REPLY Future Development Directions (SD6270)

[System Dynamics Mailing List]

Posted by  "John Gunkler" <jgunkler at sprintmail.com>

Jean-Jacques writes, "To me very simply, business is about maximizing the
net revenue from the capital invested and preferably maintaining at least
this revenue above zero.  Politics is about being elected.  This makes the
business game and the political one completely different."

I won't keep beating a dead horse, but your description about what business
is about does not match my experience.

For top executives, business is about keeping your job -- just like politics
is.  It's even "worse" now, post-Enron, because boards of directors are
really on notice to watch the executives more closely.  That means they are
more prepared to fire them at the first hint of suspicion.  So top
executives have to keep their constituents (i.e., board members and
stockholders) happy, whatever that takes.  There is probably (one would
hope) something related to generating value, and cash, involved in keeping
the board happy; but often it's more about keeping the board feeling safe
and their pockets stuffed with perks.  Why don't businesses invest for the
longer term?  It's obviously in their own best interests.  Because of
politics -- the demands of the board and the stockholders -- that's why.
And are these demands based on maximizing net revenue from the capital
invested and maintaining positive cash flow over the long haul (long meaning
"anything longer than the next quarter")?  Seldom.  It's about the price of
the stock next quarter.

I'm not saying this is what business is "supposed to be about."  But then,
politics is also not "supposed to be about" getting re-elected, either.

Finally, one of the definitions of politics is "Intrigue or maneuvering
within a ... group in order to gain control or power."  This is the meaning
I have in mind when I talk about business decisions and politics.  It's too
often all about control and power.


John Gunkler
Posted by  "John Gunkler" <jgunkler at sprintmail.com>
posting date  Wed, 14 Feb 2007 10:12:47 -0500