When formulating purposes, it is important to take three things into consideration. First, there are products (merchandise or services) that potential customers are ready to pay for, and there are those for which they are not. For example, what can be more important than preschool education for children? Whether a child will be creative, whether he will want to learn and apply his knowledge, and what his values will be all fully depend upon the way he is treated during his preschool years. Essentially, his future, the future of those around him, and that of all mankind will be determined during this time. You would think providing preschool education would be a priceless service, right? But the truth is, for some strange reason many people believe that anyone can take care of children, and therefore they do not like to pay for it. The idea of paying a thousand dollars a month for a child’s preschool seems crazy to some parents, even when that parent is driving an eighty thousand dollars car! There is nothing rational about it. In five years, that piece of metal will not be worth even half of what it cost, and eventually it will fall apart completely. But try to open a kindergarten where kids are taken care of by caring and highly qualified professionals and charge a reasonable price, and you will see that a purpose like this is difficult to bring to life. By the way, start-ups with uncommon purposes very often fail not because they don’t benefit the consumer, but because their purposes are too complicated for most of their potential customers to understand and recognize their benefits. Tremendous effort is required to convey the benefits to them, which is not an easy job for a small company.

Second, in formulating a purpose, you must consider whether it is possible to make the purpose generate large-scale activity. For example, you have a talented craftsman who can create amazing leather bindings for books. A good book with a leather binding could be a wonderful present for any serious reader. You could sell this product all over the world. But there is the question of whether it is possible to create a whole army of such craftsmen and whether it is possible to teach a number of people to create such bindings with the same degree of skill. Also, is there equipment that would allow you to produce the bindings in sufficient quantity? Hamburgers and fries are not difficult to make, yet Ray Kroc still had to open Hamburger University so that those operating his franchisees could do a quality job. IKEA is another great example. That company’s purpose becomes clear if you read a book about its founder, Ingvar Kamprad, entitled Leading by Design: The Ikea Story. I remember one story from the book in which Ingvar was in one of Ikea’s competitor’s stores and saw a drinking glass that was in high demand at the time. He went to his purchasing manager and asked whether it was possible to get the same glasses for a significantly lower price. The manager collected the necessary information and later replied that it was possible to get it much cheaper, but Ikea would have to sell over a million of such glasses. Ingvar gladly accepted the deal and, as a result, the glass was a best-seller, bringing the company good revenues.

Usually we say that a business’s purpose is successful if it allows the company to expand significantly. Expansion requires energy—that is, money—and you can only get a lot of this energy if you provide customers with high volumes of your product. For this reason, companies that make their expertise available to only a limited number of customers never become large and thriving businesses. For example, I like to educate business owners on the subject of strategy, but I do not know how to teach other consultants to do it with the same success. Because I cannot put this product on a “production line,” I would not start a company with the purpose of providing customers with these particular consulting services.