14.12.2016

Holistic Approach to a Single Purpose and Productive Actions in Enterprises

One of the most critical issues that I, someone at the bottom of the ladder, have observed and placed emphasis in my business life over a decade is the purpose and purpose integrity. My first boss, Prof. Solmaz Ayarslan, kept telling me to set my goal and to take holistic action towards this goal. I understand this better with each passing day.

Likewise, enterprises should have set their goals and taken action with the holistic work as required by this goal.

Holistic approach to a single purpose…d

But what do we do?

  • Purchasing agents are seeking ways to buy raw materials at low prices while suppliers are almost in a fistfight.
  • Salesmen are trying to sell at lower prices and moreover, promise fast delivery.
  • Human resources are in a quarrel with bosses to recruit employees with more experience and qualifications.
  • Production and planning are struggling to produce more. They talk without thinking due to deadlines they give to salesmen and/or fight over deadlines with salesmen.
  • Quality managers are keen to get into a brawl with production chiefs to produce higher quality products.
  • Finance departments struggle to ensure that all departments that I listed above work properly in order to cut down costs.
  • IT departments collaborate with department managers and try to convince the boss to buy the best inventory and latest technology ranging from machinery and software to hardware and equipment, i.e. any inventory that comes to mind.
  • And the boss wants to earn money.

Given this situation, it is extremely important that these departments take a holistic approach to a single purpose. 

Let’s make a story of what I have told you above.

First, we should ask ourselves: What is the goal? What runs this business?

Is it cost-effective procurement?

One of the most important things that a manufacturing company should do is to buy raw materials. Naturally, raw materials are needed for manufacturing. Moreover, we should ensure that they are delivered to the factory at the lowest price and in the shortest deadline. That is to say, cost-effective procurement is very important for an enterprise. Well, is cost-effective procurement the reason for existence of factory? Of course, the answer will be “no”. In the end, if that was the case, we would buy high quality metal sheets at low prices and pile them in the warehouse and enjoy ourselves.

Is it recruitment of qualified personnel?f

​Another issue is recruitment of qualified personnel. It is the issue that human resources quarrel over with bosses. Even many approaches advocate that “human resources is the most important value”. It may be true but it is not enough alone. In other words, recruitment cannot be the sole reason for existence of a factory.

Let’s address another justification. Wasn’t our job just to produce? Production is also not enough alone. What about quality? We have to make many costly mistakes if we do not produce high quality products. We have to meet customer demands with top quality products. But quality alone is also not enough. If the main purpose was quality, why would a giant company like Rolls Royce be on the verge of bankruptcy? Similarly, quality alone cannot be a purpose. It is important but it is not the purpose.

The Relationship between Cost and Effectiveness…

Now, it’s time to reduce costs. If low-cost production was essential, then the answer would be effectiveness. The fewer mistakes would result in less labor to remedy such mistakes and this would reduce the costs. So, are quality and effectiveness our purpose? Well, can this purpose ensure the survival of a factory? I would like to share a good example about this issue. If the purpose was to produce high quality products with effectiveness, then why did Volkswagen stop making Beetle cars? That car was a quality product that could be manufactured at low cost. In other words, manufacturing quality products is not sufficient on the basis of effectiveness.

I would trade all of my technology for an afternoon with Socrates. 

Steve Jobs

Now it is time to discuss Technology. We had to acquire the latest technology and this was essential for the company, right? In other words, if we failed to keep pace with technology, we would go bankrupt. Are you sure? Regretfully, I wish that would be the case but if that was the case, R&D would not be placed in a box in organizational charts. That is to say, technology is important but it is not the purpose.

Sales, sales and more sales!

Are sales the purpose? Or is it increasing our market share? If that was the case, it would be easy. We would get the biggest market share and make the best sales. Would the strategy “Conquer the market and live happily" alone be sufficient? That is to say, if destocking and increasing market share do not bring money, what’s the point?

The purpose of enterprise is to earn money.

Let’s cut a long story short, the purpose of enterprise is to earn money. Would earning money alone be sufficient? 

Here, we are at the critical point:

  • Cost-effective procurements,
  • Recruitment of qualified personnel,
  • Advanced technology,
  • Production volumes,
  • Production and sales of quality products,
  • Increasing market share,
  • Communication and happy customers

All of these items are needed to make money. In other words, none of these can be the purpose alone and they can only be the tools to achieve the goal.

Our actions that bring money can be productive!

Our actions that bring money can be productive. Our actions that do not bring money are not productive and are no good other than to relapse the enterprise.

Ahmet Savaş Göktürk