If you have children who are teenagers right now or if you have seen any teenagers recently, you have likely noticed how baggy their clothes are. It’s always weird to me the timing of fashion trends. Baggy clothes used to be hot in the 90s and they are now back in fashion. Sidenote, I always thought that baggy clothes were great because you could “grow” into them. Maybe this isn’t true.
Like fashion, business goes through similar trends. Years ago, everyone was talking about Good to Great by Jim Collins. Over the past 14+ years, the major trend behind most companies can be boiled down to one word: growth.
Tech companies became famous for taking this trend to the extreme. Until late 2021, Tesla was worth more than all other carmakers combined. It wasn’t because of their ability to deliver cars (they have tiny volume) or the quality of Teslas (it’s notoriously bad). It wasn’t even based on actual growth but future growth. You would hear investors say how one day Tesla would dominate the car market, how their batteries would be a standalone business or how they would become the dominant player in a world of operating systems for cars.
Tesla stock has crashed today as profit becomes more important. Granted, it is still worth more than Toyota or Ford. That’s the thing about changing business trends. You never know what the future trend might be or how to prepare for it.
2023 is the year of profit and businesses need to find levers for more profitable decisions. In my work with clients, I helped identify these decisions across six major areas: Pricing, Customers, Brand, Technology, Product, Value. Any one of these areas can drive profit and the best companies find two or three to increase their chances.
Here’s a short primer on the six areas.
- Pricing = pricing increases, decreasing costs, etc.
- Customers = new customer segments
- Brand = strong brand means less pricing hesitation or marketing investment needed
- Technology = automation, decrease costs, better service
- Product = new products or services
- Value = charging for all value provided to customers
Profitability is back in vogue. Go back to your management team and start thinking about where future profit will come from. If you need help, check out a short video I created on how to find profitable decisions across the six areas I mentioned above. It’s likely having a cheat sheet at your fingerprints.
Photo by Bryan Papazov