Building a Profipoly
In a previous essay, I wrote: “The eFolly-to-Profipoly journey is about driving change in mindsets and harnessing the potential of innovations. It calls for a significant realignment of the core business philosophy, moving from a culture of relentless acquisition to a more equitable model that values customer nurturing equally. It’s about internalising the fact that real growth and profitability are not the result of ceaselessly hunting new customers, but in transforming each customer into a lifelong advocate. When this view of customer relationship management is adopted, a natural progression ensues, marking the path towards a sustainable, profitable future, rather than forcing a change. This shift, from strategy to a way of life, is a call for CEOs and CMOs-turned-CPOs (Chief Profitability Officers) to think entrepreneurially and champion the transition. It is in this metamorphosis that the essence of real business growth and “built-to-last” endurance lies.”
As I wrote in ProfitXL to Profipoly, “A profipoly provides a brand with a formidable competitive advantage – by monopolising profitability, it drains competitors’ chances of survival.” A profipoly is not merely about dominating a market segment; it’s about mastering the art of sustained profitability in a competitive digital landscape. While a monopoly focuses on market share, a profipoly emphasizes creating unparalleled value for both the business and its customers, ensuring consistent and amplified profit margins. It goes beyond just revenue; it’s about optimising operations, nurturing customer loyalty, and fostering innovation such that the business enjoys a unique, almost monopolistic advantage in its profitability. In a world where many chase volume, a profipoly champions value. A profipoly is thus the ultimate endgame and best moat in a business, a guarantee for exponential forever profitable growth.
In this series, we have discussed various ideas around profitability and growth – simultaneously. Here are four more ideas for businesses to embark on their profipoly journey.
Jim Collins’ Map: Encapsulating the best ideas across all his books, Jim Collins created “The Map” in “Beyond Entrepreneurship 2.0.” This offers a masterclass in building enduring, great businesses.
3B: This is akin to McKinsey’s Three Horizons framework, which I have written about. The 3Bs stand for BAU (Business as Usual) Better, Boosters, and Breakthroughs. It’s an intricate balance of small changes and audacious bets on game-changing innovations. The first B (Better) is about making small, continuous improvements in the daily routine of business – akin to the Japanese idea of Kaizen. The second B (Boosters) is about creating some initiatives which can work to give a fillip to the business – this is ideally done by small cross-functional teams with a timeline that extends beyond the quarter. The third B (Breakthroughs) is about crafting a few 10X options that could pay off big: a new product, a partnership, or an acquisition.
4M: The 4Ms are Magical (Product), Money (Machine), Moat, and Monopoly. I wrote about this in a recent essay: “The starting point must be a product that wows. As you use the product, you wonder how it is happening. The experience is out of this world. As Arthur Clarke said, “Any sufficiently advanced technology is indistinguishable from magic.” That product experience must convert into a money machine: high sales that keep growing. To sustain the profits, there needs to be a moat which will prevent competitors from attacking thus creating a defensible franchise. Eventually, the product must become a near-monopoly with high barriers of entry. It is this which leads to creating exponential growth and an enduring great company.” To this, I would add a 5th M: Multipliers. Leaders need to think about catalysts that can deliver exponential returns for invested efforts.
Centennials Habits: Alex Hills’ book discusses the 12 habits of great, enduring organisations. The key message: combine a stable core with disruptive edges. Lasting success comes from maintaining an organisation’s core culture while also driving change at the edges. Here are the 12 habits.
Stable core
- Purpose
- Habit 1: Build your north star
- Habit 2: Do it for the kids’ kids
- Stewardship
- Habit 3: Have strong roots
- Habit 4: Mind the gap
- Openness
- Habit 5: Perform in public
- Habit 6: Give more, get more
Disruptive edges
- Experts
- Habit 7: Be porous
- Habit 8: Shake all trees
- Nervousness
- Habit 9: Get better, not bigger
- Habit 10: X-ray everything
- Accidents
- Habit 11: Make time for random
- Habit 12: Break bread
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Profits, while pivotal, can be fleeting in a marketplace rife with established competitors and startups. This underscores the need for businesses to craft a long-term vision – ensuring profits are sustained, protected, and grown. Herein lies the essence of the “profipoly” mindset – a blueprint for exponential, forever, profitable growth with a profits flywheel. Modern leaders, tasked with both present and future responsibilities, need to solve the mystery of today’s missing profits, and also lay down robust foundations for future profit engines, thus building a profipoly.
