The “Five Deadly Business Sins ” first appeared in The Wall Street Journal in August 1993. In it, Peter Drucker says “There is no excuse for management to indulge in the five deadly business sins.” These sins, according to Drucker are:
- Sin One: Worship of High Profit Margins and Premium Prices. He says, the worship of the high profit margin is thus not only a dangerous fallacy — it is worshiping a false god. According to Drucker, the worship of high profit margins presents an opportunity for competition to take over the market.
- Sin Two: Charging for New Products What the Market Will Bear. Drucker advocated that the new product should be initially priced at what it would have to be sold for within three years as a likely result of new competitive, or substitute, products being sold at lower prices. This initial pricing strategy, he felt, makes it difficult for competitors and substitute products to enter the market.
- Sin Three: Cost – Driven Pricing vs. Price – Driven Costing. “What is the price the average customer is willing to pay for a very basic automobile that came in one color, black?” Many businesses fail to ask this question that Henry Ford the inventor of Model T Ford assembly line asked. His marketing research concluded that $ 500 was the right price, still high in those days, and he therefore instructed his engineers to determine how they could manufacture the auto and make a profit selling it for $ 500. The rest commit the cost-driven pricing sin by totaling costs and then adding a profit to arrive at the price to be charged the customer.
- Sin Four: Killing Tomorrow ’s Opportunities on the Altar of Yesterday. As a result of attempting to preserve yesterday, opportunities for tomorrow are lost. Drucker also argued that often times the best performing people in the organization are assigned to such problems instead of focusing on opportunities.
- Sin Five: Feeding Problems and Starving Opportunities. Drucker commented that better-performing organizations assign their best people to pursuing opportunities for growth. They also have two pages to their management reports, the typical problems and status page, and an Opportunity page. Organization that focuses on problems when periodic objectives are not met and ignore to search for new opportunities and innovate will not survive.
While above points are acknowledged in some circles, and criticized by others. Our attitude is never to ignore ‘sins’, be real, small or by far. In addition, there are other four business sins, that Muslims must be aware of. These are not only taking the business to the grave but the businessperson is going to hell and misfortune however long it may seem to take. These are;
- Engaging in interest / usury based borrowing to finance business growth or lending on interest to generate further income for the business. Ibn Mas’ud reported that the Prophet (ﷺ) said: “There is no one who deals in usury a great deal (to increase his wealth) but he will end up with little (i.e., his wealth will be decreased).”
- Not paying Zakat when it is due. “And let not those who covetously withhold of that which Allaah has bestowed on them of His Bounty (wealth) think that it is good for them (and so they do not pay the obligatory Zakaah). Nay, it will be worse for them; the things which they covetously withheld, shall be tied to their necks like a collar on the Day of Resurrection. And to Allaah belongs the heritage of the heavens and the earth; and Allaah is Well‑Acquainted with all that you do” [Aal ‘Imraan 3:180] Imam Ali r.a said “When people do not pay Zakat the prosperity of their agricultural lands and mines will be lifted from the earth.”
- Evil intention. The Prophet pbuh said, he who goes to work to feed his children or parents or distance from begging, he is on the path of Allah. But he who goes out in order to show off or to boast, he is on the path of devil. Surely, business is for a Muslim like prayer. It has its own rules, conditions and code of conduct. The first rule is purity of intention, for Allah’s sake and for what he is pleased with.
- Unethical practices such as lies, cheating, bribe, stealing, robbery, forgery, swearing, misrepresentations, manipulating scales, hoarding, environmental pollution among others have no place in the Islamic business norms. The Prophet said “The swearing (by the seller) may persuade the buyer to purchase the goods but that will be deprived of Allah’s blessing.” So is every unethical practice may win you some gold or silver but have no blessings in it. Such is the first punitive consequence just as He said ” Allah deprives interest all blessings.” (2:276).
In conclusion, business people eagerness in generating revenue for their business and their investors should be cautious not to fall into these costly sins. More important, remember our motto in the words of Ertgul Bey, “Don’t forget. We are not battling (doing business) for loot or treasure or reputation but for God’s will and our holy mission. Don’t let that slip from your mind, so you wont give up!”