“Executives in profitable companies couldn’t tell us how they made money, and executives in unprofitable companies could.” (1)

This quote comes from a newly published study by the Accenture Institute for Strategic Change. Researchers found that most executives of profitable non-dot.com companies knew their strategic plan but had no understanding of their business model. Conversely, most CEO’s of unprofitable dot.com organizations had no strategy but did have a well-defined business model. A strategy is what you do. A business model is how you do it.

Many managers have learned a hard lesson this year. Following the economic successes of the previous decade, it was easy for them to kick back and rest, assuming that existing strategies and business models would assure future success. That presumption proved wrong as the world economy flipped from a ’90’s boom to a ’00 bust. The executives who couldn’t explain how they made money in the 90’s are likely the same ones who are struggling to understand why they’re losing money in 2001!

In times of change, it is learners who inherit the future. The learned …relying solely on previous knowledge, old processes and outdated skills … usually finds themselves unequipped to meet the challenges of a new world.

It is not instinctive to invest time and money in learning. When business is good, learning is not a priority. And when business is bad, learning is considered a luxury. While they may be counterintuitive, here are some reasons to make learning a priority, even during an economic slump:

• Profits depend on a well-defined, well-executed business model.A business model is the linkage of an organization’s activities into a series of processes, with the intent of providing value to customers. If your management needs to understand the business model, Activity Based Management (ABM) is a proven tool. Map ABM activities into your “as is” business model. Then define what you want it “to be”.
• If you need to change your company, you’ve got to change your employee’s thinking.Becoming a successful learning organization requires a collective mind shift at all levels, starting with senior management. As author John Maxwell says, “An organization will never surpass the capabilities of its leaders.” To successfully use ABM, ABC or Six Sigma to improve your organization’s financial performance, every level of employee must learn new skills.
• Learning “to do” is enormously rewarding and personally satisfying. Training employees how to apply the Five-Steps of ABM to their pre-existing Activity Based Costing (ABC) data has resulted in big cost savings for numerous ICMS clients. ICMS uses a Tell-Show-Do workshop format. The result of this hands-on learning is a cost saving, not a cost incurred.
• “Learning organizations have an edge. (2)Learning translates into actions, and actions spark productivity.” , says Jack Welch, retiring CEO of General Electric. Mr. Welch built GE into the most successful American corporation of the 20th century by training his employees how to use Activity Based Management and Six Sigma to reduce waste and improve quality.
• Learning can change momentum.Repetition of old methods is boring. Learning is invigorating. New ABM/ABC skills can turn a sales decline into a profit climb. Train employees how to use ABM/ABC tools and techniques during the economic slump. Use ABM to eliminate non-value added overhead activities. And use ABC to eliminate unprofitable products, customers, services or distribution channels that eat up profit and valuable working capital.

Learning from trials and tribulation

Many of you reading this article are experiencing hard times, either personally or professionally. If given the option, you would not have selected what you’re experiencing today. But as the following excerpt from Bob Benson’s Something’s Going on Here (3) explains, some of our most important learning takes place as the direct result of a trial or tribulation:

“W.T., how did you like your heart attack?”

“It scared me to death, almost.”

“Would you like to do it again?”

“No!”

“Would you recommend it?”

“Definitely not.”

“Does your life mean more to you than it did before?”

“Well, yes.”

“You and Nell have always had a beautiful marriage, but now are you closer than ever?”

“Yes.”

“How about that new granddaughter?”

“Yes. Did I show you her picture?”

“Do you have a new compassion for people — a deeper understanding and sympathy?”

“Yes.”

“Do you know God in a richer, deeper fellowship than you had ever realized could be possible?”

“Yes.”

“How’d you like your heart attack?”

Silence was his answer.

Pause for a few minutes. Ask yourself, “What have I learned from the past six months?” Create a list. Then ask, “What do I and my organization need to learn in the next six months?” Make a commitment to be a learning employee in a learning organization. Let me know if you need help.


(1) “Five Business Model Myths That Hold Companies Back” by Jane C. Linder and Susan Cantrell, June 2001, Institute for Strategic Change.
(2) “Get Better or Get Beaten!” By Jack Welch, edited by Robert Slater, published by McGraw-Hill, 2001
(3) “Something’s Going on Here” By Bob Benson, published by Impact Books, 1977