Making Money - A fast track strategy to business failure
Mark Saywell - Director Business Transformation at Nurxure
I'm going to give you two uncomfortable truths and provide you with some of the most valuable consulting advice you can receive, absolutely free of charge.
1. You are categorically not in business to make money. If you believe it is your primary purpose, I won't go as far as to guarantee your failure, but I guarantee you will fail to be as successful as you otherwise could be.
2. Your shareholders are your least important stakeholder group. Make their satisfaction your primary focus at your business' peril.
The last few years in business consulting have been particularly eye opening, the bewildering regularity in which I have seen potential rising stars sell themselves short with poorly defined, badly misaligned business strategies, or even worse, committing the cardinal sin of basing their strategy solely on financial goals and leaving themselves wide open to the destructive bad behaviours such strategies encourage.
The late great W. Edwards Deming put it beautifully, 'if management sets quantitative targets and makes peoples' jobs depend on meeting them, they will likely meet the targets - even if they have to destroy the enterprise to do it."
I love the above quote from Deming. What is so frightening is the extent with which intelligent business leaders fall headlong into the trap, and then passionately march their organisation deeper into it. Quantitative strategies lead to desperately destructive business behaviours. A couple of examples:
A specialist professional service organisations who opted to prioritise chasing margin as their primary strategic goal. They actually celebrated losing key and senior client delivery staff as it ‘delivered’ reduced overheads. Not a single thought was paid to the cataclysmic impact on their ability to deliver core client services or to facilitate quality client delivery for their own key revenue streams. They sat back as their most experienced, knowledgeable team members were literally applauded as they crossed the floor to competitor organisations.
The technology service providers who made cost reduction their strategic aim and penny pinched and wound their internal IT Team down to a minimalistic service operations only function, relinquishing their strategic market advantage by failing to leverage technology internally for their own strategic business enablement.
Just two examples from a myriad of similar experiences I’ve witnessed across industry sectors in the last few years.
By placing priority exclusively on making money or increasing margins, the bad behaviours you can encourage across your workforce can genuinely place your entire business operation at risk.
So what's the answer?
1. Prioritise your stakeholders properly - put your customers first, you are in business to deliver products or services that your customers actually want, will potentially pay a premium for and will want to buy again and again, recommending you and your company to everyone they know. The famous Richard Branson article that is currently doing the rounds on LinkedIn about 'putting staff first' is only true if you already have a defined and coherent product or service offering that is fully centred around customer needs.
2. Make your staff your second highest priority, only marginally behind your customers. Support them to support your clients to the very best of their ability. Give them an environment to thrive, innovate and succeed. Do not accept attrition lightly and certainly don't create an environment that celebrates departures for any reason. Celebrating the avoidable strengthening of your competitors' businesses is the very definition of insanity.
3. Define a strategy that drives your whole business to deliver value to your clients. Encourage client satisfaction, encourage repeat sales, encourage referrals.
4. Support your strategy through policy, procedures and with performance KPI's focused on relentless product or service delivery excellence at every level of the organisation
If you follow and build upon these simple steps, the consequences will deliver far greater financial benefit and reward for shareholders, but from greater success, growth and sustainability.
If this article made for uncomfortable reading, then maybe your business needs our help. If you found yourself shaking your head in violent disagreement throughout this article, then I suggest you reach out for a conversation with me even sooner to avoid shaking your head in bewilderment as your business slides further behind your competitors.
Our Consultancy team can support your organisation to develop, align, optimise and support your strategic focus. We also provide services to facilitate business transformation, implementing technology and reporting solutions and enable a relentless focus on success, quality and sustainability. Get in touch and let your journey to success begin.