What IS Improvement?

The pursuit of improvement has a vulnerable blind spot to the degree profitability is overlooked. Improvement must be profitable, if not immediately, then soon thereafter.

Some “improvements” may have enough perceived or political value to be called improvements, but in fact not yield greater cash flow and valuation. They may even put the company in an adverse situation. Increases in fixed salaries, benefits, or other overhead expenses are easily perceived as improvements to recipients, but can actually make the company more vulnerable. Higher fixed overhead makes the company less flexible in downturns (reducing survivability) and tends to weaken incentives for team performance improvement (reducing thrive-ability), as people take base benefits for granted as an entitlement.

The arena of compensation is potently connected to potential corporate improvements for increased cash flow and valuation as well as survivability and thrive-ability.

As one positive (constructive) example, higher ratios of variable to fixed incomes for management and all other employees, with greater incentives for improved team performance in increasing cash flow and valuation can be powerful catalytic improvements.

As one negative (destructive) example, tensions from perceived inequities can be debilitating to the improvement process, the very existence and growth of labor unions being largely a deleterious response to entrenched tensions over perceived inequities.

Sometimes profit and higher cash flow is just a matter of timing. It takes awhile to increase cash flow and valuation, and short-term, short-lived effects can be temporarily negative before the sought after desirable results are achieved. This is a notorious problem for publicly trading companies who must report quarterly earnings growth or have their stock prices punished. To their advantage, if need be, privately held firms can take a short-term reductions that last more than a quarter in order to produce greater cash flow and valuation in the long run.

While specific improvement, making something better, can occur in virtually unlimited ways, in every area of the company, at all levels, micro to macro, the ultimate common expression and verification of true overall improvement for the corporation is increase in the financial valuation of the company, typically a function of some multiple of a mix of increased cash flow, earnings, and net worth.

In this way, "improvement" can be quantitatively measured.

The leadership challenge is to accomplish the set of specific improvements that will bring about this increased financial valuation. Choices made for short-term increases in value can affect long-term value.

In one respect, appropriate small steps can add up to meaningful longer-term accomplishments. Improvement is incremental. The cumulative effects of many small improvements can be immense. Similarly wisely targeted improvements that portend greater resultant progress can be even more rewarding.

On the other hand, it is possible to do things that just look good temporarily. Superficial improvement can be more cosmetic than enduring. So-called "slash and burn" tactics epitomized by "Chainsaw Al" Dunlap with Scott Paper and Sunbean can result from overemphasis on the numbers of business. Actual or virtual not-for-profit status can result from overemphasis on the people end or fantasy aspect of business.

Effectively involving and educating the people of the business in the numbers of the business, addressing the working core of business model, vision, strategy, organization, and leadership, is conducive to improvements that result in enduring increases in value.

Improvement and Applied Physics

There is power in focus.

There is strength in diversity.

Harnessed, channeled energy yields power.

Unchanneled energy tends toward entropy, dissipation, disruptions.

Density, pressure, and temperature interact to effect flow.

Combined flows of interactive elements effect outcomes.

Enlist a physicist to improve this topic.

Don't fight the laws of physics - use them to be more productive.