What's your priority?
The profitability of any business is important - right? It’s vital. If you’re not making a profit, unless you have extremely deep pockets, you won’t be in business for long.
Now here’s the thing. Because making a profit is so important, many businesses fall into a trap and get things horribly wrong. They focus too much on making a profit.
So why do I say this? – Businesses that focus too much on profits often forget about their purpose. They then lose sight of the things that are most important - their people and their customers. When they do this, they damage the very thing they are chasing - profitability.
Let’s look at the people first – I think it’s only right to do this, because if you look after your people, looking after your customers should take care of itself.
From the formation of the very first companies 100’s of years ago, we have been de-humanising the workplace. We do this by putting in layer upon layer of rules, processes, and procedures. They cover everything.
Often, you’ll find that when a business launches a new product or service, or is simply going through change, they’ll introduce new procedures. It’s done with good intent, to provide clarity on what’s expected and to ‘help’ people. What happens though is that they have the opposite effect. Instead of helping, they are damaging.
Critically what businesses often forget about is the need to take time to work with their people and to get buy-in by. It’s essential to engage with your people so that you can develop ideas together and focus on the purpose behind the change. Put simply, companies forget to engage with their people. Instead they tell them what they are doing and how to go about doing it.
Now most people will understand the new step by step guides / processes etc, they get it at an intellectual level, but deep down, because they don’t understand the purpose, they won’t always respond in the right way. Sometimes they won’t even try. Instead, they’ll carry on with their older more familiar ways of working, as this is what’s got them their results in the past. They stay in their comfort zone.
What I’m describing here is an imbalance. Often there’s way too much emphasis placed on the organisation, management and control. This is at the expense of individuals and there is a lack of real leadership, freedom, and inspiration.
These days more so than ever, businesses need to be agile, not only to thrive, but also to survive. Stand still for too long and you become average very quickly, then you sink to the bottom. If you don't innovate, you’ll find yourself dead in the water.
If you don't lead and just manage, all the new ideas that you will need end up coming from your top management team, ignoring the vast ideas and talent pool of those you're managing. This will limit your success.
Processes and procedures are by their very nature set up at a point in time, which deal with a set of circumstances at that time. If you overly focus on management (using processes which can be out of date the minute they are created) and don't give people the freedom to find better ways of doing things, you're on very dodgy ground. The latter requires leadership.
Now I’m not saying that management isn’t important, it absolutely is, but it can be overdone. Great leadership on the other hand is vital and is something that’s hard to overdo.
You need to inspire and lead your people first and then you can think about the processes and procedures needed to help you deliver the services or products that allow you to make a profit. So, its people first every time.
Now the second area to think about is customers and the type of customers you serve. First of all, you need to be clear on your purpose - Why you’re in business (and this needs to be more than just about making a profit).
Once you’re clear on your purpose, your brand and brand values need to reflect this. Then you can then work at attracting customers that understand and have the same aligned values.
Here’s an example of what I mean. If you offer a product or service that is built on it’s green credentials, but you then start to compete for business on price in order to grow, you’ve lost your purpose.
What’s happened is that you’ve been sucked into selling to people and companies who are not really that bothered about the environment and the green benefits of your product or service - all they’re actually interested in is a cheap price.
When this kind of thing happens, you lose your identity, you lose your purpose. OK so you might grow your customer portfolio, but it will be based on transactions and not relationships built on shared values.
The problem with this is that your new customers won’t stay loyal to your brand. Indeed, they have no interest in your brand or it’s values at all. The only thing they are loyal to is making sure they get a cheap price.
Before you know it, you’re chasing your tail. You have to win more new customers to replace the business that you’re losing. More and more of customers choose other price orientated brands and you get sucked into a price war. You lower your margins and begin driving your business into the ground.
So, the moral of the story is stay loyal to your purpose, keep your brand values at the forefront of everything you do and stick to them.
Be proud of your purpose and the change you are trying to make through the products and services that you’re providing. Most of all find customers that value the same things you do.
Remember, people first, then purpose. Do this and profitability will look after itself.
What’s your view? I’d be interested in your thoughts.
Find Gherkin on LinkedIn at
https://www.linkedin.com/company/gherkin-associates-ltd
Helping People and Businesses Thrive
Glenn Smith – Gherkin Associates Ltd.
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