Thursday, December 23, 2010

Making Money Is Not the Goal

Nearly 30 years ago, Eliyahu Goldratt asked the question, "What is the goal of the company?" in his book, The Goal.  His answer in subsequent works is "to make money now and in the future." A recent book, listed as one of the top 10 business books of 2010 by the National Federation of Independent Businesses (NFIB), claims the answer to the question is give the owner three things: time, money and significance. This is probably true for the small business owner. According to Chuck Blakeman in his book, Making Money is Killing Your Business, many business owners end up hostages to the business, putting in long hours, rarely able to get away and sacrificing family, friends, health and "sanity" to the god of mammon. First, he encourages you to making "building the business" the purpose, rather than making money. This means working on the business processes (i.e. process mapping) so that the business will be successful "while you're on vacation" (a useful image). Blakeman acknowledges that his writing is not new or unique but the information is differently presented. He also states that he's not trying to educate (cram your head with knowledge) but help you learn by bringing clarity and hope to your situation.

The first consideration is similar to Stephen Covey's foundational principles and one his habits. Covey talks about keeping the balance between Production and Productive Capacity, illustrated by the need to feed the goose that lays the golden eggs. Likewise, the 2nd habit deals with "Begin with the End in Mind"; know where you're going so you can determine how you want to get there in your business. Blakeman also talks about avoiding the tyranny of the urgent in favor of prioritizing the important. This concept is familiar to leaders (rather than managers) and those familiar with Covey's four quadrants. The non-urgent, important work is quadrant 2, and leaders need to spend most of their time there, rather than in the urgent, important work (quad 1).

Part of Blakeman's process mapping should be working on the culture of the company. Building the business includes developing people. Developing people requires some empowerment, which necessitates a high level of trust. If you want to get away for a vacation and have the business still running, you need to entrust the staff to do the work while you're gone. They need to know what they're doing, why they're doing it and the guiding principles for when (not "if") circumstances don't fit the Rule Book. This part is like Blakeman's Process Mapping. But there's a lot to the organizational culture that makes this effort effective. If the culture isn't right, none of this works. If you don't trust others and allow them to make decisions, you cannot write a Process Map or Rule Book large enough to cover all of the potential circumstances.

Making money is not the goal. I agree with Blakeman on this point. Create a legacy. Your legacy is setting up an operation that will carry on after you're gone...on vacation or to another company or to retirement. If you create a place where people know how to contribute to the customers and the company, are allowed to contribute and benefit from their contribution, then your legacy will be intact. If you do this right, you should receive time for yourself and your family and friends. You should receive money. You should feel a level of significance through bettering your employees' lives, your family's lives and have time to give back to the community and profession.

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