How many people in your organization have a goal anywhere on their job description or performance contract that includes profitability? Your P&L managers do, of course (don’t they?) but what about everyone else?
- Sales people are typically measured and incented purely on the basis of revenue
- Line managers are typically measured on some level of efficiency and effectiveness
- Staff managers are typically measured on metrics related to their function
- And so on.
One of the easiest ways to have a “revolutionary” increase in profitability is simply to remember that we get what we turn our focus and attention to. And if everyone in your organization is turning their attention to daily “stuff” and KPIs that don’t include profit, then what you get in your business is… daily “stuff” and KPIs that don’t include profit. Technically, everyone in the company can actually be rated a success at performance review time… and yet have the company miss its goals. Sound familiar?
Only customers drive cash flow.
Only profit drives growth and prosperity that ensures long-term sustainability and success.
I experienced that first-hand in the early 1990s when Digital Equipment, once the world’s second largest computer company second only to IBM, downsized 120,000 people worldwide and vanished while simultaneously sending their sales reps and managers to Hawaii every year for achieving their sales targets, and awarding stellar performance reviews across the company.
So what’s the answer? It’s NOT to try to slap profitability metrics on every single person in the organization – that would be unwieldy, unmeasurable, and unrealistic. That might be a revolution, but not the one we’re talking about here!
This year, another Revolution I want to share with you simply requires you to change the conversations to change the mindsets, not the metrics… and drive a 16-38% increase in profitability.
Instead, the answer is to simply change the conversations. When people start talking about profitability in a constructive way, they start thinking about profitability in their everyday role and in their everyday decisions – it’s a simple, easy mindset change. No, we’re not talking about counting paperclips here. Instead, their senses are simply heightened to see new possibilities and the opportunity to, as I call it, “Find 1% Everywhere” – which will almost effortlessly drive a 16-38% increase in profitability for most organizations.
You can increase profits the hard way – by chasing revenues and cutting costs in conventional ways. Or you can create a flywheel effect in your business that changes your results just by changing the conversations.
Revolution #2 Checklist:
7 Ways to Change the Profitability Conversation and Find 1% Everywhere.
(Includes download link to the Grand Daddy of all conversation changers!)
Right now, type in the biggest challenge you face in getting your people onside and engaged in profitable behaviors.