One measure of how well a business is going is how profitable it is. People often focus on growing the top line (revenue) but neglect to pay close attention to the bottom line (profit).
To be successful a business needs to be profitable, to cross the chasm from successful to significant and generate superior profits.
Superior Performance = Superior Profits
Superior profits flow from superior performance. Fundamentally, there are two approaches to achieving superior performance:
- Superior effectiveness (better products and services), or:-
- Superior efficiency (better value creation processes for transforming inputs into
Superior profits allow a business to invest in new technologies, in more memorable marketing programs and in training and development programs that boost productivity. This also helps attract additional investment into the business, of great talent and money, which helps fuel growth.
Disciplined, Calm and Considered
The problem is that most executives and business owners are so busy addressing the myriad of things competing for their limited attention. They know they need to spend more time working “on” the business rather than “in” the business. However, the escalating complexity of the world in which they operate requires their constant attention. It is easy to cancel strategy sessions, board meetings, retreats, conferences, lunches and other “big picture” activities when the pressure to execute builds.
Creating superior profits requires the antithesis of this widespread “busyness” we see so prevalent amongst leaders today. It requires a disciplined, calm and considered approach to how you manage the limited resources at your disposal. It involves focusing on the “big” decisions, confronting the real issues and barriers to progress. It demands deeper thinking, planning and preparation to ensure opportunities are realised and obstacles are overcome.
Take a more strategic approach
Creating can easily become confused with being creative. Creating is actually a process that can be learned, applied, replicated and even institutionalised within the DNA of a business. Taking a more strategic approach to adapting yourself and your business recognises that the formula for success is not static. As the business (internally) and the environment in which it operates (externally) keeps changing, superior profits flow when we achieve and maintain a strategic fit between the two.
Taking a more strategic approach – to business and life – is a set of capabilities that are best transferred over an extended period of time. A professional coach, mentor or non-executive director/chairman can help pioneering leaders strike the right balance between the need to catch fish and the need to learn to fish.
In my experience, the ideal individual needs to be a role model of a diverse range of qualities. I’d like to share five of the personal/professional characteristicsI recommend you look at for and some tips about how to quickly assess someone’s capacities:
- Superior organisation (ask them how many messages they have in their inbox)
- Superior self-discipline (take a look at their waist line and overall vitality)
- Superior relationship skills (observe how attentive they listen in conversation and the way their life/business partners relate to them)
- Superior coaching skills (watch the way they provide constructive and encouraging feedback)
- Superior thinking skills (give them something messy and see if they can untangle it for you)
Creating superior profits is not simply about finding the magic formula for your industry. If you look there, you are likely to find yesterday’s answers rather than tomorrow’s solutions.
Superior profits flow from discovering and enlivening new possibilities for meeting and exceeding customers’ needs in ways that have not imagined yet. It is about anticipating and creating a “strategic fit” as new windows of opportunity are opening.