Scaling Up: How a Few Companies Make It...and Why the Rest Don't (Rockefeller Habits 2.0) by Verne Harnish

Author:Verne Harnish [Harnish, Verne]
Language: eng
Format: mobi, pdf
Publisher: Midpoint Trade Books
Published: 2014-10-20T14:00:00+00:00

The Profit per X metric represents the underlying economic engine of the business and provides the leaders with a single KPI they can track maniacally to monitor the progress of the business (a great luxury to have).

Though the numerator can be any metric you like — profit, revenue, gross margin, pilots, routes, etc. — the denominator is fixed and represents your company’s unique approach to scaling the business. And it generally ties back to the One-PHRASE Strategy (all of this stuff links together). While most airlines focus on profit per mile or profit per seat, Southwest focuses on maximizing profit per plane, which aligns with its One-PHRASE Strategy of “Wheels Up.”

As we saw in Alan Rudy’s story in Chapter 2, he took a similar approach in the business of answering phones. While everyone else focused on revenue per minute and profit per minute, he looked at the industry through a different lens and drove the business to maximize profit per booked appointment. The result: revenue reached an industry high of $5 per minute, vs. an average of $1.25 per minute. At Gazelles, we used to obsess over profit per event; now it’s profit per long-term client.

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