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Good business, bad business


Good business, bad business

Marco Moreira

As the world gets more complex, we are starting to run out of easy answers for questions that were previously straightforward. Take the difference between businesses and charities, for example. Roughly speaking, it used to be that business made money and charities gave it away. Business focused on maximizing "shareholder value" and the mishaps along the way could be called "externalities", while charities fixed the externalities. But the world got more complex and now we have some odd situations complicating what was once a simple question to answer.

Let's take the world's latest startup darling, Uber, for instance. Uber is (hopefully) becoming a profitable business for its shareholders through the disruption of the taxi industry. Uber makes it so that fewer of us have to 1) own a car 2) drive it alone in congested roads and 3) leave it parked for the vast majority of its useful life while it rots away. 

On the other hand, Uber is accelerating the hollowing out of the middle class by replacing otherwise stable taxi driver jobs carrying good benefits with part time contractors who are on their own. It is still a private company, making the already-wealthy venture capitalists and, to a much lesser extent, its employees, much richer than the general public, therefore increasing income inequality.

So, is Uber "just" a business or is it accomplishing a bigger social mission of sustainable transportation where many charities have failed to do so? Should the charities that have failed to achieve the results that Uber achieved be shut down? When asking the question "how much better is the world because of (insert organization here)?", does the distinction between business and charity even matter anymore? 

In an increasingly complex world, it's no longer useful to predetermine an organization's motives by the way it's incorporated. There are a great deal of charities that actually do more harm than good just as there are many businesses that are sustainably improving life for everyone.

We need another way to measure organizations regardless of how they're structured. What would those metrics look like? How do we make the numbers visible to end consumers without being hijacked by marketing?