By Okechukwu Onwuka
In making judgments, the early kings were perfect, because they made moral principles the starting point of all their undertakings and the root of everything that was beneficial. This principle, however, is something that persons of mediocre intellect never grasp. Not grasping it, they lack awareness, and lacking awareness, they pursue profit. But while they pursue profit, it is absolutely impossible for them to be certain of attaining it. â€”LÃ¼ Bu-wei 246 B.C., Chinese prime minister under Emperor Ying Zheng, The Annals of LÃ¼ Bu-wei, Lu Shi Chun Qiu
THE act of setting businessÂ Â objectives can be daunting andÂ sometimes confusing. Over the times, various models and practices for setting achievable business objectives have been taught and implemented. Of all the methods, the practice that has been most common is the use of profits or money as the focal point of designing a business or companyâ€™s objective. Wall Street, stock brokers and investment analysts have come to use a companyâ€™s projected earnings numbers as indicators of performance. Consequently, many Chief executives find themselves making huge public declarations of future profits per quarter or in years to the admiration of the investing public.
The practice is not much different for start-up business owners and SMEs (Small and Medium Scale enterprises). This practice has significant implications to the business owners and society as a whole. Weâ€™ll examine some of these. Business schools have widely taught the principle of setting SMART objectives, SMART being the acronym for Sensible, Measurable, Achievable, Realistic and Time bound. Todayâ€™s focus is not to teach on the SMART methodology but it is mentioned here to calibrate our discussion against a tool of widespread knowledge and acceptance.
Often times, finanÂ cial goals are a reflection of the money desires of the business owner or CEO in the context of his or her position at the time of making the projection. Sometimes, the projections are a linear extrapolation into the future based on the companyâ€™s historical performance. At other times, it is merely an aggressive expression of bravado by say a new CEO to impress the investing public.
It may well be a new business ownerâ€™s way of subconsciously feeling good about his ideas and makes passionate and optimistic projections of market acceptance and effective demand. Greed is another factor that results in undue focus on declaration of specific profit numbers, as a measure of success. When this happens, the many elements of the SMART test are compromised. Here are some examples.
Distortion of due process: When profit figures are issued to the public by a publicly quoted company, it sets off a number of negative vibes and actions. The positive side is that the workforce is given a performance target that drives all involved to give their best to achieving the target earnings. Thatâ€™s probably where the benefit ends.
Many leaders force the workforce to go into overdrive. A number of ethical processes are bypassed for the expediency of immediate cash. Arm twisting, bribery, manipulation, falsification of books, inordinate target for marketing and sales team are common practices in the business world. How does a fresh graduate employed as a marketer in a bank given a monthly target of N200m achieve results ethically? Is it a wonder that the profits declared by many banks in recent times have been viewed with suspicion by many? Particularly during the stock market boom and her eventual crash. We all know how banking officers will plead with you not to touch your deposits or bring in heavy deposits if only for one day at the close of the bankâ€™s financial year, to ensure fictitious numbers show on the year- end report.
Corruption, violence and smear campaign: To realize the unfounded profit objectives, company executives not only engage in corrupt practices, violence and intimidation of opponents or competitors often emerge. People engaged in transportation business might move to destroy the business of each other.
Some go as far as committing murder or causing their competitorâ€™s vehicles to have fatal accidents. Others manipulate share prices while actively trading in their own shares. Certificate of shareholders are withheld until the sharks have sold off at obscene profits. Some spread unhealthy rumours around competitors. Another group engage in producing off-quality products and pay companyâ€™s receiving officers to accept the goods. A number of companies show future earnings as current earnings in their books. Recall the Enron story.
Achievable objectives: From the quote of today, youâ€™ll see that as far back as 246 BC, it has been noted that pursuit of profits is usually an elusive target. My study across businesses and organizations all over the world shows that the SMART objective truly lies in identifying specific customer needs and developing products or services that satisfy them. When we really make products to solve one or more of manâ€™s needs at the price he is willing to pay for it, we build a growing band of satisfied customers.
Thatâ€™s actually easier to achieve. Whether we like money or not, customers are ever willing to pay for what gives them value and when we provide this, we are rewarded with profits. As we fill more of such needs, our profit grows. Companies that have lasted for decades and centuries have been businesses built on satisfying specific market and society needs through changing times. The profits are just by-products that come with the joy of seeing true happiness and smiles on satisfied customers.