The concept isn't normative and it definitely is meaningful. Another way to describe cost centers is that their benefit is very hard to measure but their cost easy to measure. People know that in the limit of non-existence, the company can't survive without it, so customer support has to exist. But as long as money is used to support them with no easily measurable benefit, it will always experience strong downward pressure on operating expenses.
All of western accounting, including the cost-reduction mindset, is artificial. It just happens to be the dominant paradigm, so many people mistake it for some sort of universal truth.
If you look at the Lean Manufacturing folks, they have their own notions of accounting. They think the mantra of, "increase revenues, reduce costs" is stupid. For them, it's "increase value, reduce waste".
A simple example: you make hamburgers. You find a cheaper supplier of meat. It's not quite as good, but the number of complaints is manageable. In the western perspective, that's a win: revenues are stable (in the short term, anyhow) and costs are decreased. But in the Lean perspective, you've probably fucked up: value is down and you haven't reduced systemic waste.
Another way to describe cost centers is that their benefit is very hard to measure but their cost easy to measure
By that metric, marketing and advertising must be cost centers! But they somehow always manage to take credit for revenue.
Honestly I think that "cost centers" are a combination of politics and managerial laziness. If you only place value on the "easily measurable" benefits, then the beneficial but more difficult-to-measure functions will be devalued and cut back.
And maybe a department only gets labeled a "cost center" in the first place if the manager running it is not influential or politically savvy enough to take credit for a piece of the revenue.
If you can form a reasonable argument that your work either earns or saves your company more money than they're paying you, you are not a cost center, and you would be foolish to accept that label.
> By that metric, marketing and advertising must be cost centers! But they somehow always manage to take credit for revenue.
I'm puzzled by this. Compared to customer support, marketing's benefit is _very_ easy to measure. You just correlate a given marketing action or strategy (say, a particular ad) with the lead generation / customer acquisition / "new" customer base metrics over its duration + a certain margin afterwards calculated from your product's delay-to-purchase, comparing with your prior projected growth at the rate it was going before the marketing strategy.
Of course once you throw in larger entities and multiple concurrent strategies and other confounders it takes a bit more math chops to isolate specific edges, but usually it's easier for a manager to find information about measuring marketing output than for typical "cost centers". And when all else fails, that's what the "Where did you hear about us?" box on the questionnaire is there for.
> And maybe a department only gets labeled a "cost center" in the first place if the manager running it is not influential or politically savvy enough to take credit for a piece of the revenue.
But yet, that's the kind of manager who gets put there! You want your best managers in the meaningful places that your company really relies on, and the lesser ones, well, there's an open spot down in Office Health & Safety right?
So it "earns" the label of a cost center because management put its worst person in charge of it. Okay. That's still... bad overall management, not just bad political savvy on the part of one manager.
