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The nature of profit

I’m worried that in all of this discussion about the “Big Bailout”, the concept and the merits of “profit” get lost.

The problem right now, as I see it, is that we have forgotten what profit means… Profit is not extortion, it is not injust, it is not unfair, it is not evil.

Profit, as I define it, is the value that I add to an exchange, a value that expresses the positive impact that this exchange represents for the client.

In calculus, a branch of mathematics that is the language of physics, each number has a “real” and “imaginary” term. The real term is what we can touch and count, and the imaginary term represents potential. As numbers are manipulated and combined through the equations of physics, the imaginary terms join to become real, and sometime real terms become imaginary. Electricity, magnetism, gravity, quantum mechanics, all these are physical phenomena that can be represented through the calculus of real and imaginary numbers. (for a deeper explanation, see here)

I believe that business is a similar transformational process. As I input or invest the real resources of time, money and effort into my business, I also invest the imaginary, intangible resources of passion, mission, intention, values and trust.

Profit, the value that I add to the exchange, is also represented by “real”, tangible, and “imaginary”-intangible terms. The real terms are representable in accounting language: return on investment, increased cash flow, savings and so on. But these real results have to also be balanced through the intangible benefits: how has this transaction helped my client fulfill their potential just a little bit better? To improve the quality of their life? To advance community, nation, humanity, the environment, the planet?

Any business transaction has to generate a value added that is win-win, in the short term as in the long, in the tangible as in the intangible, in the local as in the planet, to you as to me.

When I sacrifice the intangible profit of doing good over the long term just to temporarily increase my tangible dollar results in the short term, the core reason for being of the business starts to rot, and you get the empty shells of the major institutions and corporations that you see today.

Business is about creating a bridge of trust between two people in order to exchange resources of value in order to mutually improve each other’s lives. Business is personal, it is is a sacred responsibility. Focus on creating tangible and intangible value that expresses who you truly are, and you will build something that will make a lasting impact on the world.

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