Dear Reader,What is the purpose of an organization?
Some say the purpose is to maximize shareholder wealth. This is, after all, what I was taught in my MBA program.
Profit maximization has become a more familiar goal. According to the March 2012 Harvard Business Review, the 1980s mentality created the mentality around corporations as tradable assets, while CEO income increased rapidly as stock options and incentives made up executive compensation packages. This built stronger pressure on on short-term results. Organizational purpose has become "hit the numbers" and not serve the customer.
This - of course - is nonsense.
A short-term focus on profits leads to a focus on costs. A focus on costs leads to increased costs . . . always. The inside-out nature of a purpose related to profit maximization and not the customer leads to the type of maddening conversations I have had on Linked-In and many other places. These conversations are about profit vs. customer.
Let's be clear, there is no profit without a customer. Hell, there is no organization without a customer with needs.
The inside-out purpose has no logic or profit to stand on. Organizations with this mentality make money in spite of themselves, not because they are great business financial wizards.
Complexity in business has grown because of inside-out thinking. Serving customer needs has become "too easy" except for the fact that no organization or government does it well. Service is lost on management thinking that tries to save money or increase revenue without knowledge of "what matters" to customers. The result is both increased costs and decreased revenue. Proof that ignorance is alive and well.
Ignorance isn't stupidity, it just means that organizations have not found a better way. Stupidity is only achieved when the evidence is ignored.
The Vanguard Method is both profound and simple. Some might say too simple, but the evidence exists for those who seek. Those that don't seek can remain in blissful ignorance, but those that ignore the evidence . . . well that is a different story.
