There are multiple ways to improve EBITDA. The Profit Accelerator Map™ facilitates discussion about how to improve EBITDA–what to do and when to do it. It assists in understanding implications on operations and financials to prevent unintended consequences.
How is the organization pursuing growth and improvement? Is the goal growth in profitability through operational and supply chain improvements? Is the strategy to further penetrate existing markets and/or expand into new markets? How does product or service innovation factor into these efforts? Similarly, how do regulatory constraints impact these goals? Some industries are more highly regulated than others and the corresponding management issues scale in significance and cost accordingly. Are regulatory practices aligned with the actual requirements, or is the organization possibly overspending for no apparent strategic or customer added value? Does being a good corporate citizen necessitate “greener” practices? Are customers demanding “greener” products?
Takeaways from this figure.
- Business objectives are attainable by many routes
- The particular route or routes should be tightly aligned with the strategy
- The high-level decision of what to do merely defines the starting point for thinking about transformation
Too often there is a tendency in organizations to leap before looking. The superior execution discussions get hijacked and directed prematurely to a particular solution approach. The solution may or may not be appropriate given the actual challenge or problem within the context of the overall goals. Insufficient attention goes into first developing an understanding of the underlying challenge. You don’t cross the street and then look for traffic. Doing so is very risky. The stakes are too high for anything less than absolute success. The same holds for operational and business transformations. Thus, it is imperative to first clarify the execution strategy and goals rather than presupposing any particular solution approach or specific tools. This may even lead you in a different direction than initially anticipated.