The Twelve Components of Profit Design (1-3)

The Profit Design

James Fischer, author of Navigating The Growth Curve and creator of The 7 Stages of Entrepreneurial Growth process said, “A company is never too small to organize their thinking and planning around revenue groups. I consider these 12 factors so critical that I refer to them in a phrase I borrowed from the space program: mission-critical factors. And despite the importance of attending to these points, most companies can only think of two . . .”

A Closer Look at the 12 Profit Design Components

1. Business Development
For every revenue group in your company, you need to clearly define your methods for targeting, acquiring, and caring for the customer. In most companies Business Development typically includes the separate worlds of marketing, sales, and customer service. I recommend these three elements be tightly integrated and considered one theme instead of three different departments.

2. Value Exchange
This is the most important component of Profit Design. It is how you make money, how you exchange or derive value for the services or products you provide to customers. Value Exchange always starts with breaking down a company’s products and services into appropriate revenue groups.

3. Strategic Control
For every revenue group, you must clearly define the following four things that hold your customer to you, keep your competition from “knocking off” your product or service, give you competitive advantage, and tell you what your average customer is worth in time and dollars:

Customer Magnet
Barrier to Entry
Strategic Control Points
Lifetime Value of the Customer
The other 8 elements of Profit Design will be examined more closing in subsequent issues:

4. Scope of the Enterprise

5. Culture

6. Knowledge Management

7. Organizational Structure

8. Customer Intelligence

9. Strategic Alliances

10. Operating Systems

11. Research and Development

12. Capital Intensity

In The Next Issue: A closer look at the next four elements of the 12 Components of Profit Design

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