Bottom line thinking

I was having dinner and drinks with my friends, Drucker and Sun. Drucker said that he would never let anyone in the company patronise a competitor’s product because he hates to see himself lose a market share. Sun, was about to join the company but was not receptive about the restraint. I could tell that he was very disturbed. I decided to reflect on this issue. Is a restraining order that prohibits an employee from patronising a competitor’s product in the company necessary to ensure that the company retains its market share?

It is clear that retaining and increasing the market share is the company’s bottom line. But is the restraining order consistent with that bottom line? Yes, if the company plans on hiring everyone in the market!

While I agree that a company should never hire anyone who does not believe in the goods and services it offers, a restraining order does not appear to serve any of the company’s mission or objectives. In fact, I think there may even be a conflict.

A company that imposes such a restraining order on its employees clearly subscribes to the law of scarcity. It fails to understand a simple human behavior. It is never fun when you have to do things out of obligation. Furthermore, an employee may perceive the company’s products as being weak; that’s why the company has resorted to a restraining order. The company therefore breeds obedience but not staff loyalty. If the company were to subscribe to the law of abundance, it will be seeking to determine the needs of customers and learn how competitors have successfully filled in the gaps. The company can then surpass customer expectations and win a bigger share in the market.

It appears to me that the company, in this case, lost its perspective of the bottomline (as employees only form a very small part of the market share). The company will still lose its market share if it cannot keep up with the competition. In such a situation, is the company going to hire more employees to retain its market share? The restraining order appears to have created a win-lose situation for Drucker. The result is he wins now but not the rest of the time. What he needs to develop is a win-win situation for the company and its employees. To do this, he needs to change his paradigm from the law of scarcity to the law of abundance. One needs to believe that the market is so big that it is impossible for any one company to fill in all the gaps. There is always something for everyone.

One can turn to warfare for some guidance for the right strategy to beating the competition. The bottomline is to win the war with few casualties. Informers are often engaged to gather information on the enemy. A strategy is formulated based on their understanding of the enemy, themselves and the terrain they are going to fight on. Similarly, the first thing a company needs to do is to determine its bottom line (e.g. increase market share). A company should then only hire employees who believe in the company’s products and services because such employees can market the goods and services effectively and have genuine interests in the company. Successful marketing should also be leveraged on personal experiences and these are invaluable. In the absence of a restraining order, the employee may still purchase a competitor’s products because it fills his needs. In this case, an interested employee can gather his personal experiences as feedback and strive to improve the company’s products. We call that the competitors intelligence. A company can only effectively market its products if he understands his customers, business and his competitors. Doesn’t a restraining order seem to conflict with the mission to gain market share?

The company should therefore practise bottomline thinking and align its employees interests with its mission and objectives. If the company focused on its bottomline, its strategy would be to hire anyone who consumes his product (but it may not be the only one) and believes that his personal experiences or contributions can improve the company’s business. The results are a positive morale, development of better products and services, greater ideas and profit! All this can be achieved without a restraining order.

As for Sun, he should walk away if he does not subscribe to the company’s existing paradigm. But if his bottom line is to work for that company, then he will have to subscribe to their paradigm so that it is a win-win situation for both the employer and the employee.