How Big Is Your Business? 20th Century Metrics in the 21st Century
Apparently size matters to a lot of people, or a least the perception of size. How many employees? What’s your revenue level? There are all kinds of ways to quantitatively and qualitatively “size up” your business. But are they truly meaningful measures in this new era of business?
First Question: How many employees?
Today, businesses have options other than permanently adding employees. They can:
- Subcontract to other companies;
- Hire temporaries through agencies;
- Lease workers;
- Use independent contractors;
- Hire consultants.
So, asking a company “how many employees do you have?” in an attempt to gauge the size of the operations or to classify the business may not get you very far. In fact, many business models today are very lean when it comes to plans for adding permanent staffing positions. The ability to configure the skill sets, teams, and level of human resources in a business based on ever-evolving needs of projects, demand, and customers is one aspect of the new age of highly competitive, nimble organizations. They are lean, adaptable, fluid, and capable of tapping the talent needed—when it is needed—through networks and strategic collaborations. Talent is a phone call away. Deep and broad employee rosters are last century. The capability to configure teams, and keeping the organization lean and efficient with the financial investment in resources well-managed is 21st century competitive.
Second Question: What are your revenues?
Revenues are important, but not enough on their own. What are your revenues, your profits, and your sustainability potential? In other words, you had the customer. Did you make money on the sale? Can you do it again and again? In business, it isn’t about the one-time deal. It is about the ability to continuously compete for the customer and make a profit. Revenues are good, but profits are better. And being able to generate revenues and profits again, and again, and again, and again is the best.
Third Question: Are you number one, or what’s your market share?
This question is much like the second question about revenues, because market share isn’t enough to succeed. How you achieve market share will make or break the business in the long run. Are you selling at a loss to become number one? How long can you stay in business selling at a loss? Would you actually make more money if you were number two and had higher prices?
Achieving a metric for image or prestige or because it is “the metric” isn’t reason enough in the 21st century. There are too many competitors and alternative products in the marketplace to be pursuing things that have “always been the holy grail.” What does achieving a particular metric mean for a business in terms real results and impact? What will it mean to the financial results? U.S. automotive companies pursued being the goal of being “#1 Automaker” and held that title for years with strategies of sales incentives, manufacturing cost reductions, and numerous other “traditional” approaches. They aren’t number one any more, and they certainly aren’t the most profitable in their industry, so they need to shift their thinking from 20th century metrics and strategies to 21st century approaches and thinking.
Question Four: What product do we want to sell?
Ego-centric business thinking involves pushing the product to the customer. The question for the 21st century is what products are the customers looking for and willing to buy? Twentieth-century businesses had the philosophy of creating a product and finding the customer. Twenty-first century businesses find the customer and the need, and create the products to satisfy the need.
Question Five: What will people think?
This isn’t just a 20th century question but a question for the ages. What will people think if you aren’t doing things the way everyone else does them? What if you don’t have employees? You won’t make the ranking lists of the “Top X Companies.” If you aren’t #1 in market share, then well you aren’t “the best.” If you aren’t conforming, you aren’t performing … right? Well, they told Google they couldn’t do the IPO that way. They’ve said viral marketing wouldn’t work. The Internet wouldn’t change the world. The Berlin Wall wouldn’t come down. Man couldn’t walk on the moon. The world is flat. There are a lot of things that people have thought; so what? What matters is what works. What matters is what makes sense, as well as business cents … and dollars. What worked yesterday isn’t necessarily true about today and probably will be questionable tomorrow. So what will people think? If you are successful, they will think you are savvy, wise, insightful, and …
Question Six: Why Didn’t I Think of That?
If you do things the way they need to be done for your business or organization, not constrained by the expectations of “the way things have been done;” If you operate without the expectations of building a behemoth of “big business” constrained by a business model of employees for the sake of employees, infrastructure for the sake of infrastructure, and last century thinking, then you just might be innovative, adaptable, revolutionary, profitable, sustainable, and connected to the customer. You might be the person, the organization, the business that everyone asks about. You might be the one who generates the question, “Why Didn’t I Think of That?”
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