Wednesday, 18 March 2020
Profitability is a Byproduct of Good Work
A successful client of ours recently made this statement during one of our meetings: “Profitability is a byproduct of good work.” This got me thinking about how businesses approach being profitable.
In business, there is a high priority to maintain profitability; without it, businesses do not survive.
However, how businesses are profitable can determine how long they will be profitable.
At AEOS Consulting, we can help future proof your organization by supporting your Growth and Development strategy.
Quite often we see companies make budget cuts to resources and limit spending and activities (such as training), all in an effort to reduce costs and improve profitability.
No.. of course it doesn’t. If the process is broken, then the action of making further cuts, potentially eliminating the possibility of making positive change is not going to help! Cuts being made by large companies in an effort to retain the viability of a business are usually made too late. These sacrifices - often at the cost of employees - are made in haste and in an effort - often too late - to stay in business.
Why does this happen?
This happens because there is a lack of foresight and a level of complacency in business operations. We can't afford to make changes because it will impact our (short term) profitability.” These statements are a result of fear of change and fear of risk.
As an instigator of positive change, I often hear rationale such as “we don’t have the budget” or “we can't change how we currently do things”. Budget is often a big factor, and I understand that being prudent of expenditure is important for the success of any organization, this needs to be balanced with the desire for progress and investing in the infrastructure of the organization. This infrastructure should include investing in the capabilities of staff as well as process and workflow resulting in improved efficiency.
The challenge for any organization is to balance the cost of internal development and implementing positive change and innovation with maintaining a status quo.
At AEOS we typically see three types of clients:
Type 1: Early Adopters Innovative, progressive, recognizes a need to “keep up” with industry developments to retain market share. Recognizing the need for change is a key factor.
Type 2: Late Majority Less progressive but if made aware of inefficiency can be receptive to improving process. Recognizes the benefit of improving the skills of staff. Cost is a key factor.
Type 3: Laggards Processes are old and out of date, training is limited or unavailable. Any significant changes to workflow would likely have a significant pushback from both management (due to the disruption to production) and staff (it falls outside of their comfort zone).
From the above three scenarios who do you expect will be still in business, 5, 10 or 15 years from now?
Future proof your organization
Through dedicating time and resources to internal development you can mitigate not only the impact of disruption to production but also the cost of falling behind. Progress is an integral aspect of the organization's Growth and Development Strategy; anticipating and planning for change is the key, and by doing so you will be in a very good position to weather any challenges your business may face and see positive growth and development.
By producing good work efficiently, with staff that is happy, within a culture that encourages improvement, profit comes more easily. Plan for change, anticipate costs so you can budget for it, and invest in the future profitability of your business.