Five Drivers for Building Great Companies (Audio)

April 18, 2012
Understanding and communicating the value of these five drivers can improve employee engagement and company profitability.

Too few employees really understand how their work fits into their company, says Kevin Cope, president and CEO of Acumen Learning, because of the complexity of businesses. They fail to see the big picture.

But by focusing on five key business drivers, says Cope, employees at all levels can understand how their company operates, makes money and sustains profitable growth.

The five drivers -- cash, profits, assets, growth and people -- are interdependent, says Cope.

"You cannot affect one without influencing the performance of another," he says. "Leaders have to take the connections between the drivers into account as they make their decisions, or risk running their business into the ground."

In his new book, "Seeing the Big Picture: Business Acumen to Build Your Credibility, Career and Company," Cope discusses the five drivers and how they work together:

Cash -- "Cash is the fuel that drives a business. Without cash, a business can't pay its bills, can't pay its employees, can't buy the goods it needs to produce the products or services it sells," writes Cope. He explains how to evaluate the three key components of cash -- cash position, cash flow, and liquidity -- and details what all businesspeople need to know about generating cash as well as how to use it wisely to spur growth.

Profit -- "Profit is simply the difference between how much you make by selling goods and services and how much it costs to produce and sell them," explains Cope. He clarifies the differences between profit and cash flow, and also explores the concept of profit margin, which reveals how efficiently a company is turning revenue into profit. "Seeing the Big Picture" details the benefits and risks of varying approaches to growing sales revenue and reducing costs.

Listen to Kevin Cope
What are the five key drivers for business growth? How do they work together? What should executives do to make sure employees understand these business fundamentals? Author Kevin Cope explains in this interview with IW Executive Editor Steve Minter.Assets -- Assets include everything a company uses to produce revenue -- whether it is tangible, like buildings and equipment, or intangible, like patents. Cope discusses how to balance asset strength -- which enables companies to meet obligations, take advantage of opportunities and survive tough economic times -- with asset utilization, which is the ability to generate a return on your assets.

Growth -- "Constant change is a reality in today's business environment and growth is one of the only ways to handle it," writes Cope. After explaining how growth is measured -- in terms of both revenue and profit -- he addresses how it can be achieved, by internal expansion (selling new products, for example) and by merging or acquiring new businesses.

People -- People lie at the center of the five key drivers, says Cope. "People make the decisions, supply the financial resources, buy the products, provide the labor and services... They drive cash, profit, assets and growth," he writes. "Meeting, exceeding and anticipating the wants, needs and expectations of your employees, customers and other important stakeholders is essential to your financial success."

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