- When margins count
The most effective way to improving business profitability in a competitive environment is to dissect each business process and seek continuous improvement.
But balancing the need to lead the business of today whilst creating the business of tomorrow is often challenging.
In reality, many leaders seek to make one or two major changes to significantly improve profitability. While there are instances where these can be found, it is rarely a long-term strategy or solution. Successful businesses adopt a culture of continuous improvement
Sir Dave Brailsford, credited for the success of British Cycling and Team Sky, explains it in terms of cycling: “…if you broke down everything you could think of that goes into riding a bike, and then improved it by 1%, you will get a significant increase when you put them all together.”
Now let’s apply the same principle to your business: if you broke down everything you do in business and improved it by 1%, you would experience a significant improvement in profitability.
When you think no further savings can be achieved, think again. I recently met with a client who believed they had maxed out their savings. However, after applying the idea of marginal gains and dissecting the business to identify 1% improvements, savings of $330,000 were identified. Another client added $300,000 straight to the bottom line applying the marginal gains approach to its pricing strategy.
No business or team can afford to sit back and rely on existing systems/processes or past successes; those that do will find that competitors will not only catch up but eventually overtake.
Arue De Gues sums it up perfectly when he says, “In the future, the ability to learn faster than competitors may be the only sustainable competitive advantage.”
Every CEO needs time to focus on setting long-term goals and seek ways to stay ahead of the game. As an advisor, I help improve profitability, address challenges facing the business and connect them with the relevant expertise.