Zero Sum? Or Growing the Pie through Potential?
Thursday, 5/19/16 @ 4:00 PT & 7:00 ET
When asked whether the pie should be cut into eight or twelve slices, the pizza customer replied, “Just eight. I could never eat twelve.” Or so goes the old joke… and the prevailing notion of organizational profit.
That dominant assumption of a zero-sum sort of profit, that wages and salary paid to employees are lost profit for owners, is the seed of adversarial relationships between companies and employees. It forces the question: Who gets more from whom.
But must the issue be framed that way? Or is it possible to grow the entire profit pie so that we can cut 12 slices to be the same size as the original eight? Then cut 16 as 12, and 20 as 16, and so on?
Dare we ask, how can we have more for each at a cost to none? Our answer is yes.* Framed by our 3rd Radical Idea, it is the topic of this week’s discussion, but. . .
Through Lens of Our 5th Radical Idea*
While this entire series of discussions intends to view the entire GTIdeology through the lens our 5th Radical Idea, it bears particular mention this week. The 5th Radical Idea, Radical Equality, is that “Profit belongs to the Individual who creates value.” It rejects the idea that profit belongs to the organization to be distributed or retained as it sees fit.
“At a cost to none” assumes that Radical Idea is in place. Obviously, where wages and salaries have been cost-minimized to maximize shareholder wealth, ownership would incur a cost, but not an unjust one. (See Q4 below)
Framing the Discussion: Our 3rd Radical Idea: Radical Opportunity
Our position is that we can and should grow the profit pie — that we must — but that we cannot do so through traditional methods of limited opportunity based on a hierarchical pay structure that rewards experience qua experience.
It is a vital distinction: Profitability can absolutely be grown in the adversarial system, but only at the cost of individual opportunity. The profit pie, on the other hand, can only be grown through individual opportunity. The difference is a shift from bottom-line (what is left “for us (ownership)”?) to top-line (what is created by us (the organization)?) thinking about profit.
Where bottom-line thinking must limit opportunity to maximize bottom-line profit, top-line thinking expects unfettered opportunity to maximize the size of the profit pie.
It is our contention that growing that pie, by maximizing the potential and contribution of every individual member of the organization, will not only make the organization more profitable in the long run, but will indeed create more for each individual at a cost to none.
That is the discussion we look forward to having with you.
#GTIdeology Happy Hour
You’re invited to — and we hope that you will — join us at 4:00 PT & 7:00 ET on Thursday, May 19, to unofficially kick off the weekend and discuss this issue with us and the smart, fun, and friendly #GTIdeology Happy Hour crowd.
Here is our cool video intro and the questions:
Q1. In your opinion, what is the connection between individual opportunity in and the profitability of an organization?
Q2. Per our 3rd Radical Idea, we esteem each member as a potential source of top-line profit. Not as a bottom line cost of profit. What do you think?
Q3. Agree or disagree: An emphasis on identifying and maximizing individual opportunity throughout an organization will make the organization more profitable in the long run. Why?
Q4. Discuss whether a cost incurred by owners shifting from profit-maximizing by minimizing payroll costs to profit-maximizing through individual opportunity is just.
Q5. Do you have any experiences in or with organizations that have taken a top-line view of profit-maximizing through opportunity? Would you want to work in or with one? Tell us about it!
We hope you’ll join us. If you’d like a reminder, just tweet @ us and let us know. We’ll be happy to tweet you one. Cheers!