Thursday, 3 June 2010

Another John Kay snippet

From Obliquity
A good oil company is good at being an oil company, just as a a good university is good at being a university, a good harpist is good at playing the harp and a good dentist is good at filling teeth. There is no defining purpose of these activities distinct from the activities themselves. Those who direct businesses must try to balance a multiplicity of objectives and meet many and incompatible demands that individuals and other organisations make on them...

...The people who sought to infer some overall design from the noisy bustle of day-to-day decision making in business were imposing order on confusion, directness on obliquity...

Businesses do not maximise anything. The most successful business leaders like Marks or Walton or Gates pursued the unquantifiable, but entirely meaningful, objective of building a great business. A great business is very good at doing the things we expect a business to do - rewarding its investors, providing satisfying employment, offering goods and services of good quality at reasonable prices, fulfilling a role in the community - and to fail in any of these is, in the long run, to fail in all of them.

To say, as some people do, that doing all these things is really maximising profit is as confused as the claim that Beckham was really solving some set of complex differential equations [when he scored that free kick]. Indeed to say that successful business people are really maximising profit is doubly wrong. I know that Beckham scored. I have no idea whether or not Simon Marks maximised profit, and nor did he.

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