3 Immutable Laws of Business
Second, individuals will look to maximize their utility, and if you find a few who value the same thing, you might have a market. As economists tell us, utility isn’t just happiness but rather our preferences and the things we care about — our self-interest. I might like to eat pizza every night, but it doesn’t maximize my utility. I’d die happy, perhaps, but too quickly!
A firm’s employees care about many things other than compensation to maximize their utility. On the other side of the equation, customers also want utility, and that certainly doesn’t just mean a cheap price. If I could afford a Bentley, I might buy one for several other reasons than just transportation. The question, “What’s in it for them?” is one that all business executives need to ask about their employees and customers. This hasn’t changed and won’t change.
Last, firms will try to make as much money as possible. This is good, but I’ll stop short of saying greed is good. This is why we need regulation, though hopefully not enough to destroy our ability to compete globally. A profit motive causes new products to be created. It makes prices drop. It creates many jobs globally — and destroys some in the process, but to the long-term benefit of the global community.
At its core, business hasn’t changed. My premise is that you can understand business and predict behavior with these three rules. Ignore them at your peril.
I hope that you had a tremendous year in 2013! I have had the pleasure of working with great clients this year to help them grow their businesses and leadership skills and increase organizational effectivness. If you know of someone that I can help in 2014, please drop me a line.
Todd Ordal helps senior executives lead better, profit more or sleep soundly…without narcotics! I can be reached at 303-527-0417 or firstname.lastname@example.org. Follow me now on Twitter at http://twitter.com/toddordal