3 Leadership P’s for Maximizing Profits
Time to start, but where to start?
Profits are paramount if you want to have a thriving business. But as a business owner or leader, it is very difficult and oftentimes confusing to land on a strategy that maximizes long-term profits. Where do you start?
After years of personal experience working with and for various businesses (large and small), I have come to believe that there are three fundamental leadership “P’s”—purpose, partners, and proactiveness—that are key to delivering increased profit year over year. I’ll go into more detail about these three P’s below:
Purpose is about intention. Every decision, goal, product, service, process, or action that exists in your business must be purposeful—there must be a reason or a need associated with it. Ask yourself, Why did I start my business to begin with? What aspiration or objective do I have for my business, and what positive impact can it have on others?”
Some business leaders believe that their purpose is to make money, but if you look at some of the world’s most successful businesspeople, you’ll see that they had a greater vision in mind. Walt Disney, for example, did not create the most beloved cartoons and magical places on earth because he wanted to “make money”—he did it to bring entertainment to children and create a place where parents and children could go and have a good time together.
The current stated purpose of The Disney Company is “to use our imaginations to bring happiness to millions.”
In the first quarter of 2015, Disney delivered a 10% increase over 2014 in profits, earning a 2.1 billion dollar net income—and they did it by providing happiness to millions. Figure out what your purpose is, then bounce every one of your company’s decisions, processes, objectives, and actions up against it to ensure alignment and consistency. This will empower you and your employees to consistently work toward a common goal—which, ultimately, will translate into greater profits for your company.
There are five key partners to consider in any business: employees, customers, suppliers, the community, and investors. First, let me remind you that a “partner” by definition is a person who is associated with or shares something with another person. Unfortunately, in the business world there is a tendency to think of partners as “units” or “organizations,” and to ignore the actual humans that comprise them.
But great leaders recognize that good relationships deliver profits. Happy, engaged employees have higher productivity.
Positive customer experiences foster loyalty and higher revenues. Collaborating with, not dictating to, suppliers enables better costs for your products and services. Supporting your local or global community in their efforts increases awareness and potential revenue increases. And engaging with investors who focus on long-term, not short-term, profits creates an environment for continuous growth and innovation.
In their second fiscal quarter this year, Whole Foods Market posted $142 million in net income. Whole Foods’ focus on partners also delivers innovative changes, as they are introducing a new line of stores to meet the needs of one segment of their customers, the millennials. The new stores will offer lower-priced options that are still in alignment with Whole Foods’ stated belief that what people put in their bodies makes a difference.
Being proactive is about acting intentionally in circumstances instead of reacting. Because of the day-to-day demands and pressures of the business world, many leaders find themselves faced with reacting to unexpected situations that arise; however, reacting ALWAYS delivers less than effective results. Why? Because reacting doesn’t allow for time to consider the downstream consequences to the action. “Off the cuff” choices usually cause a disruption to something somewhere, which in turn often leads to productivity decline or increase in quality issues, both of which negatively impact profits.
I am not suggesting that being proactive has to take a lot of time; it can be virtually immediate. It does, however, require being mindful of the reason a decision is being made or action is being taken—and it is a mindset that understands that nothing is sacred and there is always room for improvement. Change is a given, because without change there is no growth. Companies that operate in a status quo or reactionary state waste valuable time and resources, which drains their profits. Proactive companies, in contrast, evaluate and reevaluate their strategies, and they change constantly to keep their performance fresh and alive. In late 2014, for example, Southwest Airlines did a total rebranding of their company and planes with a message that shows they care about people. Their new tagline is “Without a heart, it’s just a machine,” which demonstrates their love for and focus on their people and their customers.
After their first quarter this year, the airline posted record profits of $453 million—30% higher than those during the same period of 2014.
While lower fuel costs did contribute to these record profits, making proactive decisions and actions certainly made an impact as well.
Want to maximize your business’s long-term profits? Act with purpose, focus on your partners, and be proactive. Embrace the 3 P’s, and watch your bottom line soar!