Many organizations obsess over measuring revenue. Both historically to see how much actual revenue was generated and estimations for how much revenue may be generated in the future. Objectives are set to increase revenue. And people lose sleep when expectations aren’t met. Which only leads to more measuring. Organizations also obsess over cash flow issues, especially timeliness of invoicing and receipt of payment.
It’s not that finances don’t matter. But we all only have so much time at the end of the day to allocate to various activities. The more we put into measuring financials, the less we have to invest in activities that might actually improve our finances. We can measure all we want, but we have to act to do something about it. The measuring, especially of past financials, rarely affords the information necessary to do something about it. It’s just crying over spilled milk.
Even if we can glean useful information from studying financials, are financials the only way to glean information to hypothesize about boosting revenue? And perhaps more important, profit? After all you can have substantial revenue and still go out of business.
Where do revenue and profits come from? From providing value to customers. Specifically, taking risks as a business to provide a service that customers perceive worthwhile. If that’s the case, then if we focus on taking better care of customers, and providing highly valuable services, then the profit will follow. If anything, the only challenge we have left is to figure out how we price our highly valuable services such that we can continue to provide highly valuable services in the future.
What if we start measuring how valuable our services are to our customers? Wouldn’t that be a better indicator of our own success, than measuring our past financials? And even a better indicator of our customer’s success too. What things can you measure to have confidence that the profit will follow?