The Corporation: The Pathological Pursuit of Profit and Power

The book referred to above is a very challenging book and really makes you think about the motivation and character of the public corporation.  The key thing apparently is that the owners, shareholders, are not libel or responsible for the activity of the corporation.  The only interest the shareholders have is making a profit.  To serve the shareholders the company management must act to maximize profit as long it is within the law.  Thus the corporation is completely amoral.  Morality is not a motivation for the corporation. 

Even if the management wants to be responsible, they have no right to do something that will reduce the profitability of the corporation.  However if management can make the case that such things will enhance the business and make it more profitable then it a valid pursuit.  Some interesting examples are given.  BP has jumped on the global warming bandwagon many years ago and it has moved them into one of the top oil companies because people feel good about buying gas from a "responsible" corporation.  However they also are pushing to drill in the Alaska delta even though it may do harm to the environment there.  This may the "right" thing not to do but without an economic argument they must do the profitable thing.

The money that every corporation spends on lobbying is designed to talk governments into giving the corporation to act without restraint.  They claim the industry and market forces should control what these people do and do not do.  The great debate on global warming is an example to lobbying at the max.  Who can divine what the real story is.

Advertising is a great example.  I guess you have seen the GM commercials about how they helped the allies in the second world war.  They fail to mention that their subsidiary in German supplied the Germans with much of their war machine.  The argument is that as long as it was not against the rules management must optimize profit for the shareholders.  Even if management does not want to do it as individuals.

I think this is a must read for politicians, board members, and senior management.    We must be very leery of the arguments for deregulation and letting market forces control the corporation.

I found the whole book both scary and enlightening.  We will be discussing this book at our Senge Circle this week and I am looking forward to the discussion.  More later.

  1. michael Reply
  2. michael Reply

    For the last 8 years, I have maintained an informal network of consultants. Some MBA’s, some PMPs, a Six Sigma Black Belt, and several expatriates (including myself formerly). We talk through client situations and the myriad business challenges we have encountered for hours on end always aiming to improve our understanding of business and life. I have taken to referring to it as the single most valuable component of my ‘professional development’.
    Your Senge circle sounds like a more reliable way to enjoy similar benefits. With some 15 years of that, I have even more insight into why I snagged your RSS feed when I first came across an excellent coffee cast you did last year.
    Here’s an example of the pathological pursuit of profit from plucked from this week’s news.

  3. Jim Reply

    In the early 90’s some of us read the Fifth Discipline by Peter Senge and thought it was an important book but needed help in understanding the concepts. We decided to have a discussion group to talk about the book. We went through the book and really got a lot out of the book. We then moved on to other books and have been meeting more or less monthly ever since. Membership has changed over the years but two of us are originals. I will do a post soon with a list of, at least, some of the books we have discussed.
    I must look at the video before Friday.

  4. michael Reply

    “The money that every corporation spends on lobbying is designed to talk governments into giving the corporation to act without restraint.”
    The book covers the even more outragious practice of externalizing the cost of that lack of restraint to the public and the government (which goes beyond lack of regulation to a more insidious interdependency). As with war in the Middle East paid for by the US government while corporations pour in and notch unprecedented profits (Exxon has not been alone).
    You are probably aware, but there is an excellent 3 hour documentary film version of the book that is first rate (albeit somewhat chilling like the book). You can download it here
    Donations are requested.
    I saw the film a few years ago before getting the book. Great to see your post and remember how much it impacted me. Rock on at Senge Circle (what is a Senge Circle?).

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