Posted by: Patrick Lefler | February 9, 2010

How do you measure your bottom line?

Here’s a story that I’ve run across a number of times in slightly different versions over the past few years. I first encountered it while reading Jack Trout’s book, “In Search of the Obvious”. The story is simple yet profound.

An American businessman was at the pier of a small coastal Costa Rican village when a small boat with just one fisherman docked. Inside the boat were several large yellow-fin tuna.

The American complimented the Costa Rican Tico on the quality of his fish, and asked how long it took to catch them.

“Only a little while,” the Tico replied. The American then asked why he didn’t stay out longer and catch more fish. The Tico said he had enough to support his family’s immediate needs.

The American then asked, “But what do you do with the rest of your time?”

The Tico fisherman said, “I sleep late, fish a little, play with my children, take siesta with my wife Maria, stroll into the village each evening, where I sip wine and play guitar with my amigos. I have a full and busy life, senor.”

The American scoffed, “I am a Wall Street executive and could help you. You should spend more time fishing, and with the proceeds buy a bigger boat and a Web presence. A scalable, go-forward plan would provide capital for several new boats. Eventually, you would have a fleet of fishing boats. Instead of selling your catch to a middleman, you would sell directly to the processor, eventually opening your own cannery. You would control the product, processing and distribution. You would need to leave this small coastal fishing village and move to San Jose, Costa Rica, then to Los Angeles and, eventually, New York City, where you would outsource tasks to third-party clients to help run your expanding enterprise in a vertical market.”

The Tico fisherman asked, “But senor, how long will all this take?”

To which the American replied, “15 to 20 years.”

“But what then, senor?”

The American laughed and said, “That’s the best part. When the time is right, you will announce an IPO and sell your company stock to the public and become very rich. You will make millions.”

“Millions, senor? Then what?”

The American said, “Then you will retire, move to a small coastal fishing village where you can sleep late, fish a little, play with your kids, take siesta with your wife, and stroll to the village in the evenings, where you will sip wine and play your guitar with your amigos.”

Here’s the takeaway: Understand your bottom line and how its measured. In many cases, changes that may sound good, end up adding little or no actual value to bottom line results. Continue to focus on what adds value and eliminate everything that doesn’t.

More on this and other topics next time…

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