There is profitability…and then, there is growth.
Many businesses – and their leaders – do not understand the difference.
If I want to be more profitable, I can do either one — or a combination — of three steps:
1) Cut expenses
2) Get my current customers to spend more money with me
3) Get new customers
(Thanks to my friend, Ford Saeks, for discussing this with me last week at a meeting in Las Vegas!)
However, it is very difficult – perhaps impossible – to cut my way to growth. (It just sounds like an oxymoron, doesn’t it?)
Gary Hamel wrote, “You can only grow by bringing something unexpected and exciting to clients.” Taking that approach means you’ll get your current customers to spend more – and you’ll attract new customers.
In other words, true growth is created by distinction.
Chopping your training budget, slashing R&D, and cutting back on your marketing may cause you to be more profitable in the short term. However, it’s impossible to consider that approach as a long-term strategy for growth and distinction.
Think about it: If you grow in a distinctive manner…you’ll be profitable.
But, if you’re currently just profitable…it doesn’t guarantee you will stay that way…or that your organization will grow.
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