A Letter from the CEO – Blinded by the Top Line
Perhaps you’ve heard the phase, “You get what you measure.”
This is the reason we set up performance reports that reflect the things we want to achieve. After all, if we’re not measuring it, how can we demonstrate whether or not we’re succeeding?
It’s also true that, “You don’t always measure what you get.” This is especially true of the unintended consequences of focusing too much on top-line sales revenue.
While it’s true that top-line revenue is an important measure of companies’ success, in the end, it all comes down to the bottom-line: Profitability.
So, what if a relentless focus on top-line sales actually undermines your profitability objectives?
Most Operations folks routinely endure problematic orders they wish were never accepted. When senior leaders hear about these stories, it often makes their blood run cold and is embarrassing for the people who were involved. Which is why leadership rarely hears about delivery issues.
Indeed, many organizations are set up to prevent messy and distracting details like nightmare orders from bubbling up to the higher ranks – fueling a notion by senior leadership that teams will always “just find a way to make it happen.”
Also, the culture of most Operations teams is to deliver whatever they’re asked, or die trying, even when it’s obvious to everyone that it didn’t make economic sense to take the order in the first place. I see this happen all the time for old/low-volume designs.
All this means that senior leaders don’t feel the slowly mounting pressure or see the value of measuring the true opportunity costs of continuing to sustain low volume/problematic designs. Eventually, if not addressed, these nominal and frequent costs will slowly strangle the bottom line.
And once that happens, they’ll already be strangling the top-line too. But that’s a topic for another time.
–Ethan Plotkin, CEO