A week ago, we didn’t expect that we’d have to referee between the children of Rupert Murdoch, but, as Peter Drucker said, “assignments change all the time, and unpredictably.”
The story is that Elisabeth Murdoch, daughter of Rupert and chairman of News Corp.’s television production firm Shine, delivered a speech yesterday in which she implicitly took a sibling to task. Speaking at an Edinburgh television festival, Elisabeth warned that “profit without purpose is a recipe for disaster.” She also cited the dangers to capitalism and liberty of an “absence of purpose—or of a moral language—within government, media or business.”
Listeners saw in this a rebuke of Elisabeth’s brother James Murdoch, who in a speech at the same festival three years ago declared that, in a world with government ownership of media on the rise, “the only reliable and perpetual guarantor of independence is profit.”
OK, Murdochs, break it up. First of all, you’re not necessarily disagreeing. And Drucker wouldn’t necessarily have found fault with either of your sentiments.
While Drucker wouldn’t have countenanced News Corp.’s unethical (if not illegal) tactics, he would have agreed with James that, absent profit, private media—indeed any business—cannot survive. This is why Drucker called profit “the cost of staying in business.”
But he would also have agreed with Elisabeth that a business exists to do much more than make a profit—that it must have a purpose. In fact, Drucker went so far as to call the very existence of “such a thing as a profit motive” into question.
“It was invented by the classical economists to explain economic behavior that otherwise made no sense,” Drucker wrote in The Practice of Management. “If we want to know what a business is we have to start with its purpose. And its purpose must lie outside of the business itself.”
Drucker would also have agreed that business must speak a “moral language” in order to play a welcome role in society. This is something he was considering already in the 1940s. “As the representative social institution of our society the corporation in addition to being an economic tool is a political and social body,” Drucker wrote in Concept of the Corporation. “Its social function as a community is as important as its economic function as an efficient producer.”
Besides Elisabeth Murdoch, others have also spoken out of late about the need to find a higher purpose in business, including executives at PepsiCo, Starbucks, Unilever and the folks involved in Conscious Capitalism. Drucker would be pleased.
But does this suggest a real change? Do you think the business world is on the brink of a major shift in how it thinks about profit vs. purpose?