Know your company’s critical success factors to increase yours
Understanding how your company makes money, and the metrics that reflect that, empowers you to focus on the right problems and make better decisions. Leaders in all functional areas need to understand their company’s key business drivers and how to impact them.
“Job specialization in large companies can distance employees from a full understanding of what makes the company successful,” says Kevin Cope, Founder and CEO of Acumen Learning and author of Seeing the Big Picture: Business Acumen to Build Your Credibility, Career and Company. “But everyone, from sales leaders to HR executives, need to know and be able to impact the key factors that build value across the organization,” he says.
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Key business drivers are basically the critical factors that lead to success. They:
- Reflect the performance and progress of your business
- Are measurable
- Enable comparison to a standard, such as a budget, prior year performance or an industry average
- Are actionable
Many drivers are consistent across almost all organizations but even those, such as sales, must be understood within your context.
A critical reason for clearly understanding your company’s most important drivers is to maximize those you can control, mitigate others, such as current economic conditions, that you cannot, and understand the interplay among them.
"Leadership requires an understanding of the overall business and moving into management positions means leaving behind a singular focus on function/profession and taking on the identity of a business woman. This is something that women aren't often told," says Susan Colantuono, author of No Ceiling, No Walls
and Make the Most of Mentoring.
Five Business Drivers
Cope suggests a five-driver model composed of Cash, Profit, Assets
with People at the center because the drivers come to life through the actions of team members. He also emphasizes the connection between these drivers and the three financial statements used by almost all businesses:
Statement of Cash Flows (aligns with the cash driver)
Profit & Loss Statement (aligns with the profit driver)
Balance Sheet (aligns with assets driver)
All five drivers exist across the Food Industry with differences in the details. A restaurant manager, for example, might focus on labor costs and shifting demographics and would need to know whether dine-in, takeout, catering or bar service drive the greatest revenue streams.
A manufacturer might be challenged by automation, labeling requirements and commodity costs while a distributor sees transportation costs and on-demand delivery services as key drivers to understand and influence.
As you develop a solid understanding of the key business drivers in your organization and how to influence them, you will build your business acumen, your value and your career potential.