17 March The Purpose of Profit (...ultimate...)

[Paul Terlemezian]

Does the corporate training operation run as a profit center. In "Drucker" terms this means:

 

Profit is used:

 

1. To measure "net effectiveness and soundness" of the business

2. To serve as a "risk premium"  to "cover the cost of staying in business"

3. "To ensure the supply of future capital for innovation and expansion"

 

As a "business within a business" we may rely on the "outer" business to handle the use of profit as it relates to items 1 and 3. The result is a focus only on item 2 - justifying the costs.

 

Would we better served as an industry if we earned a profit to prove that we were better than alternate choices and so that we could fund the innovations that would allow us to stay in business?

[Paul Terlemezian]

It the corporate training function depends on third party providers for innovations then it takes the risk of losing its competitive distinction.

On the other hand - if it relies on internal innovation if takes the risk of limiting its options to a very small number of the available minds that could innovate.

Is there a third (possibly better) way to innovate?