by RUSS ROBERTS
People are making fun of this piece by Greg
Smith where he talks about his
disillusionment with the culture at Goldman Sachs. Smith claims the only focus
at GS is making money and people openly disdain the customer. He’s being mocked
for thinking it could possibly be otherwise.
But I was reminded of this 1950 quote from George Merck who was president
of the pharmaceutical company:
"We try never to forget that medicine is for the people. It is not for the profits. The profits follow, and if we have remembered that, they have never failed to appear."
If you focus on making money, you end up making a lot of bad decisions.
Paradoxically, if your goal is to make money, it’s better to think about making
a great product, making the customer happy and so on with the constraints of
making money along the way. The best corporate cultures encourage excellence,
not the bottom line. The bottom line matters of course, but if that’s your
focus your long-run results may be quite poor. No corporation that I know of
has as its motto: make as much money as possible! And I don’t think it’s just
public relations. A great corporation with great profits gets its workers to
focus on the consumer and uses other mechanisms to make sure the employees
don’t bankrupt the company by being too generous with prices or quality.
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