Achieving monthly, quarterly, and yearly financial targets (revenue, costs, margins & net profits) are the topmost priority for every business today. Nothing wrong with it, after all you are not in charity. If businesses don’t make money ever, how would they survive?
There are immediate and significant downsides of not meeting the targets because people and institutions are invested into your business and the targets you announced upfront are your promises to them about how you would return their investment. If the targets are not met, people lost confidence in your promise and will dis-invest their stake. Remember people and institutions wants to grow their investments and not interested in your excuses and have ready options which are promising better returns. Your market capitalization could go for a immediate downward swing in minutes and days. This is what makes the achievement of financial targets so important for businesses.
I would like to term this goal as managing ‘current business’ since revenue are mostly achieved from selling products and services that you produced/designed currently. These products and services are bought by customers because they fulfill their current needs / wants.
But the business world has become very competitive, businesses are rapidly investing in technology to offer promising & convenient alternatives and options to the customers. These offers are influencing the customer preferences and consequently the needs/wants of the customers are evolving. Customers are demanding more from same or less.
Well, in this fluidity, not many businesses are able to catch up successfully. They are either disappearing from the business horizon, getting sold, or struggling and fast approaching bankruptcy. Typically, their downward vicious journey starts from signs of losing customers, not meeting current financial targets, struggling to maintain their organization positivity and energy, and steadily bleeding towards oblivion.
In today’s hyper-competitive VUCA (volatile, uncertain, complex & ambiguous) business world many businesses are so consumed in firefighting because they are struggling to meet current financial targets to survive. But you will find them in denial.
What could businesses learn from this to save them from extinction?
In my view, everything being same, ONE of the most important change that could help organizations to become future proof is to include in their management dashboard important KPIs which are future focused – See below picture as an illustration.
It is like one runs every day to remain fit in the future even though currently there is no problem in person’s health.
Since resources, time and energy are always going to be limited in comparison to what an organization would require, it is important for leadership of the organization to clearly identify focus areas, prioritize, communicate & commit resources to include innovation and change elements into their daily business. Without the leadership sponsorship, institutionalization and support, no innovation or ideas will be consistently followed for concrete progress.
Without this culture shift, organizations will continue to get wiped out from unknown competitors without knowing what hit them.
Innovate your business or get perished, sooner or later!
