Chapter 7: The Business Enterprise

The Special Machine Tool Enterprise

What follows is an effort to elevate the discussion of the individual Yankee ingenuity characteristics of passion, imagination, courage and the “find a way” mentality to the enterprise ownership level. Ownership in this context is the assumption of responsibility for an organization including, but not limited to, actual ownership.

A fact of business life is that every “for profit” enterprise must consistently and competitively improve shareholder value to survive. In the case of a public company, the shareholder makeup is constantly changing, based on the Wall Street perception of shareholder value; that is, track record and prospects for the future. Most of the time, they are investors without personal or sentimental attachment to a company or to an industry.

Those of us who own stock directly are those investors or shareholders. Many more of us are shareholders as part of mutual funds, retirement plans, or those who have insurance policies whose assets are invested in stocks. So most of us, as owners of companies, expect not just security in those investments, our assets earned from our life’s work, but a competitive return as well. Most would agree that is not an unreasonable expectation.

But shareholder satisfaction alone does not assure enterprise success. In fact, there are two other constituencies that are equally important. While the shareholders in one form or another exert the most direct, day-to-day influence on enterprise operations, the other two also apply very direct but different pressures on those operations. One of those influences is the customer, who must find competitive dynamic value in product or service offerings. The third influence, if you accept the philosophy of this writing so far, are the contemporary employees who must be able to satisfy the promises of “W3” competitively.

It’s important to note that a common denominator for the three constituencies is the adjective “competitive.” With all things considered, why should any of the three continue involvement in the enterprise with less? This is pretty basic stuff, right? Enterprise results must consistently and competitively satisfy all three.

That is a serious challenge for the cyclical and highly competitive special purpose machine tool industry and others like it. Add to that the industry’s intense capital needs and its innovative nature and associated risks, and its investment attractiveness is further diminished. In the case of public companies, financial analysts see to it that all risks to solid and consistent returns are well-known. What matters is a track record of consistent success along with a favorable economic outlook.