Fundamental Business Management Objective

In this posting, I will argue that the natural fundamental business management objective (FBMO) is building a happy company and that a happy company is the one that maximizes its aggregate value (financial + functional + emotional) for all of its key stakeholders - owners, clients, employees, partners, suppliers, etc.

Let's start with the most fundamental question in business management: Why does the entrepreneur start a business? To be happy because for him (or her) there can be no happiness in life without owning and running a successful business.

But (contrary to the popular misconceptions) happiness requires more than that. A lot more.

Whether we like it or not, a human being is a social being and, therefore, can only be happy in a ‘happy environment’. Again, there are exceptions (mostly, religious hermits) but I strongly doubt that there are any religious hermits among successful entrepreneurs and business owners.

As the life of an entrepreneur is inseparable from the life of his/her business (in other words, his/her emotional well-being depends heavily on the ‘quality’ of his/her emotional relationship with the business in question), he/she can only be happy owning and running a ‘happy company’. Any degree of ‘unhappiness’ in the company will inevitably ‘poison’ your emotional life and, therefore, prevent the entrepreneur from being happy.

Therefore, to achieve and maintain personal happiness, an entrepreneur simply has to own and run a ‘happy business’ (and therefore, to transform a ‘not-so-happy’ business into a happy one).

In order to achieve this objective, one must come up with the most appropriate definition of a ‘corporate happiness’ and ‘happy company’. This definition must not only be based on common sense, but also allow for the development of (1) a comprehensive and efficient system of plans and activities aimed at achieving and preserving ‘corporate happiness’ in the company and (2) a comprehensive and efficient system of key performance indicators to be used for “measuring corporate happiness”.

Fortunately, such a definition is not that difficult to come up with. An individual can be called truly ‘happy’ when his or her aggregate needs – financial, functional, emotional and spiritual – are completely (or at least adequately) satisfied.

Therefore, a ‘happy company’ is the one that at least adequately (‘acceptably’) satisfies aggregate needs of all of its key stakeholders – owners, clients (customers), suppliers, partners, appropriate government entities, etc.

Naturally, the company that adequately satisfies aggregate needs of its stakeholders is valuable (ideally, highly valuable) to them. In other words, it creates a large amount of aggregate value - financial, functional and emotional – for its stakeholders.

Therefore, a ‘happy company’ is the one that creates the highest possible amount of aggregate value for its stakeholders (both in ‘absolute terms’ and compared to its competitors) or, what is essentially the same thing, maximizes its aggregate value to its stakeholders.

Common sense tells us (if necessary, one can verify the truth of this statement by conducting a thorough study of decision-making patterns) that the stakeholders – explicitly or implicitly – choose the company they are going to deal with based on the abovementioned ‘aggregate value maximization’ criterion.