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Principles – the Foundation of Sustainable Wealth Creation

“A boat doesn’t go forward if each one is rowing their own way.” (Swahili proverb)Boats

In the last post I presented my thesis that wealth creation is the essential foundation to the long-term success of any manufacturing enterprise in a market economy. In this post, I want to discuss the foundation for sustainable wealth creation – the Principles of the enterprise. In everyday practice we speak of the Mission, Vision and Values of the organization as the Principles – the reason for its existence and the fundamental “rules” that govern its operations.

No enterprise, in any endeavor, can achieve greatness without a fundamental mission that unifies the efforts of its people to align toward the same objective – to row in the same direction. Just as the oars of a boat must be commonly directed to achieve progress toward a destination, so the efforts of the staff in an enterprise must be aligned to succeed in the marketplace. The enterprise’s capacity toward wealth creation is defined by the alignment of the staff toward this common goal.

Let me elaborate the boat analogy further in the development of the Principles, Practices and Performance model of EagleCI. The velocity by which the boat traverses its route is determined by four factors:
1. The strength and skill of the oarsmen – people selection and training
2. The quality of construction of the boat, oars and associated equipment –technology deployed
3. The consistency of effort of the oarsmen in the same direction –alignment
4. The conditions of the water –external environment

In our model, the 1st and 2nd factors are controlled by the Practices of the enterprise – how it selects and improves the Resources it uses to transform inputs into higher valued outputs. The key Resources of the enterprise are its People and its Technology. These Resources create the most wealth when they are well sourced and adapted for the work required to generate that value.

The 3rd factor is the Principles of the enterprise – the mission and guidelines that determine what the organization will do and how it will do it to create marketplace value. It should be clear that no matter how hard and effectively the oarsmen row, and how good their equipment is, if they are not rowing in the same direction the boat’s progress will be slower than its potential. Likewise, an enterprise that is not aligned around a consistent vision of where it is going and how it is going to get there will not maximize its wealth creating potential.

The 4th factor is the external Environment of the enterprise. Just like the velocity of a boat can be impeded by headwinds, waves, currents and obstacles, so too political, socioeconomic, bureaucratic and competitive obstacles can impede the wealth creating capacity of an organization. An enterprise that is not equipped with the right resources will fail in a difficult external environment, just as a boat will sink if it is placed in conditions for which it was not designed to go. When the environment changes, the Practices need to be adapted to accommodate that change, but the Principles do not change. The direction of travel remains constant.

I look forward to further developing these concepts together with you, and look forward to your comments.

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