years should always be clear.
The choice of objective has a profound impact on a fi rm.
When Boeing shifted its primary goal from being the largest
player in the aircraft industry to being the most profi table,
it had to restructure the entire organization, from sales to
manufacturing. For example, the company dropped its policy
of competing with Airbus to the last cent on every deal
and abandoned its commitment to maintain a manufacturing
capacity that could deliver more than half a peak year’s
demand for planes.
Another company, after years of seeking to maximize profits
at the expense of growth, issued a corporate mandate to
generate at least 10% organic growth per year. The change in
strategy forced the fi rm to switch its focus from shrinking to
serve only its profi table core customers and competing on
the basis of cost or effi ciency to differentiating its products,
which led to a host of new product features and services that
appealed to a wider set of customers.
At Edward Jones, discussion among the partners about
the fi rm’s objective ignited a passionate exchange. One
said, “Our ultimate objective has to be maximizing profi t
per partner.” Another responded, “Not all fi nancial advisers
are partners – so if we maximize revenue per partner, we are
ignoring the other 30,000-plus people who make the business
work!” Another added, “Our ultimate customer is the
client. We cannot just worry about partner profi ts. In fact, we
should start by maximizing value for the customer and let
the profi ts fl ow to us from there!” And so on. This intense debate
not only drove alignment with the objective of healthy
growth in the number of fi nancial advisers but also ensured
that every implication of that choice was fully explored. Setting
an ambitious growth target at each point in its 85-year
history, Edward Jones has continually increased its scale