I’m writing a series of articles on company culture and how it can affect the quality of your product and service. Checkout my previous articles on company culture:
Here’s the fourth article of the series:
Often we see shareholders, investors and employees of a company totally focused on its financial results. When there’s a period of crisis, this focus can be over 100%… :-/
Once I’ve heard a sentence that became popular with Dick Costolo, Twitter’s CEO, that compared revenue to oxygen:
“Revenue is like oxygen, it is vital for the health and the success of a company, but is not the purpose in life. Do you wake up in the morning and the first thing that comes to your mind is Ã¬how can I get more air?”
I’m very fond of this comparison. Every company must have a purpose, and this purpose should not be to defeat the enemies (as explained previously) nor getting the biggest amount of money as possible.
The financial outcome must always be used as one of the metrics that indicate that the company is successful, that it is meeting its purpose. However, even as a metric, it should not be seen isolated, for there is the good and the bad revenue.
The bad revenue is obtained at the expense of the prejudice of the relationship with the client. For example, imagine a company that provides a service over a monthly payment; when a client wants to cancel this service, the company makes it difficult in order to keep that revenue source for a few more months. This is bad revenue. The international roaming charges are also a good example of it, such as car rentals that charge for gas when you return the car without a full tank, using a more expensive price for gas than the one you find in the market.
If a company sells something with a higher price, taking advantage of the fact that you need that item, such as the cost of bottle of water in a hotel, that is also bad revenue.
In other words, although the comparison between revenue and profit with oxygen is good, it is also incomplete, because it doesn’t capture the effect of bad revenue. You rarely think about oxygen, unless you are with a shortness of breath. I don’t thing that revenue should only be remembered when there’s a shortness of it. Revenue is what keeps the company alive, able to fulfill its purpose. If it’s good revenue, the company will continue to meet its purpose for many years. If it’s bad revenue, it will have difficulties in the long run.
For that reason, I prefer to compare revenue and profit to food. In the same way healthy people don’t think about oxygen all day long, healthy people don’t think about food all day long. However, unlike oxygen, when we talk about food, there’s good, healthy, good for your body food; and there’s bad, harmful for your body food, with the possibility of getting you sick. It is very important that people know what is good and bad food, and that everyone thinks about how to get the good one and avoid the bad one.
Taking the sentence above, improving it and changing oxygen for food, we have:
“Revenue is like food, it is necessary for health and success of a company, but is not its purpose. However, both a company and a person must be always alert to the quality of the food they are ingesting, in order to assure that it is not going to cause any harm.”
In 2015 I wrote a book on Software Product Management in Portuguese. In the beginning of 2016, Paulo Caroli talked to me about how he enjoyed the book and how this book could be useful to people in the software industry not only in Brazil but anywhere in the world. For this reason, we decided to create an English version of my book.
The book is organized in 5 sections:
This book is suitable for anyone working with software. Even companies that do not have software as its core business use software in their day to day and often have developed some software that interfaces with its customers such as a website or a mobile application. It is important for these companies to understand the software product management role and responsibilities, so they can better manage this software and increase its chances of success.
We are working on the translation but as we progress we are already releasing the content. If you want to see the work in progress, please visit the book page at LeanPub. Still in beta but already with valuable content. Feedbacks are not only welcome, but needed!