Tom Lemanski's

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Measuring Profit Model Engagement

Money

Has “Profit” become either a Dirty or Unspoken Word Where You Work?

It is no secret that the reckless pursuit of profit can lead to win-lose scenarios. When the business media exposes examples of profit driven exploitation, the word “profit” gets a bad name. Does the word “profit” have negative connotations in your organization? How do you know? What happens to your company’s ability to profit when “profits” are perceived negatively in the minds of those who help create them?

Pumping Up Profitability’s Perception

If you’re seeking to improve that perception, here is some wisdom from Peter Drucker on Profitability
Profit is not the explanation, cause, or rationale of business behavior and business decisions, but rather the test of their validity. If archangels instead of businessmen sat in directors’ chairs, they would still have to be concerned with profitability, despite their total lack of personal interest in making profits.A company can make a social contribution only if it is highly profitable.Managers must convert society’s needs into opportunities for profitable business. That, too, is a definition of innovation.
So let’s agree that profits are essential as an organization seeks to create wins for all of their stakeholders. Then consider getting everyone committed to responsibly creating more profit. I recommend that you start by asking this simple question:

money msoHow Do We Make and Keep Money Here?

When it comes to the rank and file, the answer to this seemingly simple question is more elusive than most executives realize. Assuming that everybody “gets it”, is a expensive and dangerous outlook.

Profit Model Engagement

Accidentally or intentionally every enterprise has a profit model: Processes for taking in more than you spend. What would happen if everyone in your enterprise could answer this “million dollar question” articulately with both an understanding and enthusiasm for their role in the process? If they can’t explain it, your model is more accidental than intentional. And if your profits are more accidental than intentional, they are easily jeopardized.

The Profit Model Challenge

In Tom Peters’ the business book classic, In Search of Excellence, he coined the acronym: MBWA which stands for Management By Wandering Around. My challenge for you is to wander around your workplace and randomly ask these million dollar profit model questions:
  1. How Do We Make and Keep Money Here?
  2. How do you play a role in that?
I am willing to wager that you will be startled by the overall inability of your people to give you an articulate answers.

Call Me a Capitalist Pig, but…

If your discovery is surprising, allow me to ask:
  • What do you need to do to raise the status and perception of the word “profit”?
  • What if you don’t?
If you’ve avoided engaging your people in your organization’s profitability, ask yourself: Why? and How much money are you leaving on the table every business day?

Acknowledgements

The idea of educating and engaging your organization in your profit model comes from James Fisher’s book Navigating The Growth Curve.Peter Drucker quotes are from Chapter 6 “What is a Business” in “Management: Tasks, Responsibilities, and Practices