Archive for February, 2012

Why do companies exist?

February 16, 2012

Some people claim that companies should provide jobs. Not necessarily work that adds value but jobs followed by generous company-paid pensions.

Companies exist to create more successful customers. They recruit well-educated employees who can anticipate the needs of future customers to collaborate in designing goods and services that will fulfill those needs. They hire well-educated employees to work together in designing processes that result in goods and services that create more successful customers. They also employ people to work in teams to fulfill the design specifications.

Customers reward companies by paying them what they agreed the goods and services would be worth to them. Companies invest part of these rewards to optimize the system while improving supply chains and neighborhoods. Companies share other parts of these rewards with owners and employees (may be the same) so they can look after their families, their communities and themselves now and in their futures.

The more a company has to invest in its ability to create even more successful customers the better it is for the economy especially when those customers live in other countries.

The greater the value they add through their work the more the employees can receive. Creative designers earn more and may be paid more than the implementers who fulfill the designs.

Employees are not alone in this. The leaders create and continually improve systems that help create more successful employees as well. These systems are organizations known as companies.

Companies that fail to do this consistently exist only on borrowed time.

Companies, why not design one as a system now?