What are your thoughts about organizations making profits to be able to serve people? Should that not be the first point to emphasize after purpose? Or should it not be purpose, profit, and then people, because is there is no room to make profits, you will not be able to support people.
Taking great care of people is the best way to make a lot of profit. Okay. There is a book with the title - The customer comes second. And the translation of that is if you want to put the customer first, then the most important person is the person in your company who is serving the customer. And as a customer service trainer put it this way. Your customers will never be any happier than your employees. So that's the first half of my answer. In 1970 If you were a profitable company, you spent 50% of those profits developing people and doing research. And then a wretched human being came along by the name of Milton Friedman and he introduced this devastating idea that just screwed up our country as well as our businesses. And it was called profit maximization. And suddenly the big bosses were only focusing on what happens in the next 90 days. And this is a statistic that makes me weak.
Remember I said 50% of profits in 1970, went to people and R and D. 50%. In 2015, 9% went to people and R and D and the other money, the difference between the 50% and the 9% went into the pockets of the rich people to make them richer. And the point is our companies have gotten worse. , they have a terrific 90 days, but the point is what are we doing in 2020 to prepare for 2030 or 2022 or 2025. And the answer to that one is do you invest in research, invest in people, you invest in facilities, you and me that's in relationships with your customers.
My old employer, McKinsey and company, did a big study, giant study, 600 companies that accounted for most of the market capitalization in the United States. 450 that focused on the short term and 150 that focused on the longterm and the financial performance of the 150 was incredibly good compared to the people who had focused on the next 90 days. Thinking of Indian society and American society, the money numbers were all fabulous for the short termers more important than my opinion was the companies that were the long-termers created an incredible number of good new jobs. So they made money and they employed people and they help their own people become more effective or independent financially. So the answer is you want to get rich pay attention to people. You want to get rich train the employees who work for you until you're blue in the face. You want to get rich focus on research and development. There are a lot of people in small businesses in America and India and everywhere who, because of the COVID thing have just really had the curtain come down. And I'm not talking about that. I'm talking about more or generally in a somewhat normal period. But even in a period like this, and I'm right technically, and I know I'm right in a human way. I believe that every small business owners should mortgage his house if they have to.
And if they have a mortgage in order to take care of their people and lay off as few people as they can. And keep as many people as they can on a fairly recent, are a fairly decent, salary or pay level. So think long term, think people, make money!