I read a piece on the state of big business in America in the 2021 preview issue put out by The Economist.
In the issue, the writers point out that somewhere around 40+% of the 3,000 biggest businesses in America are losing money.
Before the pandemic there was a big issue with debt overload, debt-fueled growth, or whatever you might like to call it.
The key idea being that businesses in the United States were operating in an unsustainable manner because you can only go so long before you are forced to actually have a business that makes a profit.
The factors behind this are policy level, decades in the making, and a huge risk to the long-term health of the American economy.
But I’ll point to three simple things that are at the core of the challenges facing American businesses right now:
Over the past decade or more, American businesses have become too tactical, ineffective, and driven by quarterly results even when those results aren’t actually the sign of a successful business.
To stop the next crisis from coming faster than the last one, businesses are going to need to be more focused on results, more effective in how they deliver value to their customers, and instead of focusing on driving revenue at all costs…more focused on profits.
I’ve been a strong advocate over the years of the basics of business. To focus on product, value, and the customer.
Here are three ideas for the start of 2021:
Become more market oriented:
Market Orientation means bringing the voice of your customer into the business. Being market oriented means that you are closer to your customer and have a better understanding of what they value.
This often leads to better product and service launches and higher profitability.
Focus on the outcomes:
What is your goal?
Make sure you have the right goals and the right objectives. Too many businesses get trapped in chasing results or outcomes that aren’t in their best interests.
Focus on the outcomes that work for you and your business.
Possibly profit. Customer spend. Whatever.
Be effective and not efficient:
Efficiency is a dangerous thing because we all want to be more efficient but is that the thing that is really going to push us forward?
Efficiency is easy because it doesn’t require you to think about what you should be doing just that you are doing things well and improving your processes.
You have to focus on doing the right thing not just the thing.