It occurs to me that something I’ve been saying for a long time is probably applicable to the most recent financial meltdown, and it has to do with the widely held sentiment that, no matter what it is that we do, “We are in business to make money.” My blood boils every time I hear this statement uttered as though it were common knowledge and inherently obvious. The problem is that it is not only misguided, it is 180 degrees wrong! We are not in business to make money, we make money to stay in business. A baker makes bread, not money, and if he’s more concerned with money than bread, he’ll likely make pretty lousy bread which no one will buy and he’ll be out of business very soon. Money is not the object of the game; money is the score of the game. And since there seems to be no competent referee in this game, one way of scoring seems to be doctoring the scoreboard. That’s like trying to warm the room by putting your thumb on the thermometer. Eventually, someone will notice that the room is quite cold, thermometer reading notwithstanding. If we have too much faith in the thermometer, we just might stand around wondering why the pipes are frozen and we’re really thirsty in addition to being cold. That would describe the big banks who all needed bailouts last year.

Businesses need to focus on doing what they do, not month-to-month improvements in the bottom line. Accountants need to be scorekeepers, not strategists. And we need more risk-averse investors willing to reward such businesses that take a long-term outlook, who realize that sooner or later, thirsty people with cold fingers and toes are going to stop trusting the thermometer.

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