Business Geek is changing focus slightly. Over the last couple of years some ideas have been coalescing in my head which are now formed enough to start journalling them in a way that can be shared with others. This blog will be that vehicle. As I explore the paths that my theories and ideas take me I will be posting them here. I will also intermix this with commentary on specific news items or topics that extend or demonstrate those ideas.
These ideas have already driven much of the analysis and commentary that I have been making here and on GNC, which is why this will only be a focus shift rather than a radical change. Previously the news drove the ideas; now the ideas will drive the news. My experience is in IT and this will continue to be the greatest source of stories that I cover or comment on. Focusing on the theory though will also mean topics covering economics, business and politics as well.
The idea that companies should be run exclusively for the benefit of the shareholders is misguided. While we intuitively know that a company (or government for that matter) cannot thrive if every decision it makes considers immediate shareholder return exclusively, our legal system impels organisations to make this their prime objective. This method of corporate governance did work satifactorily for a long time though, and many companies still continue to operate well and ethically so what has changed? I believe the answer comes down to focus and the many ways that drive company executives to objectives outside of long term stability.
My career revolves around solving problems and experience has shown me that problems occur when things move. From a technical perspective its the moving parts that fail first, they slowly shift from the path they should take until they lose track of what they should be doing. From a business and communication perspective problems occur when goals, strategy or environments change and/or when different people have different understandings of what the process and outcomes are. These problems are solved by getting everything back to a stable base, making sure we all understand what we should be doing, confirming that what we will do helps us towards our goals and then get back to work. This demonstrates the root of what I believe is off track with our capatalist society.
We have lost track, both as individuals and as a society, of why company structures exist and what we hope to gain from them. As a result it is difficult for us to evaluate company performance in an objective way. As a result we sometimes use measures that should be proxies for other factors as absolute performance measures. This is to our collective detriment.
The most misused proxy method is money, which is often used as the ultimate arbiter of corporate success and becomes more problematic the shorter the time period that change in money occurs. While we explicitely operate within a capital market, companies actually operate in 4 different marketplaces. Capital is one, and the others are labour, society and environment each of which is greatly important to company success. While all can, and are, related back to capital measures to varied success it is important to realise that they are not completely translatable, hence why using capital as a total substitute can cause problems.
The labour market is not just the economics of hiring, firing and contracting. Companies are also a market for individuals to make best use of their skills and efforts, trading them for the goods they need to survive and enjoy themselves. Companies that assist their employees to find and enhance their talents will do better than those that don't.
The community should be the prime focus of any corporation. I will discuss this in great depth in future posts, the core reason for collaborative effort is to allow the community to advance. If we still had to produce, hunt or gather everything we consumed ourselves we could never sustain anything like our current standard of living. The community of concern for a company is whatever community they engage with as customers, suppliers and staff.
Environment is justifiably getting a lot more focus in corporations, press and government. Thinking in short terms will use up resources that cannot be replaced. Balancing the effect of our manufacturing process so that the inputs and outputs balance in environmental terms.
This describes to raw basics of the thesis which I will develop. I do not believe that the problems with our systems are profound or based on evil intent and an re-examination of what we as individuals and as a community we can improve our position. Upcoming posts will expand in detail as well as make commentary on specific examples and document any research I do on specific ideas or companies.
