Is Profit as a “Direct Goal” Overrated?


Response Comment on HBSWK Comment " Is Profit as a "Direct Goal" Overrated? "

It is to some extent heartening to see that we slowly have consensus being built around the concept that the world of business( indeed all of the world) is an unbounded system! This is not a ‘Simple ‘ system.

In an unbounded system, any objective can only be achieved through a constant recalibration of direction and energy. Information Technology is making the entropy of information assymetry more powerful than it ever was in the history of mankind. The theory of business has now shifted from ‘Occam’s Razor’ to ‘Einstein’s Razor’.

Profit as a direct goal would be suitable in a world where cause-effect relationships were linear and based on the industrial revolution driven approaches focussed on converting raw material into usable commodities. All businesses are generating their competitive advantage from the entropy of knowledge & its conversion into processes and systemic structures. We are hardwired to understand and make tactical maps out of complexity. Historically,human beings have dealt with complexity in groups and depended on individuals to execute. The ‘Corporation’ is in effect an acceptance of the idea that profit seeking should happen through indirect approaches.

What we need is a new mental model, a model that focusses on ‘Business Systems’ as living creatures. If profit seeking is a sustainable journey and not a ‘quarterly’ result, ‘Value Add’ will be less focussed on short term ‘profit-taking’.

Almost everyone in the organisation has his or her own theory of how profits are achieved.The challenge is in how we build organisations much like nature builds cells and organisms – With enough space for evolution, for creation and destruction.

Leadership that focusses on Vision, Communication, Goal Setting & commitment to executing as well as change plans, these are the things that make Obliquity work for organisations! The key insight that leaders need to retain is that there is no such thing as an ‘Autopilot’ in the business of leading – So we cannot believe in linear cause-effect..Leading is a lot like captaining a yatch in mid-sea; profit is not a goalpost, it is an outcome of constantly remaining alert & inspiring the team at the steering wheel!e slowly have consensus being built around the concept that the world of business( indeed all of the world) is an unbounded system! This is not a ‘Simple ‘ system.

In an unbounded system, any objective can only be achieved through a constant recalibration of direction and energy. Information Technology is making the entropy of information assymetry more powerful than it ever was in the history of mankind. The theory of business has now shifted from ‘Occam’s Razor’ to ‘Einstein’s Razor’.

Profit as a direct goal would be suitable in a world where cause-effect relationships were linear and based on the industrial revolution driven approaches focussed on converting raw material into usable commodities. All businesses are generating their competitive advantage from the entropy of knowledge & its conversion into processes and systemic structures. We are hardwired to understand and make tactical maps out of complexity. Historically,human beings have dealt with complexity in groups and depended on individuals to execute. The ‘Corporation’ is in effect an acceptance of the idea that profit seeking should happen through indirect approaches.

What we need is a new mental model, a model that focusses on ‘Business Systems’ as living creatures. If profit seeking is a sustainable journey and not a ‘quarterly’ result, ‘Value Add’ will be less focussed on short term ‘profit-taking’.

Almost everyone in the organisation has his or her own theory of how profits are achieved.The challenge is in how we build organisations much like nature builds cells and organisms – With enough space for evolution, for creation and destruction.

Leadership that focusses on Vision, Communication, Goal Setting & commitment to executing as well as change plans, these are the things that make Obliquity work for organisations! The key insight that leaders need to retain is that there is no such thing as an ‘Autopilot’ in the business of leading – So we cannot believe in linear cause-effect..Leading is a lot like captaining a yatch in mid-sea; profit is not a goalpost, it is an outcome of constantly remaining alert & inspiring the team at the steering wheel!

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~ by exploreamaze on July 15, 2010.

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