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Building Blocks of Organization

Contribution determines ranking and placement.

“What activities belong together and what activities belong apart?” A searching analysis is needed that groups activities by the kind of contribution they make. There are four major groups of activities, if distinguished by their contribution. First, result-producing activities—that is, activities that produce measurable results that can be related, directly or indirectly, to the results and performance of the entire enterprise. Second, support activities that, while needed and even essential, do not by themselves produce results but have results only through the use made of their “output” by other components within the business. Third, activities that have no direct or indirect relationship to the results of the business, activities that are truly ancillary. They are hygiene and housekeeping activities. Finally, is the top-management activity. Among the result-producing activities, there are some that directly bring in revenues (or in service institutions, directly produce “patient care” or “learning”). here belong innovating activities, selling and al the work needed to do a systematic and organized selling job. Here also belongs the treasury function, that is, the supply and management of money in the business.

Key activities should never be subordinated to nonkey activities. Revenue-producing activities should never be subordinated to nonrevenue-producing activities. And support activities should never be mixed with revenue-producing and result-contributory activities.

ACTION POINT: Give result-producing activities high visibility in your organization. Make sure support activities are subordinated to result-producing activities. Consider delegating employee welfare activities to employee teams.

Management: Tasks, Responsibilities, Practices

* Source: The Daily Drucker by Peter F. Drucker

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