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Archive for January, 2010

The recent recall by Toyota is apparently causing gloating among some and anxiety among others —there’s back-biting and nail-biting going on.  Though the incidence of failure and fatality are rare, for those experiencing the accelerator malfunction it is significant.

Apart from the priceless human cost, why is it a big deal for Toyota (and seemingly bigger than if it had been any other automobile manufacturer)?    Toyota has been known as the highest quality manufacturer—the gold standard in the auto industry.  Not only had consumers touted Toyota as the best in quality, the competition had sought to measure up to Toyota’s level of quality.  (more…)

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Just what is the business of business?  What should be the primary focus of decision-making in business?  If you are like most then you likely agree with Milton Friedman’s thinking—which many graduates of business school tacitly learn—that the clear-cut answer is profit. After all, we have a free enterprise private property self-interest maximizing economic system, so of course profit is the thing!  We conduct business to make a profit and maximize shareholder value; otherwise why bother focusing so much on the corporate quarterly profit reports!  As noted by Friedman, “the criterion of performance is straightforward!” (more…)

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The Christmas Day terrorist attempt on a flight to Detroit highlighted an all too common problem in organizations.  Information may exist but knowledge is not always developed. Business organizations are not immune to the design and management problems we often see in government.  You’ve probably heard, if not your self said, the left hand doesn’t know what the right hand is doing! Information is here and there throughout the various functional areas of an organization, but it is not always translated into knowledge—no one connects the dots. Why does an inability to connect the dots exist in organizations? (more…)

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In surveys administered by Gallup since 1965, “big government always wins—by a lot” (Thank you Wall Street, may we have another? ).  Initially I was surprised by the fact that the American people believe the biggest future threat to the country is not big business, or big labor but rather it is big government. Even in the face of the recent financial meltdown, big government is still believed to be the biggest threat.  I can’t help but wonder how this could be? (more…)

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The fear associated with creative development can often be devastating to an enterprise.  As a case in point “G.M.’s biggest failing, reflected in a clear pattern over recent decades, has been its inability to strike a balance between those inside the company who pushed for innovation ahead of the curve, and the finance executives who worried more about returns on investment” (New York Times, December 5, 2008). Clearly the fear of loss of near term profit was the primary obstacle to developing a creative idea into an innovative product.  As further evidence of GM’s addiction to short-term gain, once GM got into the SUV market—which by the way lagged the competition by five years—it was “reluctant to shift from big profitable vehicles to building small, less profitable cars, even when gas prices spiked” (New York Times, December 5, 2008).  GM had the ability—their engineers were involved in hybrid technology in the 1970’s—but it lacked the will to invest in the development of innovative products. (more…)

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The economic system has a considerable influence on the way business is conducted since it encourages enterprises operating within it to align with its material growth maximization maxim.  Consequently, economic enterprises are expected not only to seek but to maximize (their) material gain.  Accordingly, those with administrative authority over the enterprise pursue material growth, monetizing all aspects of the company in the process.  That which can’t be quantified is not material and is thus ignored—becoming immaterial in the management of the enterprise. [It is interesting to note that the term immaterial has come to mean irrelevant when in fact it is simply anything that is not material.]  In fact, the effectiveness of a manager is most often determined by the numbers, by his/her P&L statement. (more…)

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