They Lost the Top Line in Pursuit of the Bottom Line

I was sitting at the airport last week, when I heard the guy behind me talking to his sales team. I heard the following; “We are not going to do anything about that issue right now.  People, I have worked for some really poor performing companies over the years and I have gotten very good at getting out of trouble. So if you need me to help you talk it out with a customer, get me involved.”

Did anyone else hear that the way I did?

–    We have a problem
–    We are not going to fix the problem
–    I’m good at getting us out of trouble (covering it up)

VS.

“Here is how we are going to address the issue and here is how we can let our customers know about it.  Get them engaged in the solution.”

Back in the 1980’s I worked for a company that was number one in their industry. Because of their performance, their stock price went up. They were one of the top 100 best performing stocks on the NASDAQ that decade. Then the focus changed to earnings, and they lost sight of their original vision.

A decade later, they were sold to a Venture Capital Group. This firm had to change the name of the acquired company because their customers would not give them a second or third chance due to previous experience.  I remember moving into a new territory and going through the files. We had done business with almost every one of the targeted accounts in the previous years. They had all fired us due to poor performance.

You see, in pursuit of the bottom line they lost the top line. Labor was our biggest expense. So we created the Right Way Initiative and we Right Sized much of the labor. The only problem was that by cutting labor we cut client performance. They would not take ownership of the root cause of our client loss. Any manager who was persistent in calling the Senior Leadership team on the issues was soon”Right Sized.”

Why is it that companies think they talk themselves out of an issue vs. fixing the problem? It may work for a while but the customer always finds out and the result is brand erosion and loss of business. They fall into what Jim Collins calls Stage 3 (Denial of Risk and Peril) of the Five Stages of Decline in his book, “How the Mighty Fall”.

So as enlightened leaders, what are we to do?

1.    Recognize that you can run but you can’t hide. Transparency is here to stay.
2.    Getting so caught up in the bottom line that you lose the top line, can destroy your business
3.    Always remember why you got into business. It was to do better than others could do. It was to serve. When this is your focus above and beyond the bottom line, the bottom line will take care of itself.

Take Good Care
blog.johngies.com

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