Well, this insight is not to harm anyone but enlightens the board of directors/CEO of the organisation where the death of an organisation and value migration happens and gives an early signal of the same. An organisation can achieve compounding growth when its benchmark internally is perfect. You need the correct tools to measure the growth and value creation in this new decade. If the process of Value creation of an organisation is ignored and taken for granted then the same simply gets transferred to new companies or new industries. If you have the wrong tools then you will never know when the value has disappeared from your business and rivals are just next to your neck in a surprising manner. In my career, I have seen that how the death of a value is being created and how the value of an organisation is diluted and transferred to rivals by its own Top Honchos. Well, this is surprising but the truth cannot be ignored.
We are chasing new client acquisition and driving business valuation on the same metric but the most important is to keep a check on the current client's retention since value migration or is transferred from one organisation to another begins from these old clients.
The early signals of the death of an organisation and its value are transferred to rivals or other industries when the Sales team and regional sales head or key members are always available for lunch in the office. Yes, in my career and many of us might have witnessed that sales team having regular lunch in office it reflects that the company has lost its vision and is under a very comfort zone. The value of the current organisation has been taken for granted and migration is in the process. We have plenty of examples to justify the same where it's being found that value migration can happen from any vertical of an organisation that may not be identified an at early stage.
I have seen that sales teams and regional heads and even the Head of the business travelling expenditure is next to flat or next to nothing(Pre Covid phase). The degree of involvement is reflected in the current condition of those companies. Overconfidence and blind faith in the current process and system is the perfect recipe for a downturn just like the Indian banks.
One of the mind-blowing value death of an organisation I have seen in my career is that when a financial distribution company when it became a sub-broker of and its broker at a later stage. The perfect recipe of value migration and killing its child with its hand with blind egoistic half-educated business acumen. Sales heads and regional heads spend time planning lunch in the office and during evening planning for Pubs. An organisation that could become an Industry game-changer just eloped from the map in the last couple of years.
If the sales team is engaged on the field then they will ask a question like where the upcoming value and growth will be coming and where profits are allowed to be made. The point is that when the sales team ask questions like senior management then one needs to understand that evolution of value within an organisation is now routine work.
Coming to the transfer of value I would like to give two examples one old example the Nucor and the next generation integrated mills in Japan and Korea and the current example the Fintech revolution. Now many of them will cry out that if the sales team and regional head etc are always on the field does that mean the business is not going to lose its value and keep evolution intact. Well, competition and competitors update remains intact when the sales team is always on the field.
From banks to Fintechs have been the best example of how the value and a new breed of industry came up as banks refused to expand and slept on getting unbanked into the banked segment. Those CEOs, senior management of the banks lead to dilution of the value of the banks and created the Fintech Industry.
The irony of the story is that from those same banks the bankers left the job and started the Fintech platforms. We have told earlier also that QoQ and YoY growth is the wrong metric to measure success and growth of an organisation. Strategic cost management and business management does not reflect a proper a correct picture. The increase in market share and benchmarking the same with respect to the spending segment of a vertical is one of the key metrics to know where things went wrong and correct.
New client acquisition is important but at the same time retention of the existing is a challenge since customer loyalty is very volatile when the number of options is high. Hence retention of current clients is a perfect metric to know how much value the different verticals of an organisation are contributing to keeping the same clients afloat. For example, if business design transformation is a factor for driving the value and growth of an organisation then the same should be the benchmark to the sales growth. One needs to figure out the ratio between the same. For the Fintech industry, this is a massive value driver.
If the research of an organisation is the backbone to the current value proposition of an organisation and client’s retention then finding the ratio between the sales and research is a key metric. This is the correct tool to measure the growth of an organisation and keeps its growth compounding with changes over time.
The rules of the game are changed and the death of an organisation and transfer of its value proposition is very quick and fast.
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