4 Key Questions to Improve Your Profitability

Leading companies today are simplifying their strategies and focusing on areas within their control, such as increasing operating income rather than expenses. A common theme among these companies is their focus on four key questions: Am I different? Am I fit to grow? Is my technology spending efficient and at the right levels? How do I reduce the risk?

Am I different?

The first question, Am I different?, focuses on how companies can differentiate themselves from competitors. This can include pricing strategies, enhancing the value proposition, ensuring quality service, reducing response time, and delivering a unique customer experience. Leading companies are using physical spaces, digital channels, and platforms for sales to increase market share and drive differentiation.

Am I fit to grow?

The second question, Am I fit to grow?, addresses the expectation of continued growth and the need for companies to be self-financed to support that growth. Leaders must make tough decisions regarding standardization efforts and focus on profitable growth to ensure financial stability and self-financing.

Is my technology spending efficient and at the right levels?

The third question, Is my technology spending efficient and at the right levels?, highlights the importance of innovation and digital transformation in achieving real customer differentiation at a lower cost. Companies must invest in digital talent and transformation across functions, accelerate management decisions, and hold people accountable to drive change more aggressively.

How do I reduce the risk?

The final question, How do I reduce the risk?, addresses the increased risk faced by companies in today’s markets. Companies must have a strong risk function and engage in proactive risk management to successfully manage risks such as congestion risk, energy availability risk, inflation, regulation, public perception, data accuracy, and security.

In summary, leading companies are simplifying their strategies and focusing on the areas they can control, including differentiation, profitable growth, digital transformation, and risk management. By asking and answering these four questions, companies can ensure financial stability and drive profitable growth in today’s markets.

Source: Harward Business Review