Four Definitions of Success: Financial Measurement

Four Definitions of Success: Financial Measurement
Financial Measurement

Financial Measurement

Last time we talked about how your definition of success defines you, and explained that most definitions of success fall into four overarching categories:

  1. Financial Measurement
  2. Customer Service
  3. Internal Process
  4. Internal Learning

These four metrics, first discussed by Kaplan and Norton, can also be combined into a fifth definition of success, namely a Balanced Scorecard, where the leadership of a company seeks to grow in all areas, instead of just one. This is a concept we will return to later as we examine these buckets individually in the coming weeks. 

For now, the first on our agenda is Financial Measurement.

For those companies who gravitate towards this category, your definition of success will be financially driven, often based on growing revenue, expanding profit, or both. Success occurs when money is pouring in, freeing up the team to take innovative chances and develop new products, or to dedicate more time to customer loyalty or engaging employees in internal processes, or even taking the time to eliminate some outdated processes. 

Ultimately, there are a few different quantitive measures to effectively determine the financial success of your company over time: Revenue Growth, Profit Growth, Profit Margin, Return on Equity, Return on Assets, Ratio Comparison to Competitors.

With these financial indicators in mind, we suggest few different possible outcomes:

  • Capacity Growth: Doing More with the Same
  • Profitable Growth: Doing More with Less
  • Cost-Cutting: Doing the Same with Less

Profitability and Financial Success

To pin it down in basic terms, financial success begins when you are able to do more with the same, i.e. grow revenue and flatten expenses, or to do more with less, i.e. increase revenue and decrease expenses. When you do more with the same, which is a readily achievable goal, you create capacity to do more with the same level of resources, and equip the same amount of people to produce more.

Ultimately, if your overarching definition of success focuses on financial measurement, here at Brookeside we can help you to set manageable goals for greater success over the next stage of growth for your company, and assist you in charting out a feasible plan which you can begin to implement immediately, whether you would like to do more with the same, or if it’s right for you, more with less. 

How do you define success? Does it gravitate towards financial measurement? Let us know in the comments.

Tom Cates is the Founder and President of The Brookeside Group and the inventor of SalesEquity.com™. Prior to founding Brookeside, Tom held senior positions at Mercer Management Consulting and IBM. He has contributed to three management and marketing books and is working on a fourth. Tom holds a BAE from Pennsylvania State University and an MBA from The Wharton School of the University of Pennsylvania.

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