Recently I read a very interesting post written by Martin Fowler on the three pillars that serve as direction to ThoughtWorks. The three pillars came from Ben & Jerry’s mission statement:
In his post, Martin used the phrase “revenue is like oxygen – you need it in order to live but it isn’t what you live for” as a metaphor to explain the sustainable business pillar. I really like this metaphor but I would like to propose another one to help explain the sustainable business pillar:
Revenue is like food:
- you need it in order to live but it isn’t what you live for and;
- eating too much or too fast or the wrong food can make you ill.
Too much revenue: how come too much revenue is bad? Well, there are many ways that too much revenue can be harmful. If you sell at a price too high, a person may buy one time, but she’ll have the feeling that she paid too much and she probably won’t buy again. Or if you sell more than what your able serve, your customer won’t be happy. Or you sell something you are not capable of delivering, again you won’t make your customer happy.
Growing revenue too fast: how come growing revenue too fast can be bad? If you are not prepared to sell fast, you may hurt your business by providing your customer with poor product or service. They won;t be happy, they won’t return, they won’t tell their friends good things about you.
Wrong revenue: is there such a thing as wrong revenue? If you have revenue due to the causes explained in the two items above, they can be harmful to your business. Besides this, other examples are revenue from an unethical sale or revenues that can create cash now but many operational problems in the future.
Next time you are chasing a new revenue, remember the analogy with food – your business need the revenue to live, but it doesn’t live for the revenue. Is this revenue enough for your business or are you trying to put too much food in your mouth? Are you acquiring this revenue at the right pace or you are being too fast and your company won’t be able to cope with the demand? Is this a good revenue or it may hurt your company in the future even providing some cash now?