New Study Says Focusing on Your Net Profit Could Actually Hurt Your Business. Here's Why and What to Do Instead
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by Robbie Abed
I took a director-level position in a new company that had just gotten funded by a private equity firm. All the interviews went really well, since the company was focused on growth and increasing top-line revenue. But after I joined, the exact opposite happened.
The company decided to prioritize bottom-line revenue instead. The leaders grew obsessed with profit to the point that, instead of flourishing, we started to decline. We made cuts instead of investments. We focused on numbers instead of new ideas.
I'm OK with cutting the budget to be profitable, but this company also let go of our best talent because these people were "too expensive." It turns out when you drain the company of its best resources, it starts to decline rapidly.
That's not just my experience. A new study from Baylor University says focusing on the bottom line gets poorer financial results than investing in your team. Here's what you can do about that.