What Drives Business?
A few years ago I wrote a short (but very popular) blog post about what is the Profit Equation and the role that Risk plays in profitable business ventures.
Today I wanted to change the focus to what drives a business forward. What makes one business more successful than another.
I recently read an excellent article on this subject from the folks at the VeraSage Institute which presented the following formula:
At a recent conference one of the speakers presented the following syllogism:
- What drives a company -> sales
- What drives sales -> marketing
- What drives marketing -> data
The implication is clear, ultimately data drives a company.
Unfortunately, this thinking is all too prevalent in the business world (perhaps, just the world, leave business out of it).
It is also wrong. Actually, it is not just wrong, it is confusing cause with effect. Data is not the cause of company activity, it is the effect of it.
Instead, I would like to post the following syllogism:
- What drives a company -> profit
- What drives profit -> creating value for customers
- What drives value for customers -> innovation
- What drives innovation -> knowledge
- What drives knowledge -> relationships (conversations)
In my chain it is relationships that ultimately drive a company.
I totally agree with the premise that knowledge and relationships drive business. Business is conducted by humans and we want to do business with people we like and trust. Like and trust assumes a certain level of knowledge (i.e. I am confident the person understands how to solve my problem and make my business better) and confidence that they will have my best interests at hand.
One of my heroes in life was Charlie “Tremendous” Jones who famously said, “You are the same today that you are going to be five years from now except for two things: the people you meet and the books you read."
If your business is not as successful as you would like it to be, it may be time to spend more energy on learning and on building relationships. So, pick up a book (or Kindle, iPad) and start reading; make an effort to deepen your relationships and build some new ones.
by Scott Heintzelman - Scott is a CPA, CMA and CFE living in Pennsylvania. Scott is a partner serving on the executive team at McKonly & Asbury LLP, a regional accounting firm with multiple offices in the Mid-Atlantic. The firm has been an IPA ALL-STAR as well as winning Best Places to Work in Pennsylvania for numerous years.