Thursday, April 9, 2009

what's your goal?

It's a worthy question...most people would agree it is important...and it is something we think about all the time, whether it be personal or organizational goals. Over the past two weeks, I was reminded that for organizations to exist, there is really one goal - read on...
In my Introduction to Business class, we were discussing the "fundamental and powerful concepts" within business (fundamental and powerful concepts help shape how one thinks within any given discipline). While many of the comments had to do with customer service or quality products, one young man piped up and said very simply - "profit." His classmates jumped all over him, but after some clarification and further understanding, we all came to the conclusion that he was right. PROFIT is the ultimate goal of business - and any other organization if it wants to exist beyond a short time.
That same weekend I began to read The Goal by Eliyahu Goldratt. I had seen this book on the shelf for years, but had failed to pick it up. Not too far into the book the narrator is confronted with the question, "What is the goal of your business?" After many attempts to answer the question (all of them wrong), he realizes that the answer is TO MAKE MONEY. To effectively and efficiently operate a business, one must then figure out what it is that makes money for the organization and begin to work on those processes. would I translate that into a University setting (or a church...or a not-for-profit venture...or any organization that seems to have "more lofty goals" than making money)? It still comes down to the fact that in order for any organization to continue its work (be that making a product or delivering a service) it's goal must be to make money (in reality, to make MORE money than they are spending). At the University level, our income is derived (for the most part) through credit hours sold (what we might call our throughputs). Those credit hours are delivered through classes (what we might call our inventories). And our costs - for the most part - consist of our faculty (what we would call our operational expenses). Knowing that, we have to find a way to increase throughputs, decrease inventories, and decrease operational expenses...while at the same time staying true to our mission and value added propositions.
At least that is how I interpreted Goldratt's thinking for the University. I am not sure if I am right, BUT the book got me thinking about profit in a different way. I would recommend it for anyone who has to think about an organization beyond one day. And by the way, it is also a fun story to read.

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