19. Performance (definition)

NOTE: if you’re new to Ground-Up Governance, or are finding anything a bit strange or confusing, you might want to START HERE.

How do you know if your corporation is any good?  It basically depends on what you’re trying to accomplish.  Some corporations succeed by getting as big as possible.  Some succeed by being as different as possible from other corporations – and even better if the difference is something that’s difficult or expensive for other corporations to copy.  Sometimes it’s about making as much money as possible as quickly as possible, and other times it’s about spending a lot of money now to make a lot of money later.  In short, it’s really important to decide what “good” means for your corporation, and then to set objectives to get you there.

When people talk about a corporation’s “performance” sometimes they’re referring to how well a company is doing at achieving its objectives, which can be basically anything.  Maybe your corporation’s main objective is just to sell one more Reallie Steilish hat this afternoon, or maybe it’s to expand beyond your Billie Eilish niche (e.g. Olive-yeah Rodrigoil olive oil?).  Maybe you have a longer term objective to sell all 25 of your remaining hats before next Christmas.  They’re all perfectly fine objectives. 

When a shareholder is interested in a corporation’s performance, they’re usually just curious about whether they can sell their shares for more money today than what they originally paid when they bought them.  If the price of your corporation’s shares drops, your shareholders are, as a general rule, going to be unhappy.

Performance can also refer to a bunch of money-related numbers that financial experts and accountants care about a lot.  Ground-Up Governance is mostly not about those things.  Not because they’re boring (they are, though!) but because there are approximately one trillion other good books and websites and newsletters and podcasts and whatever that talk about those things.

If there’s one important thing you should know about your corporation’s performance, it’s that really good performance starts with having a cool idea about what your corporation can be in the future.  If you tell your stakeholders about your cool idea and they agree that it is, in fact, cool, then they’ll probably be excited enough to ignore a lot of the money stuff for a while.