“I am afraid,” Susan spoke. “My company is growing, but we are not as profitable as we could be. Don’t get me wrong, we are still profitable, but the percentage is shrinking as our revenues grow.”
“What do you think is happening?” I asked.
“We have always been good at getting the work out the door. If there is ever a problem, we are like a bulldog, whatever it takes, to complete the order. Problem is, we have to be bulldogs more often, which means we dip into overtime, eat the freight, expedite production, which all erodes our profit.”
“When did you notice this?”
Susan had to stop and run images through her mind. “We’ve been on a roll the past three months. I mean, in the past, we have had occasional spikes, and we could always push our way through, but now, the push is constant and we are paying the price.”
“So, it’s more than making sure all the work gets done, we have to get the work done – efficiently, and profitably. Efficiency and profitability doesn’t come by pushing with tenacity. It comes from a system. It’s a different way of looking at the work.”
I find this SO true with so many companies that have found they hit a wall at a certain revenue level! They may go over that occasionally but can’t sustain it. I think it also relates to accountability. Systems need acountability. Many entrepreneurs don’t like holding people accountable, especially if they are people who helped them get from point A to point B. (Holding themselves accountable can be an issue as well.) They may have actually rewarded people for expediting and all the hard work it took to get shipments out on-time even though it took overtime and increased other costs. With a systems view, many of the previous work habits are now the opposite of what makes the business profitable.