Most businesses are structured to maximise shareholder value, which is a terrible way to structure a company if you are wanting it to be sustainable over the long-term.
By focusing on shareholder value, the intention of management is to look good in the short-term; quick wins, quick fixes, making the books look good, chasing short-term financial targets - are all terrible ways of creating a significant asset of value in the long-term.
There is currently an epidemic of disastrous short-termism sweeping through organisations around the world.
In the early 1980's, lauded American management guru W. Edwards Deming published the book Out of the Crisis, which offered his 14 guiding practices of how any company can transform the way it does business to truly maximise its potential in the long-term. His philosophy is a guiding principle behind the success of companies like Toyota and Lockheed Martin.
As a personal exercise, here is my interpretation of Deming's 14 points which I use as as lens whenever faced with a challenge that requires a transformation of thinking:
- Have as your long-term business purpose - to stay in business and get better everyday.
- Accept that the only person that matters is the customer and that the organisation needs to constantly transform itself as the customer evolves.
- Don’t solve problems - design solutions that dissolve problems.
- Don’t work with 'suppliers', build relationships with long-term partners through win / win agreements.
- Focus on constantly innovating your internal processes and systems to improve quality and productivity and reduce costs.
- Build an organisation that is constantly learning and accumulating knowledge
- Maximise the future potential of everyone in the organisation through coaching
- Encourage curiosity, experimentation and failure on your mission to constantly improve quality.
- Have a shared vision of success
- Eliminate all ambiguity and bullshit slogans
- Measure outcomes rather than outputs and objectives
- Treat people as the professionals that they already are
- Adopt a ‘beginner’s mindset’ throughout the organisation
- Make this philosophy personal and part of the culture of the organisation