Is there more to business than revenue, cost, and risk? No

Yet businesses that focus only on revenue, cost, and risk generally implode

Dear Bob ...

I just read your recent post, "The world's quickest course in project management," and have to take issue with you regarding what you describe as "the point."

[ Also on InfoWorld: "The world's quickest course in project management" | Get sage advice on IT careers and management from Bob Lewis in InfoWorld's Advice Line newsletter. ]

Surely there's more to business than just revenue, cost, and risk, isn't there? How about all the items usually lumped under the term "intangible benefit," like employee morale, customer satisfaction, and so on? Don't they matter too?

- Disheartened

Dear Disheartened ...

I rarely deal in absolutes. This is as close to an absolute as I get.

The answer: Of course they matter. They matter in that they contribute to increased revenue, decreased cost, or better-managed risk.

Take customer satisfaction -- smart companies generally invest in it. They do so not because it's a moral proposition or because it's "doing the right thing."

It's because satisfied customers generally come back to buy more, and they bring their friends and colleagues with them. This translates to increased revenue, a reduced cost of sales, and a reduced risk that the company will lose market share to its competitors.

Any business change worth pursuing has to end up affecting one of the big three, at least in the for-profit world.

It's a bit more interesting in the nonprofit world, due to the nature of the beast. Nonprofits frequently invest in efforts that are not intended to have a financial impact, only an improved ability to accomplish the organization's mission. In the for-profit world, "accomplishing the mission better" leads, more or less automatically, to financial benefit.

In the nonprofit world, the connection is more tenuous. Yet even here, organizations that accomplish their missions also improve their ability to persuade the philanthropic community to donate to them, rather than to their competitors.

So it's more or less absolute, even though the impact is indirect in some circumstances.

Here's the most interesting part, though: Businesses that focus their efforts solely on revenue, cost, and risk generally lose out to businesses that focus on their "missions" -- not their mission statements, which are almost universally useless, but their missions. That is to say, they exist to do what's important for their customers.

Take GM. For decades, its so-called leaders expressed little interest in the company's mission of building cars people want to buy. Instead, they focused their attention on a variety of financial shell games.

In other words, the best ways to improve revenue, cost, and risk are to make sure the company is doing everything it can to create high levels of value.

- Bob

From CIO: 8 Free Online Courses to Grow Your Tech Skills
Join the discussion
Be the first to comment on this article. Our Commenting Policies