A Humane Guide to Business Basics
I find the current way of looking at business profitability difficult to justify in a humane way. Business success as measured through Profits come with a connotation of milking the customer. That led me down an entire soliloquy around a new way to define a humane version of Profitability considering myself as a business (after all corporations are legally individuals).
Profit is the excess of revenue beyond costs. Profitability improvement therefore hinges on increased revenue and reduced cost. Revenue translates to others finding me/my service helpful and valuing that help enough to part with/sacrifice a part of their own self — money in this case, which causes them the pain of loss. Increased revenue (a measure of how much more others value your contribution) is achieved when: more people find me/my service helpful and when each person values my help more.
To provide this help, my effort/sacrifice is required, which is cost. Reduced costs translate to lower effort/sacrifice required from me to provide the same amount of help to others.
Increased revenue results from Differentiation that helps lock clients in. In simple terms, this means that your help is more aligned/fulfilling to the needs of those being helped (target segment) as compared to the help offered by others (competition), and its more intense. Technology (defined as a better way of doing an act) is the way to disrupt the existing benefit-cost trade-off. Hence, inner transformation can only change the profitability paradigm by creating uniqueness on the revenue (benefit to others) and cost (effort needed to provide that benefit) fronts. A simple exercise here is to identify which efforts (costs) are not helping me become better at serving the needs of others, refocus the freed up time and effort — voila! customer-centricity.