Perpetuity of of Organizations
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Perpetuity of of Organizations:
Perpetuity is perhaps a never ending subject of discussion in our company, given its importance as a concept in our Management Model and as a pervading force in everything we do in our company. But I ask a primitive and fundamental question: Perpetuity of WHAT? I ask this because I hear many different answers to this question in our company. My attempt below adds to the muddle.
Answer 1: Perpetuity of business (Product life cycles; Technology life cycles are part of this).
Products have life cycles; technologies have life cycles; likewise businesses also may have life cycles. Some say that we all understand that the perpetuity of the fastening business is not assured because in the future the business of fastening may change so radically that our current business will be dead. In deed the death of SFS as a business is a "lively" issue for discussion.
Answer 2: Perpetuity of organization.
Acknowledging that perpetuity of business cannot be assured, some say that the answer is the perpetuity of the organization. While this is an easy answer to the problem faced with the above answer, it still begs the question, what ORGANIZATION are we referring to when we claim perpetuity of organization as the answer. Is a structurally modified organization killing the old organization or simply mutating the old in order to perpetuate. This answer is inadequate because of lack of clarity with respect to what is meant by organization.
Answer 3 and Ravi's answer: Perpetuity of "Value Creating Potential."
I contend that it is neither the business nor the organization that is being sought to be perpetuated, but the "Value Creating Potential." The business and/or the organization are the current embodiments of the "Value Creating Potential." Only the "Value Creating Potential" needs to be perpetuated. Think of a snake shedding its skin. Just as the snake sheds its skin, the "Value Creating Potential" sheds its businesses and/or organizations which are only temporary embodiments in its eternal life's journey.If not convinced, think of a very hypothetical and highly contrived scenario in which, let us say, the following occurs: Conditions of perfect fungibility of assets exist (ZERO COSTS OF ENTRY AND EXIT); and a risk-free value creating opportunity (ex: Treasury Bonds) becomes available whose value creating potential far exceeds the value creating potential of all of our current businesses and organizations. Business prudence (forget emotional attachments and sentimentalities) !
dictates that the "snake" should shed the old skin to take on the new value creating process (T-Bills). This is why there is a definite need in our company to look at other forms/types of "Value Creating Processes."
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Mathematical finance, Perpetuity, Management
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