The Challenge of Hidden Profits

This book asks three questions: 1) How extensive and expensive is business waste? 2) Why does it occur? 3) Which companies best avoid it? In seeking the answers, the authors make a distinction between necessary waste and avoidable waste. Necessary waste is built into the economy: No matter how careful the planning, there will always be Edsels as well as Mustangs. The real enemy of excellence is avoidable waste.

The key chapter in this inquiry is the one on corpocracy, the mechanism that causes executives to become isolated from their company’s activities and products. This is the “why” of waste, leading to wrong decisions or to no decision where one is needed. The focus is on the ten “telltale traits” of corpocracy. These include insensitivity to employees, forgetting the market, and a hatred of “boat rockers.” Additional chapters deal with the wasteful workplace, the high cost of legal care, corporate welfare, and other important considerations in approaching corporate waste. The chapter on corporate welfare is especially interesting, showing how powerful economic entities have their success assured by the federal government through favors in the tax codes, tariff regulations, and production quotas.

THE CHALLENGE OF HIDDEN PROFITS is well-written and well-documented. Authors Green and Berry have included many relevant, interesting, and entertaining examples of corporate practices, good and bad, to illustrate their points. The message of this book is best stated in the observation of one executive: “Politics and bureaucracy are the same thing. Many companies end up being run by politicians rather than business executives".