On October 12, 2017, Viewpoint’s Founder, Mac Van Wielingen, received the The Fraser Institute Founders' Award, in recognition of its Founders T. Patrick Boyle and Michael A. Walker. This annual award is the Institute's highest honour, and recognizes Canadian leaders who have made exceptional entrepreneurial and philanthropic achievements.
The following is an excerpt from Mr. Van Wielingen’s acceptance speech, which challenged Calgary’s business community to think beyond an over-arching simplification about the purpose of business in society. Click here to view the full speech.
The performance challenge can be framed in the context of understanding the purpose of business, any business and all businesses.
As I said, the over-arching simplification which has become institutionalized, that needs to be challenged, is that the sole purpose of business is to maximize profit. This is like a sacred principle within capitalism. It is an essential truth. I want to say that very clearly, but it is “not the whole story”, and unfortunately as I said, it is seriously misguiding. It does not describe the actual reality of decision making from the perspective of being within a business and building a business.
There is no single variable, there is no objective function as economists like to say that can be maximized, and which represents the purpose of a business. It would be nice if this was true, as business would be much easier, and perhaps there would be much less failure.
We are not maximizing one variable, we are combining, making choices, trading off and optimizing among four variables: profit, risk, time, and human experience.
Profit-seeking always occurs in the context of uncertainty and risk, it always occurs over a timeframe, and always involves human experience.
These are realities. Profit is imperative. Without it a business will not survive, but as a single end point in itself, and as a single principle to guide business decision making, it is insufficient.
There is a certain point where I will say no to potential profit if it involves too much risk; I will say no to a short-term gain if it involves compromising our long-term future; and I will say no to profit if it undermines human safety, ethics, or the respect and dignity of others. We are not simply maximizing profit. The whole picture is more complex.
It is relevant that these variables of risk, long-term sustainability, (including environmental sustainability), and social value are hot issues among corporate directors and researchers of strategy and governance.
The answer is that these fundamentals represent essential desired outcomes that must be explicitly integrated into purpose right beside profit, and then strategy is constructed to serve purpose, to serve and satisfy these four essential desired outcomes, these four imperatives of purpose. In this sense, we are not profit driven. We are purpose driven.