Home > business > P Equals R Minus C

P Equals R Minus C

Being a dufus, I’m constantly trying to use the power of abstraction (a.k.a selective ignorance) to syntegrate complex issues, problems, situations, and relationships up into ridiculously simple generalizations that are, of course, wrong. For example, take the classic business performance equation below.

In the sliver of dufus-land that aligns with reality, if revenues don’t consistently exceed costs, it’s just a matter of time before a new or established business goes kaput, no?

When a company starts up, by definition, it has only a handful of people who fulfill all of the roles in the right hand side of the above figure needed to prosper and develop. Over time, “approved” micro-specialization, infectious hubris, empire-building, and a whole lotta BS accompanies the obsession to”grow the enterprise“. These sanctioned behaviors usually (but not always) lead to an unsustainable and cost heavy behemoth that brings the party to an end – all under the eyes of the self-proclaimed brilliant dudes who run the show. Bummer.

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