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Views from the Prairie

May 2023

Company Purpose

Recently, a beer company ran an ad that riled part of their market. The person who approved that ad made a fundamental mistake, forgot their primary purpose, and violated the number one rule of advertising; Don't harm your customer. When advertising a broad market product, they should never create controversy.

When we don't know the primary purpose of an organization, we can often make subtle or even major mistakes out of ignorance. Many a corporate manager has either forgotten or never knew the primary purpose of the corporation and have hired the wrong people, approved the wrong projects, and fired the people who really knew.

What is your organization's primary purpose?

Peter Drucker states that the purpose of a business is to create and keep a customer. The business has to provide a product or service to the community at a price and quality level that enough people in the community want. Making a profit is the natural result of making a satisfied customer. Profit is a secondary effect of making the customer happy.

There are those who think that the primary goal is to make money and reward the shareholders. Companies have done a lot of actions under the pressure to return money to the stockholders. Some have repurchased stock while depleting cash. Others have taken out loans to give higher dividends. Still others have gone out and bought competitors at high prices. Now we are seeing banks and other companies fail. For many companies, the focus on rewarding the shareholders has cost the company dearly.

Often, when top management is focused on the money, they lose sight of their customers and the real concerns that the customers have. The result often is that quality suffers. One boot manufacturer moved their factory to China and were able to keep prices down. However, people who live in their boots talk about pre-China and post-China boots and prefer the pre-China boots. The quality just isn't the same. Likewise, an airline rewarded the shareholders while neglecting to invest in processes and in software to help run the planes. The result was several major "meltdowns". Record profits never can compensate for such public failures.

Another aspect of pushing for the money is that it tends to alienate lower-level managers and workers. Such companies often have a higher employee and manager turnover rate. The results are often a lower customer satisfaction and higher costs.

People respond to a purpose. Employees want to be part of a larger cause. People often want to purchase from a company with a higher goal.

Companies that understand that their purpose is to serve the communities will wind up both surviving better and making more profit in the long run.

So, what is your organization's purpose?

Accepting Responsibility

On the eve of the D-Day invasion, General Eisenhower prepared two statements. One was for if the invasion succeeded. The other was accepting full responsibility for a failure. He knew that to succeed as a leader, he needed to accept responsibility for when things go wrong, even when he didn't cause things to go wrong.

Leaders know that praise goes down but responsibility comes up. Leaders accept this as the price of leadership. Leaders take responsibility, help direct the group towards solutions, and do not blame employees or some other group for problems.

Such leadership is always in short supply. Many a politician or preacher will blame some other group and urge their followers to do harm but won't take any responsibility for what their followers do. Politicians try to select voters who won't hold them accountable. When they are forced to face responsibility, such politicians and preachers fade away and rarely if ever come back.

When those in power refuse responsibility, public action is one way to force the issue. American history has numerous examples of when people have forced responsibility and changes. Examples include how workplace safety and the food and drug safety laws were first enacted. Many changes happened when more people recognized that we all are harmed when injustice is allowed to fester.

Our ability to force change is dependent on our ability to choose. There are many who want to take away our choice. Good businesses allow the customer to choose and strive to meet the customer needs. Good politicians allow the voters to choose instead of designing "safe" districts.

Risky World

The IRS eFile website got hacked and anyone who used it in late March may have been infected when it asked you to download a file.


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