{"id":1077,"date":"2009-02-06T11:56:28","date_gmt":"2009-02-06T18:56:28","guid":{"rendered":"https:\/\/staging.opexlearning.com\/resources\/?p=1077"},"modified":"2014-09-25T09:16:27","modified_gmt":"2014-09-25T14:16:27","slug":"the-profit-tree-is-not-the-only-tree","status":"publish","type":"post","link":"https:\/\/staging.opexlearning.com\/resources\/the-profit-tree-is-not-the-only-tree\/1077\/","title":{"rendered":"Reconciling Culture and People with Revenue and Costs"},"content":{"rendered":"<div class=\"a296a24fa2fc69ef5487857f02f111e8\" data-index=\"9\" style=\"float: none; margin:10px 0 10px 0; text-align:center;\">\n<script async src=\"\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js\"><\/script>\r\n<!-- Single Post readerboard -->\r\n<ins class=\"adsbygoogle\"\r\n     style=\"display:inline-block;width:728px;height:90px\"\r\n     data-ad-client=\"ca-pub-8207522353004717\"\r\n     data-ad-slot=\"1144967431\"><\/ins>\r\n<script>\r\n(adsbygoogle = window.adsbygoogle || []).push({});\r\n<\/script>\n<\/div>\n<p>In this very <a title=\"how to use lean to do more with more not more with less\" href=\"https:\/\/staging.opexlearning.com\/resources\/people-and-value-more-with-more-less-with-less-more-with-less-less-with-more\/565\/\">tough economic environment<\/a>, organizations turn more and more focus on the Profit Tree.\u00a0 The course of history shows us that zeitgeist &#8212; or the movement of history at certain points of time &#8212; is a cascading phenomena where the collective focus and worldview is taken-on by large groups of people. At some point, business will need to\u00a0Reconcile\u00a0Culture and People with Revenue and Costs. Let me explain.<\/p>\n<p>It seems that these days, we are all required to think more about the Profit Tree.\u00a0 But, are there other things to consider?<\/p>\n<h2>The Profit Tree<\/h2>\n<p>The model of the <a title=\"profit tree framework in consulting\" href=\"https:\/\/staging.opexlearning.com\/resources\/the-profit-tree\/201\/\">Profit Tree<\/a> is a basic component of the free enterprise model.\u00a0 Below is the Profit Tree:<\/p>\n<p style=\"text-align: center;\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-4404 aligncenter\" title=\"profit-tree\" src=\"https:\/\/staging.opexlearning.com\/resources\/wp-content\/uploads\/2008\/10\/profit-tree.jpg\" alt=\"\" width=\"500\" height=\"224\" srcset=\"https:\/\/staging.opexlearning.com\/resources\/wp-content\/uploads\/2008\/10\/profit-tree.jpg 500w, https:\/\/staging.opexlearning.com\/resources\/wp-content\/uploads\/2008\/10\/profit-tree-300x134.jpg 300w\" sizes=\"(max-width: 500px) 100vw, 500px\" \/><\/p>\n<p style=\"text-align: center;\">\n<p>The model above is simple, but often not understood even by most business folks.\u00a0 To briefly explain, let&#8217;s use the following conventions:<\/p>\n<ul>\n<li>\u00ce\u00a0 = Profit<\/li>\n<li>R = Revenue<\/li>\n<li>P = Price<\/li>\n<li>Q = Quantity<\/li>\n<li>C = Costs<\/li>\n<li>FC = Fixed Costs<\/li>\n<li>VC = Variable Costs<\/li>\n<\/ul>\n<p>We know a few things from the model above:<\/p>\n<p style=\"text-align: center;\">\n<ol>\n<li>When R&gt;C, then there is economic profit.\u00a0 This is what most companies want.<\/li>\n<li>When C&gt;R, then the company is not profitable; most likely, the company is eating its free cash flow or using its credit line from its creditor.<\/li>\n<li>When R is flat and C continues to grow, that is typically when most companies seek help from folks with experience in fundamentally transforming a business operation &#8212; typically, these are folks with experience in Lean and in Six Sigma or Turnaround experience.<\/li>\n<\/ol>\n<p>The principles above are required practice if a firm is to be financially viable.\u00a0 While the Profit Tree is important, there are other trees that need to be nurtured.<\/p>\n<h2>The Culture Tree<\/h2>\n<p>Most firms with any depth to it, will have a history and some values that it claims.\u00a0 These set of values will probably be codified into a document that explicates what is important to the company and these values dictate the behavior of the company employees.\u00a0 The collective behavior is what we typical call &#8220;<span style=\"color: #993300;\"><strong>culture<\/strong><\/span>&#8220;.<\/p>\n<p><span style=\"color: #993300;\"><strong>Lead by Example<\/strong><\/span>: To nurture the Culture of a company requires the leaders of the company to behave in accordance to its said values and to lead by example.\u00a0 This also includes hiring people that either already espouse the company values or can quickly and easily assimilate those values soon in the on-boarding process; similarly, firing those that don&#8217;t espouse and own those values in their behavior.<\/p>\n<p><span style=\"color: #993300;\"><strong>Speak the Culture<\/strong><\/span>: An integral part of a culture is the language used within a company and in its public messaging.\u00a0 It&#8217;s not just the words we use, but the stories we share with each other and with the public &#8212; stories that embody actual acts of culture &#8212; these stories carry organizational memory and last long after the people are gone.<\/p>\n<p><strong><span style=\"color: #993300;\">Ritualize the Culture<\/span><\/strong>: I was once at a company where we had specific rituals or traditions that everybody practiced &#8212; it was taught, people did it willingly, and it embodied the values of the company.\u00a0 For example, prior to every meeting, this company always shared 3 things:<\/p>\n<ol>\n<li>Customer Success Story<\/li>\n<li>Safety Story<\/li>\n<li>Quality Story<\/li>\n<\/ol>\n<p style=\"text-align: center;\">\n<p>The attendees of the meeting would volunteer to share the items above in a 3 minute segment.\u00a0 Because it was prior to a meeting, it set the tone for the meeting, especially since the first story was about the customer.<\/p>\n<p>Since hundreds of meetings are held each day in a typical company, imagine how the tone is set daily about what is important to the company.\u00a0 Ritualizing the Culture can be powerful in mobilizing an entire company toward what is important.<\/p>\n<h2>Conclusion<\/h2>\n<p>The Profit Tree is not the only tree in the vineyard.\u00a0 In these economic times, the companies that nurture one tree more than another will realize that, when things are well and fine again &#8212; and they will be fine again, America &#8212; that some trees have gone uncared-for and might present a &#8220;win the battle but not the war&#8221; situation for most companies.<\/p>\n<p>Take a balanced approach: grow economic profits and take care of the soft-stuff too, because the soft-stuff is truly the hard-stuff.<\/p>\n<!--CusAds0-->\n<div style=\"font-size: 0px; height: 0px; line-height: 0px; margin: 0; padding: 0; clear: both;\"><\/div>","protected":false},"excerpt":{"rendered":"<p>In this very tough economic environment, organizations turn more and more focus on the Profit Tree.\u00a0 The course of history shows us that zeitgeist &#8212; or the movement of history at certain points of time &#8212; is a cascading phenomena where the collective focus and worldview is taken-on by large groups of people. At some [&hellip;]<\/p>\n","protected":false},"author":12327,"featured_media":4404,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[131],"tags":[338],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v23.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Reconciling Culture and People with Revenue and Costs<\/title>\n<meta name=\"description\" content=\"Reconciling Culture and People with Revenue and Costs and how to make culture an important part of your company\" \/>\n<meta name=\"robots\" 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