The definition of a business
Lets start with the how and the why. If we know how something is formed and why, perhaps we can more easily answer what it is. Directly focusing on the what might get us blinded by the many parts a business consists off.
How a business comes to be
Suppose there is no electronic telecommunication. We have to send letters or travel in order to communicate. Suddenly someone genius invents the phone. A very handy device. Instead of sending letters people can now connect instantly. In the area of communication phone service is usefull for everybody. A social demand emerges. So another genius starts a business. Why? To provide a livelihood for himself. Out of demand one can make money. It's such a good idea that many people join the business as employees for the same goal. They want bread on the table, and telecom seems a good way to do it. The emergent organization quickly becomes an established one. With a management structure and a product delivery structure it provides the public with what they want and thus its members with a livelihood.
The purpose of a business
Since a business consists of individual people, that gather and work as a collective to provide people outside the organization with a product, we can detect three separate purposes:
Individual purpose: to provide a livelihood.
Collective purpose: the continued existence of the organization.
Social purpose: to provide service X in area Y for customer Z.
I have already taken the liberty of defining these purposes. The definition of the first purpose seems clear. We all need to eat. The second and third do not. To the casual observer the social purpose is also the collective purpose. Businesses exists to provide products, do they not? So let's ask some more questions and see if these early definitions hold up.
Does a business have a collective purpose?
seperate from the social purpose?
seperate from what it produces, from what it does?
Is there even such a thing as a collective when it comes to people working in a business?
is a business more than the sum of its parts?
is there an emergent entity?
or are we just a bunch of individuals doing our thing that happen to gather in the same place?
Entity or individuals
Any organization is an entity apart from the individual blocks that form it. It emerges out of the combination. This is what organization does. There are individual parts that might do one or more things. Lamps provide light. Windows provide protection against weather. Seats provide comfortable storage of people. Wheels provide mechanical transport. If you connect these individual parts, a new entity emergences: the car. A car is not a window based product, a lamp housing, or a wheel extension. None of the individual parts can do what a car can, yet together they are something new, an entity that has its own separate existence.
Goal: existence or product
The goal of an entity in the telecom world seems clear. To provide telecom service. A product. However is this what they are really after? Perhaps they are after the customers money? A livelihood? Maybe the product is just an effect of this desire..
Let's look at nature for guidance. Grass appears as the result of evolution. A cow comes along and starts eating it. What is the purpose of the cow? Does it come there specifically to make sure it doesn't grow to long? Does it come to fertilize? No. The cow comes because it its hungry. It isn't at all concerned with any purpose related to grass. It wants to eat. It wants to live. That is it's purpose. By effect it does provide a service in the world, cutting grass and fertilization via dumping dung. However the cow itself does not have this purpose. The services provided are merely the effect of a hungry cow.
The cow itself of course is also a result of evolution. A being adapted to eat grass. So there is a cause and effect relation to grass and cows. Because there is grass, there is evolutionary room to evolve a being that can exploit this resource. So the nature of a cow is directly related to the nature and existence of the grass. It's a grass processing facility.
The mistake often made is this: to either confuse nature with purpose, or effect with purpose. The purpose that a cow strives for is to survive. Not to process grass. Not to cut grass or dump dung. The nature of a cow is a grass processing facility. By processing grass, it survives. The effect of this effort to survive is cut grass and dung. This happens to have a social function for the environment the cow lives in. It is without intent, but it is still there.
So the goal of a business is not to provide a service. It is to survive. To exist. As a result of this desire, it seeks out grazing lands, processes grass and provides a service to these lands. Via evolution a business is the result of adaptation to the grazing lands that are there.
The stated purposes hold up. Now we know how and why businesses come to exist. We can now proceed to the definition.
What is a business?
Let's break down what a business is with telecom as an example using the metaphor of the cow.
There is land. For a business land consists of people. But not just any people, customers. People that want products in a specific area. In this case the area of telecom. So the land a telecom company can graze on is customers that want telecommunication.
There is grass. The land consisting of customers interested in telecommunication is fertile ground for a specific type of grass. Telecom money. The money people are willing to spend on telecommunication.
There is a cow. In the land consisting of customers interested in telecommunication products, the type of cow that can harvest the telecom money that grows there, is the telecom company. A fruit company can't digest telecom money.
There is dung. The telecom money that grows on the land consisting of customers interested in telecommunication products is cut by the telecom company, processed in it's stomach, and after extracting vital nutrients (salaries), the byproduct is returned to the land. These are the telecom services.
So now we can define a business. The definition becomes as follows:
A business is a money processing entity. The goal is existence. It grazes for a specific type of money that grows on land consisting of a specific type of customer. It's internal structure is defined by the kind of money it is adapted to. The effects of processing are products and a lighter pocket of the customer.
Next chapter: The employee
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