By Andy Kessler | Debt-laden graduates, affluent alumni, birds-of-a-feather faculty and tuition-burdened parents: I’m sorry.
I’m sorry that I won’t be sucking up to you with the same old graduation platitudes. You should have invited Oprah: “How do you know when you’re doing something right? How do you know that? It feels so.” Or Michael Dell: “The key is to listen to your heart and let it carry you in the direction of your dreams.” Or Hillary Clinton: “Give it your all. Dare to be all you can be.”
Those are so vapid as to be meaningless—and you young’uns need real advice. So unscrunchie your man-buns, stop posting anonymous snark on YikYak, and listen up.
If you want to really change the world, get a P&L—as in, a profit and loss statement. Those of you I hear gagging in the humanities section are going to have to unlearn a few things. Harvard recently released a survey showing that over half of Americans ages 18 to 29 do not support capitalism. Ouch. You can almost feel the Bern.
Don’t be fooled. Capitalism is what allowed you to wander around this leafy campus for four years worrying about finals instead of foraging for food. It delivered the Greek yogurt to your cafeteria and assembled your Prius. The basic idea is to postpone consumption. Then invest in production to supply goods and services that delight customers. Next, generate profits. Rinse and repeat.
To succeed in life, to really improve the lot of your fellow man, you have to think about profits. I know, you’d rather clean a gas station restroom with your toothbrush. But profit is what drives change.
When I buy something from you (assuming you’re not a rent-seeking crony capitalist), your profit is how much I am willing to pay over what it costs to produce the item. In a truly competitive world, your profit is the value of my delight in your invention, or I’d simply make the thing myself. To put it in Facebook speak: Your profit is the social value of the transaction. Profits create wealth not only for you but for the collective “me” of society. Getting a P&L shines the light on that delight.
I spoke to a recent graduate who told me, with a straight face no less, that she aimed to be half Sheryl Sandberg’s “Lean In” and half Tim Ferriss’s “4-Hour Workweek.” I told her to get a P&L instead, to try to understand the economics of whatever she chose to do. She leaned out, mumbling “greedy.”
Hollywood movies notwithstanding, capitalism is not about greed. It is a system that weeds out dumb ideas from smart ones. The former generate disdain and losses; the latter generate delight and profits. A P&L will point you to what society desires. No matter if you want to be an entrepreneur, nurse or professor of comparative literature, understand your personal P&L. Why? Because your job is not about you. It’s about customers.
Front-line workers know where all the waste resides. A nurse who understands how much insurance companies pay for a service, versus the actual cost, might be in a position to suggest ways to trim expenses and improve care. A teacher with a P&L might measure the amount of spending on each student and work to maximize learning. Thinking about your work this way helps you figure out how to increase your “profits.” Yet those dividends make the world a better place for all of us, as they can be reinvested elsewhere. That’s capitalism 101.
If nothing else, get a P&L for self-preservation. Technology is like a twister headed toward a trailer park. If you’re not solidly grounded in your job’s economics, it will pick you up and displace you.
But have ambitions: It’s not only guys like Mark Zuckerberg who drive progress—you do, too. Maybe you’ll get promoted, maybe not. But your P&L is your guide to delivering what the customer wants and creating social value, which is more powerful than any charity. Invert your thinking: When you see profits, don’t think “fat cat.” Think about what delight was delivered to earn them. That’s the ultimate social value.
Disclaimer: I’m the greedy one. When you find your P&L, you’ll create the next wave of great stuff. I want that not for your sake, but for mine. The more successful you are, the more delighted I’ll be. Get going.
If you found this blog post of interest, you might want to explore these Free Think University courses:
- Are You an Entrepreneur?
- Do You Have a Life Stewardship Strategy?
- Is Our Idea of Success Making Us Poor?
For this third party post in its full context, please go to:
© 2016. The Wall Street Journal. www.wsj.com