Mismanagement in the US    rev.03.30.2006 Back to Lessons

A man in a hot air balloon realised he was lost. He reduced altitude and spotted a woman below. He descended a bit more and shouted, "Excuse me, can you help me? I promised a friend I would meet him an hour ago, but I don't know where I am."

The woman below replied, "You are in a hot air balloon hovering approximately 30 feet above the ground. You are between 40 and 41 degrees north latitude and between 59 and 60 degrees west longitude."

"You must be an engineer," said the balloonist. "I am," replied the woman. "How did you know?"

"Well," answered the balloonist, "everything you told me is technically correct, but I have no idea what to make of your information, and the fact is I am still lost. Frankly, you've not been much help so far."

The woman below responded, "You must be in management." "I am," replied the balloonist, "but how did you know?"

"Well," said the woman, "you don't know where you are or where you are going. You have risen to where you are, due to a large quantity of hot air. You made a promise which you have no idea how to keep, and you expect people beneath you to solve your problems.

The fact is you are in exactly the same position you were in before we met , but now, somehow, it's my fault!"

Any company President, Board of Directors or any other level of "CxO" that puts "shareholder return" as their top goal for their company is laying the groundwork for future disaster, dooming their company to failure in the market, no matter what market they're in. Short the stock or buy puts.

Customers first.

Everything else, second, third, etc.

If you don't make it the primary goal to give your customers the product or service you're offering and that they want or need at a price they're willing to pay, and if you can't do it at a cost that allows you to keep your employees employed and happy, you can kiss off any hope or prayer of delivering "shareholder return" in the long run.

In the long run, it will go to zero.

Company leaders who put "shareholder" or "shareowner" value, or any other euphemism for that, ahead of customer satisfaction, will be the loser, as will their employees who will be faced with the choice of following a basically-flawed plan towards a wrong-headed goal.

The most smart and alert employees of firms like these leave the company.

They tend to be winners in the long run, if they can find a company which, today, doesn't target shareholder value as their "prime directive."

But you knew that, right?

From the pen of Tom Skelton..... Wed 3/5/2003 5:45 AM

As I've said before, the ultimate in the cost-cutting game is to lay off everyone, close all facilities, purchase no raw materials and manufacture no product. Expenses = $0. Can't get any better than that.

'Course, nobody has a job, either....

And the stock is worthless.

The gains to be had from cutting costs are sharply bounded. The gains to be had from increasing income are unlimited.

Don't ever forget that, Carly.

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