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Purpose and Principle

“In the end, all business operations can be reduced to three words: people, product, and profits."

–Lee Iacocca

Many businesses can be reduced to those three words; however, significant businesses cannot.

Here’s my take: “In the end, all significant businesses are built on two words: Purpose and Principle.”

Purpose is defined by the business Premise, the market behavior the business serves, and Promise, the business behavior serving the Premise.

Premise is the most important element a business needs to survive. In fact, 42% of businesses fail because they have a faulty Premise.* Premise creates the need for product – not the other way around.

Promise is how your business serves the market, which requires people. The marketplace financially rewards your company for meeting its needs, which makes profit possible.

Principle results from companies operating within Sidelines (external boundaries imposed by the government, financial and legal institutions) and Guidelines (self-imposed boundaries like mission statements).

Want to have a significant business?

Determine your Premise. Deliver on your Promise with products and people and stay within the Sidelines and Guidelines. Profit will follow.

* Source: CB Insights The Top 20 Reasons Startups Fail

PhilTakesSM are distributed once a week on LinkedIn, Facebook and philyale.com. Review previous posts and locate additional information on the PhilTakes tab on philyale.com, and invite Phil to speak to your business group or service club.

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