Monday, October 1, 2018
Delray Beach, FL – You own four businesses in the same industry. They have the same sort of products. The same access to marketing intelligence. And they have unlimited access to cash. Three of them have been steadily growing their profits. One has not.
So you devote extra time and energy to that business. You work with the key people. You suggest ideas, make introductions, etc.
You feel certain that they are all working hard and with integrity. But even with your assistance, the bottom line is always red.
You wonder: What’s going on?
I have a theory about that…
It’s untested. It may be wrong. But it may be right.
Another Act of Binary Thinking
When it comes to company profits, there are two kinds of employees: those that are insanely attached to them (tiger sharks) and those that are not (goldfish).
Goldfish are very common. Tiger sharks are rare.
In a typical profit-oriented business, most employees, if asked, will tell you that they care about profits. And some of them may indeed see profitability as a positive thing. They realize that profits are not just something that shareholders benefit from. They may even understand that profits are the lifeblood of the business – that without them a business cannot sustain itself except by a regular infusion of new capital. (And since new capital is usually dumb capital, running a business on capital inflows is ultimately a bad idea.)
Tiger sharks understand all that. But their commitment to profits is much, much greater. They will do pretty much whatever it takes to create profitability. They will work endless hours. They will make tough decisions. They will fire their friends if needed and occasionally neglect their families. Like their namesake, they are always hungry. Aggressive and ferocious, they never stop going after their prey (profits).
So what does this mean?
It means that although 90+% of the work in any business can be competently done by goldfish, without a tiger shark at the top, profits will likely never happen.
