“No financial man will ever understand business because financial people think a company makes money. A company makes shoes, and no financial man understands that. They think money is real. Shoes are real.”
-Peter F. Drucker
At PeerSix, our mission is to create sustainable, long-term value for your business. We understand that creating value is about maximizing shareholder return, and that return is driven by growing revenues and profitable operations. Businesses have to make money! But, Mr. Drucker also raises an important, if tongue-in-cheek, point. Without customers, businesses can’t make any money. At the same time, if they can’t satisfy their customers in a way that’s financially viable, they won’t be making shoes for very long. So, what does “creating value” mean in practice? At PeerSix, we think it’s about delighting your customers and your shareholders at the same time.
However, these are often seen as conflicting objectives. A business can expend resources making a better product or experience, or they can cut costs and service will suffer. Spend even the smallest amount of time navigating “customer support” these days and you’ll get a good idea of the trade-offs. At PeerSix, we have a way to do both. It requires taking a portfolio approach, allocating capital towards the set of things that will delight your customers, prioritized in an order that will delight your shareholders. Remember, by themselves, no shareholder can grow your revenue, and no customer can grow your valuation.
To understand further, we have to talk a bit more about how that actually works. The next entries in this series will dig into both the shareholder and customer sides of that equation:
Delighting Shareholders:
Creating Value
Understanding the Business Life Cycle
Three Fundamental Business Strategies
The Role of Corporate Strategy
Delighting Customers:
Solving the Customer Rubik’s Cube
All Roads Lead to CAC (Customer Acquisition Costs)
The Metrics that Matter
How to Take a Portfolio Approach