If you are not in business for profit or fun why are you here?

“Up the Organization” written in 1970 by Robert Townshend the then chairman of Avis Rental cars, was a worldwide best seller.If you are not in business for profit or fun why are you here?Townshend analysed and commented on the structure and organization of businesses and its operation in a humorous and anarchic manner, but also showed how he had organized and managed Avis in ways that appeared radically different from the accepted business norm.

Re reading the book shows how much in business is the same, despite computerization,  e-mail and the internet, and much of his observations and maxims are still valid.

Why? Because business is run by and for people, and people do not change in their motivations, habits, prejudices ambitions and fears.

The structure and organization of most businesses probably may not have changed much in more than a century.

As company workforces increase, so there is a tendency towards a bureaucracy of little empires, with all that that entails.   But bureaucracies create inefficiencies, increase cost,  reduce profits, and cause employees to lose sight of the purpose of the business which is to produce money.

This in turn leads to the workforce becoming more remote from the customer who provides the money on which the organization survives.

Since the early 1970s, probably the most important person in a company next to the chief executive has been, and generally still is, the financial director. While financial management is vitally important, balancing the books does not make income. Finance is simply a resource that enables business and income production to take place.

Next to them in recent years, thanks to layers of employment and health and safety legislation, have been the company secretary and the director of personnel, now called human resources. Yet none of these executives is responsible for producing the income on which the business and ultimately their jobs survive.

If businesses are about making money, then the process of producing income should be central to those organizations. Instead, many businesses give the impression of being organized as a series of largely unrelated activities with the purpose of producing a product and  retaining a structure, rather than producing profitable income efficiently.

Many companies could still be considered to be product orientated while others might claim that they are customer oriented, in order as Tom Peters said, to “Delight the customer”.

Businesses are there to make money, which is why they were set up. They are not there to make products or, strangely enough, to satisfy customers. Satisfying customers is only a means to an end to produce profitable income for the benefit of shareholders and employees.

In nearly every business organization, the management structure illustrates what they do, but not what they contribute. Thus businesses have separate departments of production, finance, purchasing, personnel and sales. Each department tends to develop a silo mentality where it relates to its own limited objectives. Production seeks to maximize production, sales seek to maximize the volume sold finance seeks to balance the books, but who is responsible for producing profitable income?

If businesses want to become more efficient at producing profitable income, then producing sustainable profitable income for the long term, must be the foundation of their organization and management.
If maximizing profitable income is the primary purpose of every business, then businesses ought to be organised, structured and managed, accordingly.

From: www.businessperformancemaximized.com

October 28, 2011  Tags: , , , , ,   Posted in: Business Development, Business Services, Business Win, Professional Services, Uncategorized, Winning Businesses

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