Denominator management emphasizes on the efficiency of operations through the minimization of costs as opposed to numerator management which focuses on the effectiveness of operations. According to Gary Hamel, denominator management is a sign of inadequate leadership and uses costs cutting as a substitute for innovation, vision, quality improvement, effective risk management, and implementation of business strategy. Low-level innovation reduces the sustainability of a business given the market dynamics, change in technology and the need for rebranding. Organizations should invest sufficiently in quality improvement, improvement of technology, customer relations, marketing and product development to ensure sustainability and competitiveness.
Denominator management has become more common due to the ease of costs reduction as compared to establishing a cost-effective company strategy. Denominator management gives immediate results that are easy to recognize and hence more popular. On the other hand, numerator management is difficult to attain and requires more time to establish. Increased competitiveness in the market and more demand for efficiency from the consumers have also played a significant role in determining the attention paid on denominator and numerator types of management.
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Genetic coding
The genetic code of a company refers to the structure of the organization upon which the success of the company is anchored. The genetic code of an organization is composed of leadership, organization architecture and the corporate culture. Genetic coding refers to the profiling of the structure and operations of the organization to plan for the future of the organization. A proper understanding of the genetic code of an organization aids in restructuring, decision making and implementation of the business strategy. I worked for an auditing firm which utilized genetic coding in decision making, evaluating the market, operations management, and quality improvement to ensure sustainability of the organization. A clear genetic code of an organization enhances the understanding the weaknesses and strengths of the organization. A proper understanding of the internal process helps in making proper decisions in the implementation of the business strategy and improves the performance of an organization.
