Cost center or profit center?
  • Maintenance
  • Vacation, work flexibility
  • R&D labs, to see thru the S curves and/or take a different perspective
  • How move your target market from a cost center to a profit center?

Many businesses are tempted to treat all divisions as cost centers instead of profit centers. The legendary management consultant and thinker Peter Drucker originally created the term profit center in the 1940’s. He subsequently asserted that the term profit center is a misnomer that leads managers to focus on the wrong overall priorities, insisting instead that everything is a cost center. By focusing only on the absolute profit of a division, factors such as return on capital, opportunity cost, efficient use of resources, and relative returns are ignored to the detriment of the stockholder or owner.

Examples
  • Stratechery re Instagram founders resignation: This is the context for whatever dispute drove Systrom and Krieger’s resignation: not only do they not actually control their own company (because they don’t control monetization), they also aren’t essential to solving the biggest issue facing their product. Instagram Stories monetization is ultimately Facebook’s problem, and in case it wasn’t clear before, it is now obvious that Facebook will provide the solution.