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Companies Focussing On Profits Instead of Growth

In the latest publication by Harvard Business Review, studies have found that companies are generally focused on profitability rather than growth. The global financial crisis contributed significantly to this which prompted companies to hoard cash and trim costs. Companies are still favoring more on cutting costs than on developing and executing new growth strategies. Global CEO’s are devoting much of their time towards showcasing the results of restructuring and cost focused initiatives. This scenario is no different in Malaysia as most companies are focused on the same initiatives. Very few companies are making capital investments to innovate and grow. Smart companies avoid falling into this trap. Creativity and ingenuity have always been precious. A single great idea can put a company on top. Think of the iPhone at Apple or horizontal drilling at Continental Resources. However, companies in Malaysia generally focus their best people on finding ways to squeeze out more profitability from existing operations, rather than innovating for growth. Most companies that I have come across have conservative business ownership – they do not encourage risk taking and only reward easy to measure improvements on existing processes. As companies in Malaysia continue to practice in an age old fashion there will be few breakthroughs and this will create a bottleneck where good growth ideas will be limited. Malaysian companies practices and beliefs usually foreclose many growth options. Business owners are only interested in “sure bets”. This results in the closing of many doors. Malaysians have an abundant of talent that will translate promising growth options into profitable new businesses. Take Neon Rider for example – this innovative venture have created many “clones” in the market in a very short span of time. Today’s era of digital disruption, CEO’s must overcome obstacles to growth in their organizations. They must discard their age old business practices and only place their dollars on “sure bets” as with digital disruption, there are no “sure bets” anymore.

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