When you discover things are Broken, you have to begin to ask...
Why?
What is it that Causes the Breaking to Occur?
I've talked about the Expansion Disease in Leadership Before.
There are also the Misconceptions of What makes a "Good" Business.
When you look at these, you begin to have a Realization...
What We Measure Impacts What We Strive for in Business.
It becomes a Central Focus for Everyone in the Organization.
If you Measure the Wrong Things, You'll Get the Wrong Results.
One Form of this is known as "Vanity Metrics".
These are Measurements that Fail to Produce Revenue for an Organization.
Likes.
Comments.
Those are Common "Measurements" that Fail to Produce Revenue.
But, if we Know that the Entire Business Model is Broken...
Then we have a Deeper Problem than Vanity Metrics.
I've talked about Designing a Regenerative Legacy as the Business Model for the Future.
To Implement a "Truly" New Model though, we have to Question if Previous Metrics Contribute or Detract from the Goals of the New Model.
One Metric I've Discussed in the Past was the Flow-to-Strain Ratio.
Today, I'm going to look at a Different Metric.
ROI or Return-On-Investment.
This is one that most people understand.
For Every $1 You Input into something, you want to Receive a "Return" on that $1.
Now, is this a Bad Thing to Understand?
No.
From a Business Perspective, if you are Losing Money then you have an Unsustainable Business.
You need to "At Least" Receive $1 for Every $1 Spent.
If you Fail to Accomplish This, then You will No Longer have a Business.
Simple Math.
However, when we look at ROI, we begin to see that there's a Correlation to the Current Business Model Problem.
If you Measure ROI as a "Primary" Metric, what will happen?
You begin to Attempt to Maximize ROI.
The End Result?
Profit-At-All-Costs.
That is the Only way to Maximize ROI.
However, we already know that the Profit-At-All-Costs Business Model is Inherently Flawed.
It is a Major Contributor to the Burnout Problem we are seeing in Business Today.
You can only Keep Employee Incomes So Low...
You can only Raise Prices So High...
You can only Push Supplier Contracts So Low...
You can only Destroy the Planet So Much...
Before Something Breaks.
Which is What We are Seeing.
All Over the Place.
The Reason that So Many Leaders in Today's World are Struggling?
The Model they are Using is Breaking.
They are Seeking Profit-At-All-Costs.
Fueled by a Simple Metric...
Return-On-Investment.
Now, there is "Something" that ROI has Right.
There "Must" be a Return.
As we Established, if you Fail to make Enough Money you Fail to have a Business.
But when the Metric is "Only" Focused on Money, then it Pushes Us, Subconsciously, to "Only" Focus on Money.
That becomes the Problem.
When we are Only Looking at Money, we Stop Focusing on People.
When we Stop Focusing on People, we Start to have the Problems that we're Seeing in Business Today.
However, this creates a Challenge for Us.
How do we "Ensure" we get a Return while "Simultaneously" Not Making it Solely about Money?
There is No Metric that gives us this.
So, it simply means we Need a New Metric.
What could we Measure Instead?
What if we Measured...
Return-On-Positive-Impact or ROPI?
How would this work?
Well, there are a Couple of Ways you could Go About It.
If we think about it from a Regenerative Legacy Design Perspective, we could tie the "Return" to a Couple of Different Desired Outcomes.
Employee Impact.
World Impact.
Customer Impact.
Even Supplier Impact.
You could even have Different ROPI Measurements for Each.
But this is what you "Should" See with a ROPI Measurement.
As Impact Increases, so should the Dollar Return.
So, Your "Input" should Increase "Both" Impact and Dollars.
But this is what becomes Important...
ROPI is Focusing on the "Impact" Return.
What you Measure becomes the Focus.
Most Businesses will likely Create Employee and/or Customer ROPI first.
If You Positively Impact your Employees, they will "Want" to put in their Best Efforts.
This, of course, can work with the Flow-to-Strain Ratio as Flow States are where we "Feel" and "Do" our Best Work, which works perfectly with the Goal of ROPI.
If you Positively Impact Your Customers, they will "Want" to Purchase More from you and they become Less Likely to Seek Alternatives.
Many Businesses are Struggling with Customer Loyalty Currently, and ROPI gives a Pathway to Focus on Creating Loyalty.
Loyalty is One of the Most Important things that a Business can Obtain.
When you Focus on ROPI, you should gain a Greater Value than Money.
Are You Ready to Go Beyond Leadership?
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