5 Truths about Profit as a Goal

Profit is so often the number one goal in business…the measure by which people are judged but for me it must be a factor but not a goal. For me profit reflects how well you have achieved your business goals…after all it shows the value added to your products and services less what it has cost you to produce it..but here are my 10 truths about profit

  1. I think it was Howard Schultz who said "profit as a singular goal is a fairly shallow aspiration and it's not enduring". True – decisions made for profit are short term and business value is created over the long term.
  2. Profit is the report card on how well you have created the vision, translated it to your employees and manifested it in your products to create a unique experience for the customer. It is the snapshot report card on leadership that shows where you can do better….
  3. The inputs into profit are not the raw materials …no matter what the business…the inputs are the ideas. Ideas therefore are the precious resource that create value added not the physical material or process….they are the enablers of the idea.
  4. Profit is not a sign of future strength, it is a sign of the past….future strength is determined by the talent, the ideas, the expression, the ability to make ideas become reality.
  5. If profit becomes your goal then you make the wrong strategic decisions….your goal should be making decisions that make you different to the competitor, that make the customer experience more incredible, that create an emotional reason why people want to pay more for your ideas…..the profit is the by product.

We are coming up to many performance appraisals….the questions should reflect the goals…so

  • Use the profit as a snapshot of how well the company has done on the above goals.
  • Then focus on the creators of the profit…how people have contributed to ideas, to succession planning, to attracting talent, to making sure that great ideas don't get compromised through functional bickering!
  • Encourage and promote the idea of risk and benefit…what risks have they taken, what have they learned and how has that translated into benefits for the brand.
  • Use it as an opportunity to discuss and clarify how they contribute to the vision and how the vision needs people to constantly grow and feed that vision.

Comments

  1. says

    Great Post Anna! I loved it all but found myself emphasizing #5: If profit becomes your goal then you make the wrong strategic decisions….your goal should be making decisions that make you different to the competitor, that make the customer experience more incredible, that create an emotional reason why people want to pay more for your ideas…..the profit is the by product.

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