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The goal of optimization - profit, or something else?
Dear Bob ...You said (in your recent series on optimization in Keep the Joint Running) that there was not a single value to be specifically optimized. I have to disagree. Under this I would assume that the optimization would be for company profits. Of course that is also a very hard number to define.Or am I missing something?- OptimizerDear Optimizer ...I wish it was that simple. Not all business strategies call
You said (in your recent series on optimization in Keep the Joint Running) that there was not a single value to be specifically optimized. I have to disagree. Under this I would assume that the optimization would be for company profits. Of course that is also a very hard number to define.
Or am I missing something?
- Optimizer
Dear Optimizer ...
I wish it was that simple. Not all business strategies call for profit maximization (some, for example, sacrifice profits for growth; some prefer margin to total profit and vice versa; those are just two examples among many). And the connection between the order-entry call center and overall achievement of strategy isn't always provable, either.
I suppose you could say that all business strategies aim to maximize the present value of all future profits (which is to say, annual profits discounted by the expected rate of growth due to compound interest). It's a great theory, but very hard to turn into anything beyond interesting fiction.
Your larger point is correct, though - the Order Entry Call Center's goals (for example) should be defined by its contribution to the company's goals, not in isolation. That, of course, is another version of having to suboptimize the parts in order to optimize the whole.
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