Wednesday, April 12, 2017

More Thoughts on the Business Model

  Recently, I suggested a business model worthy of trying might be one in which the company lets subcontractors own certain component departments, thus inserting the profit motive on middle management.
   I've continued to think on this. It occurs to me, you could insert the profit-making motive without giving up a portion of the ownership. Just base the department head's pay on a factor tied to saving the company money. I still think there is an advantage, though, of offering a share of ownership. We have a tendency to take greater pride in something that is our own.
   And, about as quick as I wrote the blog, I realized there are some departments for which you do not want to be motivated by profit. Some, you want and need to focus on quality, not profitability. Though it is essential that the company, as a whole, makes a profit, some functions must not be tied too closely to profitability lest a necessary level of performance be compromised by an effort to reduce costs.

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