Profit alone is a stupid goal

Instead do the right thing and be happy doing it

by Marcus Baur (Entrepreneur and double olympian)

"You can fool all the people some of the time, and some of the people all the time, but you cannot fool
all the people all the time." Abraham Lincoln

Winning competitions and maximizing returns (profit) are the most common goals we find in sports, business or politics. In this article I argue that despite their popularity, they are also amongst the worst goals we can have. In fact, they should not be regarded as goals at all. Winning a competition, making a big profit or winning an election are more like rewards. Maybe deserved, maybe undeserved. It is a cognitive trap to confuse these rewards for doing the right thing, with ... well: doing the right thing.

I fact, winning and making a profit CAN BE a reward for doing the right thing, but sometimes it can be the opposite. People win rewards for doing the wrong thing rather often. It just depends on how lucky they get or how many people are fooled. But fooling people only works short term and every lucky streak must end. Long term, no one is rewarded for doing the wrong thing all of the time.

The recent financial crisis and the BP oil spill are two examples of the life-threatening consequences of a short-term focus on profit to the exclusion of all else. Some people were doing some very wrong things and they got away with it for quite a while. I found the exact same sort of blindness in sport, that little laboratory of life: many people want so desperately to win that their performance disintegrates. So before we get to business and how it can go wrong, I want to talk about sport and how people mess up there.

Do the right thing in sports

I competed as a sailor in two Olympic Games, coming 5th and 9th in the 49er skiff class. The most valuable lesson I took away from Olympic level sailing is that Gold can be blinding. Winning is the result of doing something exceptionally well in the moment. This present-focused state is extremely joyful. Time has no meaning in this state. It is pure experiential happiness. In psychology it's called Flow. This is not a blissed-out state of peaceful meditation though: it can include speed, intensity and controlled aggression. It's all about doing the right thing. At its best, the athlete's mind is completely void of thoughts about the past or the future. In this state the benefits of winning and the fear of losing simply do not exist.

As soon as an athlete focuses on the potential reward that his performance can bring (that Gold Medal!), he or she starts underperforming (I know because I have been there too many times). The hope of winning comes with the fear of losing – they are two sides of the same coin. Thinking about the outcome inevitably creates fear; and when fear sets in, movements and thoughts become lame and robotic, so the performance degrades. This causes more panic, even worse performance and desperate decision-making. Thus begins the horrific downward spiral of the blown brain.

So whoever manages to stay in the zone of the present moment will perform at his or her best (I also know because I have been there a few times). Anyone interested in the mastery of something strives for this state when practicing - consciously or unconsciously. But when competition time comes, with its tantalizing rewards, the majority are distracted. So the challenge is to lose this distraction. Setting the right goal can make a big difference.

The relaxed, focused state of Flow, when everything works perfectly in slow-motion is so joyful that achieving it is a goal in itself? Why not drop the goal of 'winning' altogether – it's a mere distraction from the real goal of achieving Flow and a master performance. Let the rewards roll in by themselves. The goal of anyone striving for mastery should be to perform at his or her best in the moment - because that's all that really matters.

So in other words, the real goal in sports is doing the right thing and being happy doing it. It should be the same in business and politics.

Do the right thing in Business and Politics

My call to "do the right thing and being happy doing it" is even more relevant in business and politics than in sports. In sports, not much is left when the game is over. The fans pack up, the footage is archived, nothing but the memory remains. But in business and politics, the results of a good or a bad performance can be felt for decades to come. Focusing too much on profit is the biggest distraction from doing the right thing.

So how do we find the right thing? How do we find the right goals? Goal setting is one of the most fundamental skills in life, yet one of the most difficult to master. Why? Because at its root, it's about finding out what makes us happy. But happiness does not come by mail order. We obviously did not evolve to be very good at being happy.

The good news is, we understand more about happiness all the time. Watch this great 20 min talk by Nobel Prize winner and inventor of Behavioral Economics Daniel Kahneman to learn about the state of happiness research:

Kahneman explains how a lot of the confusion about happiness comes from not telling the two essential modes of happiness apart: the state of being happy (experiential happiness) and the act of thinking about one's own happiness (reflective happiness). It's the confusion between experience and memory.

Goal setting for happiness is about finding goals that strike a wise balance between these two realms. Great goals make us happy in the moments that we work towards them; but they also make us happy when we remember how we acted and see what we created or when we imagine what we will create in the future.

To find the right goals we may need some insight from happiness research. It can help us to recognize why we sometimes choose the wrong goals: perhaps we mix up different time perspectives; or maybe we are confused about the different notions of "happiness".

At the end of his talk Kahneman mentions a striking finding of a recent worldwide Gallup poll that sheds some light on what makes us happy and what doesn't. Below an annual income of 60,000 USD, money correlates with happiness (or rather, lack of money correlates with misery). Above this level however, earning more money has absolutely NO EFFECT on people's experience of happiness in the moment! So money matters, but in a very different way than we usually think it does.

The contemporary obsession with growing profits is a partial hallucination. From a certain point onwards, having more money does not make a difference to us. It only works for the reflective self but not the experiencing self. For example: most people gambling on the stock market have an income above 60.000 USD a year. The stock market is a great place to make long term investments in the right people and ideas. But not a place to shop for instant happiness. There is nothing to win really. People might think they are gambling for happiness, but there is nothing to gain in terms of experiential happiness. Any windfall above 60.000 USD results in no experiential happiness gain (according to the Gallup organization and Daniel Kahneman), but losing can cost the pension. Its a bad bet.

Of course, this is only true for experiential happiness. Money and status does make a difference for the reflective self, the mode of thinking we are in when we consider how happy we are. But so does anything else that triggers pride, gratitude or a sense of security in us. It's time to change our focus.*

This is especially important since the business world has become so obsessed with profitability that it often passes a point where it entirely forgets about doing something useful. That's the point where a business is heading for bankruptcy. Maybe it takes decades for it to fail, maybe it takes years or just a few weeks: sooner or later a business will come along that serves customer needs better and has happier, more creative minds working for it. Then the old profit-chasing business is finished.

A business that stops striving for happiness has the clock ticking against it - sooner or later it will be obsolete. So aiming for happiness and doing something useful should be at the core of any business.

Goal setting for happiness is obviously not relevant to individuals only. It is just as important for businesses. Not a big surprise if you consider that a healthy business is not defined by its pretty logo but by its individual members striving to be happy and doing their best to serve others who also want to be happy.

Change is inevitable, but it should be motivated by goals that increase the usefulness of the organization whilst staying profitable. If change is focused on profitability only, usefulness can get seriously compromised causing a cancer that slowly kills the business.

Just as form follows function, profit should follow usefulness and happiness.

Here are two recent example of how focusing on profit alone lead people astray: the global financial crisis and the BP oil spill.

Do the wrong thing and be miserable doing it

Lending money (for which you need hold only 10% in reserve!) and drilling holes in the ground until you hit liquid gold are two of the best business models of our time. While I do not want to discuss the degree of wrongness of these models here, what I find puzzling about them is how huge corporations with ridiculous advantages and some very intelligent decision-makers can mess up so badly.

A nonsensical thirst for profits drove the financial industry into disaster. Lending money to people who could never repay it, then selling the risk in a bundle of securities is not a useful thing to do - and if at all, only to a very small number of people (and then only short-term). It may have raised profitability for some time, but, like any other bubble, it was certain to burst. And it did so in a spectacularly disastrous manner.

Instead of only considering short term profitability, banks should have asked: "Why can people not repay their loans? How can we create an environment where repayment is possible? How can we serve and be useful to society?" I am not naive - I know they are light years away from this sort of thinking. But some head honchos had to pay dearly for their greed: bankrupting their corporations, losing their jobs and their reputations... Even the most hard-headed of them must also suffer terrible guilt for destroying the lives of many "ordinary people" (both the hundreds of thousands of original debtors and the millions more who have lost their jobs as a result of the downturn).

The financial crisis was no accident - just like the biggest oilspill in history.

Since the BP oilspill in the gulf of Mexico in April 2010, the US House Energy and Commerce Committee is investigating the incident. In a statement made in June it noted that in a number of cases leading up to the explosion, BP appeared to have chosen riskier procedures to save time or money, sometimes against the advice of its staff or contractors.

When BP saved a few thousand dollars on security equipment, and when politicians bowed down to lobbyists to deregulate security measures, they did not ask: "Is this a useful thing to do?"; they just asked: "Does this make us more profitable or influential?".

Well the clock was ticking for them; and now the tables have turned against BP and those governments. The oil spill has halved the BP share price (equating to losses of 60 billion USD). And they have not even paid the bill yet. No company with such an unbeatable business model, guided by the usefulness of its actions and the happiness those actions create could ever make such stupid decisions, if it were not focused solely on profitability (probably amplified by a greed disorder).

Put Happiness in the center

How much more rewarding is a sensible goal setting approach that puts human happiness at the center of attention. On top of the positive results that are produced by such a approach, there is another strong reason why usefulness and happiness should be central to any goal setting process: they increase human motivation.

We are in fact in the middle of a motivational crisis. According to another Gallup poll from 2009, less than 20% of the workforce are highly motivated. In a recent talk, Sir Ken Robinson portrayed two types of people: those who love what they do and those who don't. Its no surprise that the lovers are a minority. To solve this motivational crisis we have to convert people who work just to get paid into people who love what they do.

The cause of this motivational crisis has a lot to do with the isolated focus on profit. It leads people to do wrong and even nonsensical things. Motivation is only possible where people have set or adopted goals for themselves that mean something to them.

So in sports, business, politics and in our personal lives we should start a dialogue to find these goals.

Do the right thing with Goalscape

One of the biggest challenges in our lives is to strike a good balance between the "now" (immediate gratification) and the "later" (deferred gratification). Goalscape helps us to strike a delicate balance between these different time perspectives and do the right thing at the right time.

With Goalscape, your goals are right in the center of all your concerns in every area of your life: they are always in view so you think about them frequently and keep checking them. Are your goals worthwhile and useful? Do they represent a good balance between what you want to achieve long term and how you want to live right now? Do they trigger your passion and at the same time improve your life? If you are working in a team does everybody share the same goals and find them equally inspiring?

Once you have found these highly motivating goals, you can easily break them down into achievable parts, visualize relative priorities dynamically, track your progress along the way and reach your goals more easily.

We believe the best goals in the world deserve the best goal setting software in the world: that's why we created Goalscape.

And yes - we also want to make a profit, but mostly to help us do what we do better:

To design a tool that puts the reason WHY we do what we do in the center - making it visible, discussable and above all improvable - so that we learn to do more of the right things - whatever they may be.

*If you are looking for more insight into the state of happiness research, read the latest works by Philip Zimbardo, Daniel Kahneman, Martin Seligman, Daniel Gilbert and Steven Pinker; or or watch their other TED talks.