Overheard: Word of the Day

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» VIEW ALL POSTS Sep 8 2009   5:01PM GMT

Theory of Obliquity – why there’s more than one way to skin the cat



Posted by: Margaret Rouse
Tags:
business management
A lot of business executives get confused on what the goal is. They think shareholder value is the goal. Shareholder value is a consequence of the goal.

Google Chairman and CEO Eric Schmidt as quoted in What Is Your Management Model?

Today’s WhatIs.com Word of the Day is the Theory of Obliquity.  synonym for “indirect.”  Basically, this theory, which was first articulated by British economist John Kay, proposes that if you are working with a complex system and are trying to achieve an end goal, you need to focus on the most important contributing factors.  It’s like the old saying “Count your pennies and the dollars will take care of themselves.”

Here’s how Eric Schmidt describes it:

When we were trying to prioritize projects, I thought, how would I articulate the four or five goals of the company?  What’s the No. 1 one goal of the company?  It’s end-user happiness with search.  No. 2: End-user happiness with advertising.  Three: The construction of the Google network of partners to effectuate the first two.  And four: to scale the business.  Then I realized that none of the things that I’m supposed to be doing as CEO — maximizing revenue and shareholder value — are the goals of the company.  So I now explain myself by saying that you will eventually get extraordinary returns for your shareholders and maximize advertiser happiness if all those goals happen.  A lot of business executives get confused on what the goal is. They think shareholder value is the goal. Shareholder value is a consequence of the goal.

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