In this political season we’ve been hearing a lot about Donald Trump and his business success, his business skills, his business experience. I often remember that even when I was majoring in business I didn’t really have an appreciation for what “business” really was. Sure – I learned basic accounting, marketing, management philosophies and the like – but the “business world” was murky to me at best. Now that I’ve been out of college for a few years (ahem), I thought I’d share my perspective with young people – whether they’re graduating or not, or whether they have any interest in business or not – on what “business” really is. We all should understand some of the basics.
Business is social
Although business is more complex than ever, we do tend to over-intellectualize an endeavor that hasn’t changed much since the middle ages. Business is the process of people solving one another’s problems and, in so doing, both parties become stronger. In 14th century Venice, the guy who grew tomatoes wanted fish, and the fisherman wanted tomatoes. The exchange system benefited both parties. Eventually money was created so they could store value and invest in a new tomato stand, or more boats and nets for fishing. Although this is too simplistic a picture to totally capture what business is, it’s not a bad image to keep in mind when things get complicated.
Business can be almost anything
The fact that we call a field of study “business” is probably misleading to students. After all, it’s hard to apply the same moniker to the job of managing a hedge fund at Goldman Sachs as well as the operation of a local ice-cream shop. A relative of mine is part of a family-owned meat shop started by his father and now operated by he and his brothers. He is a business owner. I help my employer grow our software company as fast and as smart as possible. I’m in business. The local tire store is a business. A financial planner is in business. A person who resells computer hardware to insurance companies is in business. In fact, there so many variations of businesses in the service and manufacturing industries that it boggles the mind. It’s ok to find it all a little confusing. Nobody understands it all.
What about profit?
It’s been my experience that – particularly in academic and media circles – the word “profit” is used in a way to suggest there is something vaguely unpleasant about it. To be sure, we often hear stories of companies engaging in unethical behavior for profit (Volkswagen), but at its heart, profit (or the expectation of it) is what enables you to be hired by someone else. It’s what enables a company to invest in a new plant or office. It’s what enables the company to innovate and create new solutions to old problems. Also, as it relates to the idea of “non-profits”, they can be humble organizations doing great work, or they can also be the NFL –a hilarious example of a “non-profit”, where Commissioner Roger Goodell was paid $44M in 2012.
Remember these two words
Here is an old adage: “the stock market is driven by fear and greed”. Remember that this is also true in any market. Finally, remember that you will be working in some sort of market. It too will be driven by fear and greed. Fear means you’re cutting back, not making any investments. Greed means you see an opportunity to grow stronger and you’re willing to invest to get there. If you’re joining a company or an industry, spend a bit of time trying to understand if the company is excited about the future (greed) or worried (fear). It will matter to you.
Business vs Brand
In my mind, this is ultimately the confusion around the use of “business” to describe Donald Trump’s career. I would argue (and many others have as well) that Trump started with inherited wealth, was prone to risk-taking, and has primarily focused on creating a brand (“Trump”) which is part of a business – but for most companies, only a part. Outside of certain consumer product behemoths like Coke and P&G, brand development is a small part of the corporate mission. In Trump’s case, he has valued his name as the most valuable part of his wealth. Since it is he himself who decides the value, it’s hard to know what it’s really worth, although it is his brand – not his real estate holdings – has been the source of his political success to date.
So, if you have inherited wealth and a predisposition for risk-taking, bombast, and reality show television, you might want to follow Trump’s example.
But don’t confuse that with “business”. Business is social. Business is about creating new solutions, helping people, and growing stronger, together.
At least, that’s how I see it. You will have to find your own way and arrive at your own conclusions. I wish you every success.