Awesomely - the 'technical term' for doing something with excellence. In this context, we're talking about running a business excellently and making a profit. But should profit be the primary focus of running a successful business?
Let's face it, we are all in business to make money - unless you're running a not-for-profit organisation with a community-focused mission - which is a very admirable thing to do. So yes, profit is important, but is it or should it be your primary driver?
Let's look at this question from two different (and important) perspectives, ie: that of your employees and that of your customers.
Profit Focus & Impact on Employees
Most employees want to feel part of something more meaningful than just making money for the boss, or for the corporate machine. Research out of Harvard shows that making profit your top priority as a business owner or
executive may not be the best way to improve profitability. For example, their research shows that CEOs who place stakeholders’ interests above those of profits, benefit from higher employee engagement—and as a result, derive superior financial results, because profit was one of their secondary goals.
The study (gathered from 520 businesses across 17 countries) found that employees developed negative feelings toward an organisation if it was focused purely on profit maximisation. As a result, employees were less willing to sacrifice for the company and corporate performance and profitability suffered.
If you don't already have one, craft a company vision and mission (with your employees) that shows how the organisation contributes to something more meaningful than just profit. This will support your employees to feel like they are part of something special, and will help build a healthy, high performance culture. A balanced scorecard is also a very helpful tool in this regard, as it shows how profit is only one of many areas of focus for a business, often alongside employees, customers, innovation, etc.
Profit Focus & Impact on Customers
Let's look at an example that I'm sure you can relate to. Have you ever had someone try to sell to you something that you didn't need or weren't interested in and they just kept pushing that product regardless? Did they disregard your feedback or make it clear that they just wanted to make a sale, and you felt like you were just a number to them?
That doesn't feel awesome does it? It feels pretty average actually. And no business owner should ever want their customers (or prospective customers) to feel that way. But if you are solely pursuing profit, or "the bottom line," then this could be the experience that your customers are having. If so, you'll probably lose them when another business shows them the consideration and respect that they deserve.
Making customers the centre of your universe in your business is critical to profitability. This
is called being 'customer centric.' It's a fancy term, but it's not rocket-science. If customers are happy, they are more likely to keep coming back to you - and will also tell others about the great experience they had. The opposite is also true.
If your business is truly customer centric, an ingrained focus on the customer will be evident - it will be operationalised and integrated into every aspect of the business. It will influence who gets hired and fired. It will inform pricing, placement, promotions and the design of all new product and service development for sales. Being customer centric and focusing on understanding and meeting customer needs as one of your areas of focus will serve to improve profitability as a byproduct.
It seems counter-intuitive to not focus on profit when most businesses exist to make a profit. But a myopic focus on profit without consideration of other stakeholders' views, interests and needs, will only serve to erode profit rather than increase it.
The research out of Harvard and plenty of anecdotal examples confirm that when CEOs and business owners make it a priority to balance the interests of customers, employees, and the community while also considering environmental impacts, employees perceive him or her as visionary and as someone they want to work for. They feel part of something far more meaningful than just making money and will be more willing to exert extra effort. In this way, increased profit will be the byproduct of all the other things you have done awesomely.
If you would like more information about how to make your organisation customer centric, build a high performance culture and enjoy increased profitability as an awesome byproduct, then please don't hesitate to contact Business Agility. We are business coaches who are former CEOs and MDs. We know what it takes to be successful in business.