Profitability and Benchmarking

Profitability can be improved only through value addition.Value is usefulness as seen by customer. Either more number of customers or more value per customer or both. If cost can be reduced, price can be reduced and number of of customers can be increased. OR some more features can be added and thus value as seen by customer can be improved with the possibility of fetching better price. For this to happen, constant efforts are required to do better than earlier. There should be benchmarks for every activity and our own set benchmarks can be taken to higher levels through improvements.

For benchmarking, one has to ensure correct recording of facts. If this recording is not true, benchmarks shall be irrelevant and future results shall be confusing. One can get records from other sources. However authenticity of these records is questionable since we do not have control over these sources. Also, the background conditions are different and may not be known and hence may not be comparable. Self benchmarking is better since conditions are controllable, known and hence comparable. Organisational controls can be effectively used to filter stray incidents from the records.

All these things are very obvious and one wonders why then organisations do not strive to achieve something which is not so difficult. Answer lies in internal feuds and lack of teamwork. Everyone wants to take credit for whatever good things are happening in the organisation. Top management should discourage such culture and encourage employees to own the responsibility for both good and bad happenings.