Make Love, Not Money

Some folks in business are pursuing a strategy that is not taught in business school: The best way to maximize profit is to stop thinking about maximizing profit and, instead, to focus on treating people right. That is to say, the best way to make money is to focus on loving people.Joel Spolsky of Fogbugz fame says it so: “Best Working Conditions -> Best Programmers -> Best Software -> Profit!” [1]

Tony Hsieh of Zappos puts it this way: “Culture is our number one priority…Our whole belief is that if we get the culture right then a whole bunch of other stuff like building a brand…will happen naturally on its own.”[2]

I want to distinguish this view from two similar perspectives: The first is ’60s style hippie collectivism which holds that capitalism is evil because it is inherently coercive and manipulative, that labor and capital should benefit all members of an organization, and that, really, money is a nuisance and what matters is love. The Make Love, Not Money perspective in contrast, says nothing about whether money is a nuisance or how capital should be organized. This is not to say that it is inconsistent with the hippie view.

The second perspective is the standard Scrum mantra: “The goal of a team is to maximize business value by delivering working software.”[3] Under the Make Love, Not Money view this might be re-written to read: “The goal of a team is to optimize its work environment and, as a beneficial side effect, it will radically increase the business value it delivers.” The fact that optimizing the work environment has often led to significant increases in financial success is an empirical finding. It’s consistent with common sense but doesn’t by necessity follow from the “optimize the work environment” premise.

A good question to ask is: Why don’t profit maximizers do this? The typical middle manager, when asked to increase profit, responds by laying off workers or skimping on office furniture-not by creating a great work environment. I do not know why. I suspect, though, that it has to do with human cognitive limitations. It’s hard for us to understand the nth order effects of our actions. Buying cheap office chairs is a simple thing to do-the other, more complicated.

If he adopted it, a profit maximizer might view the Make Love, Not Money perspective as a useful cognitive crutch which helps him make better decisions, just as coaching a chess novice to develop his pieces (instead of telling him to mate the opposing king) is a useful cognitive crutch.

Bottom line: focus on creating extraordinary work environments and get extraordinary profits for free.

[1] See http://www.fogcreek.com/About.html for an eloquent description of the Fogbugz philosophy.
[2] http://blip.tv/file/1696310
[3] See, for example, http://codebetter.com/blogs/darrell.norton/articles/50339.aspx: “Scrum is a process for the empirical control of software development. It enables teams to deliver working software in an iterative manner in order to maximize business value.”

Comments

  1. says

    This is a very thought-provoking post. Thank you for it. It speaks to “what are we optimizing on” as we make decisions and behave. Thank you for the reference links.

Leave a Reply

Your email address will not be published. Required fields are marked *