What IS a Business Enterprise?

Last night I attended Caryl Churchill’s play, A Number, at ACT in San Francisco. I found it valuable, challenging, sometimes funny, pithy, and short. A father confronts, one by one, several sons, all but one of them clones. So, they are the same, and different. The father attempts to figure out what mess he created by allowing the cloning, in his incautious desire to have more of “his son.” The sons are working out emotions ranging from a desperate ambition to discover “who they are,” to curiosity and enjoyment of the situation life is presenting.

The play left me with a mixture of deep amusement and concern over the degree to which we 21st Century Westerners live with lousy interpretations about who we are as human beings. In the play, father and son struggle with the question “…but then who am I?” The play shows their anguish, and hints at certain deep ridiculousness in the question asked in the context of our modern world.

Personally I have concluded that most mischief in our personal and interpersonal lives – making sense of our selves and those we live with – is rooted first in impoverished interpretations about what human beings are. (In my own work I find myself thinking mostly from Nietzsche, Heidegger, and Hebrew texts – strange bedfellows.)

Coming around now to the questions of this blog, I have an exactly parallel conclusion that I will share here: most of the mischief in our working lives comes from impoverished and archaic interpretations about what commerce and businesses are. The following is a little long – more an essay than a blog entry – but for now I can’t figure out how otherwise to publish it for now.

To re-orient our interpretation of the situation and to prepare ourselves to develop new possibilities for action, I make three claims:

  1. Enterprises are historical communities that we build to take care of things that matter to people. These historical communities exist within larger historical communities called industries, states, countries, cultures, religions and the like.
  2. An enterprise is constructed as a network of commitments. In operation, effective performance of the enterprise is exactly the same as effective performance of the network of commitments comprising it.
  3. An enterprise accumulates different kinds of capital – financial (money), pragmatic (know-how), and symbolic (identity) when it recurrently satisfies customers and investors through the coordination of processes in which the fulfillment of commitments adds value for the participants in the enterprise.

In the first claim I declare the setting in which we will interpret enterprises and how they are managed and led. For me, enterprises will never again be mere collections of people, things, and data that exist to produce products and services at a profit, or to provide employment and return to investors. These old kinds of interpretations produce a great deal of mischief.

I also say that enterprises are historical. They don’t spring up out of nothing. Every enterprise exists because a larger community of people is dealing with matters that they care about – concerns. Those concerns create opportunities for people to invent alternative and improved ways to satisfy those concerns. This is where innovation emerges in marketplaces of customers. If this were not the case, the fundamental exchanges of a profit-making enterprise would not be possible. A company needs enough people receptive to some kind of standard offer to build a business around that offer, out of the prospect of future cash flow from those customers that will attract investors. I also call these communities historical because they never stand still; they are constantly evolving, re-interpreting and reconfiguring themselves. The computer industry is a perfect example of this constant interplay. Advances in technology change our lives, creating new problems and opportunities that drive further generations of innovation. Companies that show competitive leadership are always looking toward this larger context, listening for how the concerns of various communities are changing, and how people are evolving new technologies and offers to address those concerns.

Competitive enterprises avoid becoming self-satisfied, and are always breaking “out of the box” of their own local interpretation of the world. They reconfigure themselves and develop new capabilities quickly as their strategic view of the industry and the larger world around them shifts.

This is the “chemistry” that makes up a business, and makes it tick: commitments made by people in conversations, as they speak and listen to each other. I’ll talk more about that here shortly. Once firmly grasped, we can no longer be satisfied with interpretations of businesses that are comprised of list of plants, equipment, products and people, that are absorbed with tasks, activities, and objectives, or that show businesses in popular phrases which, when stripped to their foundations turn out to be metaphysics, magic, and psychology.

The power in enterprises resides in capital, not money. Those who seek the power of an enterprise in ledgers and journals listing amounts of money need to turn their attention in new directions: to the pragmatic capacity of people to organize networks of competent people; to networks of commitments and equipment that have the capacity to produce satisfaction for customers; to the power of reputations and identity that human beings create as stories about a different future that we will bring a new future to all of us; and finally to the financial capital that is still more than the “money in the bank.”

Inventing anything in the midst of traditional financial practices is not easy. The field is well endowed with the experience of more than 500 years of practice, and not open to be altered easily by new proposals of any kind. On the other hand, we are convinced that to manage enterprises beset by changes new “accounting” and “capital management” practices can now be invented, grown and nurtured, and that these new practices will in turn form the foundation for a new kind of “financial management” in an enterprise. This is a topic for another moment.

© Copyright 2006, Chauncey Bell and BABDI, LLC. All rights reserved worldwide.

2 thoughts on “What IS a Business Enterprise?

  1. Nicolas

    It’s nice that you’ve put your thoughts together in a way that’s so accessible–at least physically accessible, if not in terms of language 🙂

    Questions I’m left with after the “essay” section on enterprises:

    First, how do you see business enterprises that have historically done much harm to people and the environment as fitting into your claims about enterprises? For example, sugar and cotton production on the backs of African slaves in the New World, or the fossil fuel industry and its accompanying environmental degredation and military interventions in the Mid-East, or Walmart-style corporations and the extinction of small businesses, or sweatshop commodity production? Are these enterprises just incredibly misguided?

    and Second, what do you think about advertising’s production of desire among consumers? i.e., to what extent are companies manipulating the concerns they’re purporting to fulfill through innovation?

    I, as a member of a particular generation that’s probably not all that different from the youth of the 1960s, feel that many businesses in the U.S. spend much time/energy to feed the middle class’s hunger for stimulation, while people’s souls are starving for something more. So I’m skeptical at claims of the wonder of technological innovation. These innovations seem to me to be very inadequate band-aids to try to deal with the underlying fact of the West’s spiritual impoverishment and the degregadation of non-Western middle class populations–problems which I think are at the root of the drive to produce, advance, and consume.

    What do you think?

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