Management Kills Profit

Premise A: The primary purpose of business management is to reduce uncertainty about the future – making outcomes more predicable by reducing risk.

Premise B: Profits in business come from taking risks.

I can’t help but wonder if this means that management, in the long run, kills profit.

Help me understand how A is in alignment with B?


  1. Eric Fetterolf says:

    Taking risks just to take risks won’t profit your company. Otherwise every company would just play the lotto.

    After all, that is one of the highest risks (lose all your money staked in the game), highest reward (win tens or hundreds of millions of USD for a minimum risk of $1.00) activities I can think of. Even you won’t take certain risks (risking pissing off your customers to charge by the hour comes to mind).

    No, every company chooses what risks it will accept and what risks it will avoid. Choosing NO risk produces no profit. Choosing ALL risk is gambling.

    Management succeeds when they navigate through the risks chosen by the companies steering team, reducing the uncertainties and capturing the profit. Management fails when they avoid all risk to continue their membership in the Chicago Youth Assoc. (CYA for those keeping track of such things).

    The paradox (yep, I’m adding this to the list) is the balancing point between those two polar opposites. Those that consistently walk that line without falling on either side are the greatest managers.

    Which is why there are so few of them.

  2. Thanks, Eric.

    My belief is that management tends toward too much mitigation to the point of interfering in the potential innovation that will be the lifeblood of the company.

  3. True, I am really criticizing the practice of management as it is practiced in general, not anyone in specific.

  4. Maybe more management would increase profit?

    Management itself isn?t the issue but the type of management. If you went into a management role in a firm of accountants would their profits increase?

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