WHAT IS A BUSINESS?
Business created and managed by people, not by forces--The fallacy of "profit maximization"--Profit the objective condition of economic activity, not its rationale--The purpose of a business: to create a customer--The two entrepreneurial functions: marketing and innovation--Marketing not a specialized activity--The General Electric solution--The enterprise as the organ of economic growth--The productive utilization of all wealth-producing resources--What is productive labor?--Time, product mix, process mix and organization structure as factors in productivity--The function of profit--How much profit is required?--Business management a rational activity.
THE first conclusion to be drawn from the Sears story is that a business enterprise is created and managed by people. It is not managed by "forces." Economic forces set limits to what management can do. They create opportunities for management's action. But they, by themselves, do not determine what a business is or what it does. Nothing could be sillier than the oft-repeated assertion that "management only adapts the business to the forces of the market." Management not only finds these "forces"; management creates them by its own action. Just as it took a Julius Rosenwald fifty years ago to make Sears into a business enterprise, and a General Wood twenty-five years ago to change its basic nature and thus insure its growth and success during the depression and World War II, it will take somebody--and probably quite a few people-- to make the decisions that will determine whether Sears is going to continue to prosper or will decline, whether it will survive or will eventually perish. And that is true of every business.