone can happen. Profit is the result, not the cause.

Once you concede that business is made up of individuals, and that, more and more as time goes on, human creativity is what generates startling advances, then you cannot talk about business as if human moral qualities and emotions are irrelevant. They are absolutely central.

So I think we need a new cult of goodness in business, and we need to define the qualities that we should all be seeking to embody.

Koch's Trinity of New Business Virtues

To get the debate rolling, I would like to propose three business virtues for the age of imagination. They are Art, Economy, and Inspiration.

Great artists advance truth and beauty through imagination. I define art in business as the creation of beautiful products and services that are a joy to use. Art includes everything that we react positively to, excluding hard utility. So brands, packaging, and the means of delivering products and services can embody great art. The core of great art, though, is the products and services themselves. Every beautiful building, every constructive new idea, every innovation, and everything that is a joy to use advances civilization. We are made happy principally through our emotions.

Economy is where 80/20 and the traditional ideas of economists come in. Low prices for useful products are the main expression of economy. Think of the Model T Ford, which made cars and therefore freedom of movement possible for ordinary people. Budget airlines performed the same trick to a higher degree. Canning, refrigeration, and supermarkets made food cheap. The much maligned McDonald's hamburger did it for food on the move. Penguin paperbacks cut the price of a good read by ninety percent, creating a new mass market for books. IKEA has cut the cost of furnishing a room by three quarters. The internet and all its works have dramatically cut the cost of almost everything, from phone calls to information. The pursuit of economy is not a penny-pinching affair, but an act of creativity and benevolence. It is a noble pursuit.

Inspiration is the means to art and economy. Inspiration is evoking enthusiasm in a team of talented people. Call it leadership if you like, but in my book it is narrower and more specific than leadership -- it is holding out the vision of art or economy and getting everyone to work toward and create that. Despite his odd methods, Jobs had this characteristic in spades. Did his insults help? I doubt it. He succeeded despite being a bully, not because of it. The engineers at Apple put up with Job's nastiness because he knew where he was going and the very difficulty of the task was magnetic. Jobs had vision and judgment and impossibly high standards, and those qualities inspired.

Are You Inspired?

Is there a place in business for more conventional definitions of goodness? I believe there is, and its falls under the heading of inspiration. Some people are masochists, but most are not. To get the best people to work for you, or with you, over many years, perhaps over a lifetime, you have to respect them, care for them, give the best that you can, and be aware of your weaknesses and open about them.

In an army, generals are not expected to be considerate. But in today's creative world of work, to attract the best people requires you to be personally attractive and to create an attractive culture. To be sure, it is not enough to be have great personal qualities.

Leadership without a unique vision, and without knowing how to realize it, will not take you far. But vision and practicality are most powerful when you are a joy to work with.

Knowing how to collaborate is one of the most vital skills, in life and in business. If Jobs had been less of an arrogant SOB, he would probably never have been thrown out of Apple in the first place. He would have had another ten years of mind-boggling creativity at the head of the firm. And, as a result, the world today would be an even more amazing place.

So art, economy, and inspiration, these three, make the business world go round. But the greatest of these is inspiration.

Are you inspired? Can you inspire? If so, the universe is at your disposal.

For anyone who is really serious about stopping being a hamster, I am running a 3-day workshop in Chicago from September 28 - 30.
More information on that here: www.richardkoch.net/wp-content/uploads/2014/07/IntroducingRichardKoch.pdf
To book: https://m171.infusionsoft.com/app/orderForms/koch-seminar-app

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