“Every great cause begins as a movement, becomes a business, and eventually degenerates into a racket.”
― Eric Hoffer, The Temper of Our Time[i]
While Eric Hoffer’s quote (above) may have been originally intended for social-economic or political movements, I believe it provides valuable insights into the nature of business organizations, and their life-cycles. It’s been my observation that many (if not most) businesses begin with an entrepreneurial or technological vision, from building the proverbial better mousetrap to ways of producing or delivering goods and services better, faster, cheaper. Then come our friends, the Asset Managers, to monetize this vision – recall their oft-cited assertion that the point of all management is to “maximize shareholder wealth.” Now, Hoffer’s use of the term “racket” may be a bit harsh when it comes to describing the phases of business organizational maturity – I prefer to describe this end phase as being characterized by a shift in the organization’s internal narrative, away from the original vision’s direct fulfillment and towards keeping the organizational machine running for the sake of keeping it running.
I further believe that something fascinating happens to our sample organization’s business model as it advances from movement to business to racket propped-up machine – it becomes more and more hardened. Think about it: when the original idea turns into a new business, if there is a business model behind it at all, it’s fairly malleable. Official policies and procedures may not even exist, with the technical approaches to solving the problems addressed bound only by the rule of law. It’s only after attempts to monetize the original idea that aspects of the structure of the business model become recognized, and then codified, formally or otherwise. Even here, if a preliminary rule of doing business is found to be sub-optimal, it’s far easier to modify or even abandon it in these early stages.
But make no mistake: once the vision becomes monetized, a business structure must be in-place, if for no other reason than to make sure taxes are correctly determined and paid. Codification of hiring and firing practices are right behind, along with procurement, safety and health, organizational structure, etc., etc. The most insidious aspect of the three-phase Hoffer-esque organizational transformation must be the movement from business to racket self-sustaining machine. Here, those running the organization have lesser (or even non-existent) ties to the visionaries who started the whole shebang. Their understanding of organizational purpose is far more likely to be centered on, well, maximizing shareholder wealth, particularly if they’ve attended a business school in the United States.
GTIM Nation is familiar with my assertion that there are three types of management, so:
- Asset Management is focused on the aforementioned maximizing shareholder wealth, and its primary information source is the general ledger.
- Project Management, conversely, is centered on the customers’ expectations of scope, cost, and schedule. Its main information source is derived from Earned Value and Critical Path methodologies.
- Strategic Management’s function is to maximize market share with the assets and project portfolio available to it.
Returning to the movement-business-racket on-going concern evolution structure, it’s easy to see which type of management benefits the most from the associated ossification of the business model, our friends, the Asset Managers. Generally speaking, they’re thrilled when they can, say, maximize the revenue from a given project or program, even if it involves sub-optimal performance against the scope, and corporate policy will often reflect as such in more mature organizations. On the other hand, the PMs, again generally speaking, are better with an outcome of on-time and under-budget scope delivery, even if it means, say, the contingency budget is never touched. A fully consumed contingency budget (assuming it was funded by the customer) might have maximized the revenue available in the Project, and have been recognized as beneficial in the near-term. But an on-time, on- (or under-) budget delivery means that this customer is likely to bring more business in the future, meaning an increase in market share, which typically won’t manifest until the mid- to long-term. A portfolio of high-performing Projects will almost certainly impede, or even reverse, the movement away from the organization’s original vision and its associated business model calcification, since the overriding narrative is still centered on the customers’ expectations of performance.
We’ve all encountered organizations that have become enmired in the just-keep-the-machine-going phase, typically manifesting disdain (or even contempt) for customers, existing and potential. Since these organizations never actually started that way, it’s safe to assume a certain degree of, ahem, getting on has occurred. Is there a remedy, short of the macro-organization sliding into irrelevance?
Sure. It’s that fountain of youth, Project Management.
[i] Retrieved from https://www.goodreads.com/quotes/98215-every-great-cause-begins-as-a-movement-becomes-a-business on October 15, 2024, 18:35 MDT.
Community Champion
