The Problems with Profit
Profit is difficult today in part because of global competition. However, the primary reason profit is increasingly difficult is that our understanding of how business should be designed, lead and managed has not kept up with our understanding of how things work in nature.
Traditional management practice is a legacy from a time in which capital was scarce and expensive and talent plentiful and cheap. Today just the opposite is true. The inventors of "modern" management were 19th century intellectuals who grew up in a Newtonian universe and their view of the organization was therefore a machine model. Today, we understand the universe is not a giant machine and behaves in much more complex, self-organizing ways.
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Profit is also difficult because traditional management practice was designed very intentionally to minimize employee contribution. In today's high labor cost market, any approach to running a company that does not intrinsically draw out the full potential of each employee is doomed to put pressure on profit.
Our very accounting systems cause us to do things that inhibit profit. For example, we are taught to look for efficiencies at every step of a production process and that overall profitability will be maximized this way. The proven reality is that optimizing locally drastically reduces optimization globally of any production system (either manufacturing or service delivery) and therefore profits.
Lanny Goodman is a strategic planning consultant and president of Management Technologies Inc.. Since 1980 he has helped entrepreneurs build highly vital and productive companies. Lanny has developed a unique process to create self-managing companies based on the emerging scientific principles of self-organizing systems. His company works in a very wide variety of industries in the services, manufacturing and not-profit for industries with clients ranging from $1.5m to over $1b in sales. Contact Lanny at www.lannygoodman.com
