A flawed assumption many executives carry is the belief that we can continually systematize our way to profitability.
We know this assumption no longer makes sense and yet many companies remain "stuck" in this production-focused, Industrial Age mentality. We continue to try to 'cost cut' our way to profits.
Why do we do this?
In part, because it's what we know. We developed these wonderful models and systems during a time when they made sense and they worked. We invested a lot of money and energy. We grew accustomed to the success and assumed we could continue to operate this way forever.
Systemization is particularly attractive because it provides (or once provided) tangible dollars and cents results. Because demand could be taken for granted, systematization equaled profitability. And we achieved this profitability via economies of scale. This is not a flawed assumption by itself, however, it is an assumption that is inextricably tied to the existence of mass markets, which we've now discovered are rapidly disappearing.
The bottom line - few companies are able to effectively compete based solely on the efficiencies that come through systematization. In fact, operational efficiency has become a given, a commodity, rather than something that distinguishes you. Competitors can quickly imitate your process improvements, new technologies and management techniques. As Michael Porter notes in the HBR article "What is strategy?"
"As rivals imitate one another's improvements in quality, cycle time or supplier relationships, strategies converge and competition becomes a series of races down identical paths that no one can win."
Porter's Value Chain work was a huge step in the right direction, but like other strategies of the time period, it was still rooted in Taylorism which ultimately is all about production and systemization.
Systematization is critical to growth and profitability. However, in a constantly changing world, it is now insufficient. We can't continually systematize ourselves to profitability. What we can continually do, however, is understand what our customers really value and ensure our companies exist to create ongoing value for our customers.
 Frederick Taylor (1856-1915), developer of scientific management. Taylorism is a theory of management that analyzes and synthesizes workflows, with the objective of improving labor productivity.
About the Author:
Adrian Davis, President of Whetstone Inc., is a business strategist and trusted advisor for chief executives and business owners. He is a thought-provoking speaker and is frequently called upon to address senior management teams and sales groups on the subjects of corporate strategy, competitive advantage and sales excellence.