Most great companies are formed to meet the goals and express the values of their founders, which is not always the same as maximizing shareholder wealth. For them, profit is simply a strategic necessity rather than the supreme end point.

This may be a jolting concept, we realize. But we’re certainly not the only management writers who have come to the same conclusion. Peter F. Drucker, in his classic text, Management: Task, Responsibilities, Practices, reached the same conclusion years ago:

Business cannot be defined or explained in terms of profit... The concept of profit maximization is, in fact, meaningless... The first test of any business is not the maximization of profit, but the achievement of sufficient profit to cover the risks of economic activity.

Successful institutions almost always develop strong cultures that reinforce those elements that make the institution great. They reflect the environment from which they emerged. When that environment shifts,it is very hard for the culture to change. In fact, it becomes an enormous impediment to the institution’s ability to adapt.

This is doubly true when a company is the creation of a visionary leader. A company’s initial culture is usually determined by its founder’s mindset—that person’s values, beliefs, preferences, and also idiosyncrasies. It’s been said that every institution is nothing but the extended shadow of one person.

16: Must Companies Maximise Profits?

“Organisations have distinctive cultures and collective intelligences, and it is through these differentiating characteristics that they contribute to our economy and society.

For an economist who taught that profit could be sustained only as a result of competitive advantage, this diversification raised a simple question. And some businessmen on the board, accustomed to a world in which profit is earned only by meeting customer needs, encountered the same difficulty.

PART 6: The Corporation in the 21st Century

24: Combinations and Capabilities

“The modern firm is a community, rather than an office or a factory. It is defined not by its plant and machinery but by its capabilities. The successful business is characterised by the distinctive nature of its collection of capabilities and the match between these capabilities and the needs of its customers – and other stakeholders. The claim that George W. Bush told Tony Blair that ‘the problem with the French is that they don’t have a word for entrepreneur’ is, sadly, apocryphal.