Mission Driven Management: Knowing the key drivers of profit & growth

by | Jan 25, 2016 | Business Strategy

Time flies over us, but leaves its shadow behind.

— Nathaniel Hawthorne

Time is an incredibly valuable asset. Where management spends its time signals to employees what is important to a firm. Management time and focus also dictate what areas of the business will flourish and what processes, products or services will languish.

So how do we decide where to spend our time?

Two of the most common approaches we see are:

  1. Management by “gut feel” and intuition: Management teams that spend the majority of their time “fighting fires”, or addressing issues as they arise.
  2. Mission-driven management: Teams that know the 2-3 things that are of strategic and financial importance today.

Management by “gut feel” and intuition

When management teams are overwhelmed, they tend to spend much of their time addressing issues as they arise. Managers and business owners find themselves hopping from one fire to another, constantly troubleshooting pesky business issues that threaten to derail critical business functions. All the while, endeavors that make the business more profitable, and more valuable, remain on the proverbial back burner.

This is an incredibly expensive management style: While “the problem of the day” may always be solved and the business stays profitable, the organization fails to make significant progress in achieving the growth and profitability it desires.

Mission Driven Management: Knowing your drivers of profit & growth

Mission driven management requires business owners to know the 2-3 things that make their organization more profitable and more valuable. Focus on those 2-3 things, and profits will soar, the business will grow, and the value of your organization will continue to climb.

What are the 2-3 things that will maximize your profit & growth? The answer is uncovered in a strategic-financial review of your business. Multibillion dollar corporations do this all the time. They have to. They are paid to make their business more profitable and valuable each and every year.

Applying rigorous financial models to your firm’s data will uncover the precise metrics, business functions and strategies that maximize profitability and growth. They are different for every organization. For example, the key business drivers that make Walmart more valuable aren’t identical to those of Target.

What drives Starbucks’ enterprise value isn’t the same set of drivers that propelled Peet’s Coffee to command a $1Billion valuation upon its acquisition by JAB Holding several years ago.

How do they know what to focus on?

Large organizations generally operate with the philosophy that they are stewards of their investors’ capital.

Unfortunately, closely held businesses don’t always do this. It’s too bad. They only end up stealing from their own pocketbooks.

Large organizations use sophisticated financial models to identify their key drivers of profitability and growth. Maximizing the performance of these key business drivers makes their companies more profitable and valuable. The majority of their time and effort is spent focusing on business processes, strategies, and other endeavors that boost the performance of their primary value drivers.

Bridgesphere can help

Our proprietary financial models and analytics help our clients define their critical value drivers. We partner with clients to develop strategies that maximize the performance of these value drivers and boost profitability and the value of their business. This can take several forms:

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Own it.

Own it.

Whenever someone says they want to “manage” something, I cringe.

I immediately ask myself, is there a better word? After all, words matter. The words we chose carry deep significance, not just because of their inherent meaning, but because they give insight into our actions. They cast light on our motivations.

So when people tell me they’re going to manage something (or even worse, manage-through something), I immediately try and discern whether they’re setting themselves up for failure.

After all, ownership breeds success. Management reeks of passivity.

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Christopher Catapano, Bridgesphere Strategic Planning

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