The Three Ps. How to balance the business choices we face

Balancing the three Ps

Possible / Practical / Profitable

Running a business is a continuous balancing act and this is a skill at which the successful leader must become adept. As your skills and intuition at balancing improve then you can expect your company to recognize this and your career to benefit greatly from what definitely is a hard earned talent.

I have spent a lot of time trying to find a clear way to communicate the dynamics and major levers of this balancing act; what is it we need to balance and what happens if any of the balance points are not aligned properly. So one day while trying to rationalize and solve a challenge put to my team about a new product development I settled on the first point of balance; the art of the possible. Our challenge was to answer whether it was possible to engineer an enhanced feature for a product. The situation being considered was not simple and the answer would take some days to get to a preliminary conclusion. So the team analyzed the challenge, gathered information, consulted with many technical experts in the hope of finding the answer. Two days later we had come to a conclusion – “anything is possible we declared, so the answer must be yes”.

So our challenger was happy. They now had that valuable piece of information, “it was possible” to do as they had asked, and they could set about determining the next move, the next decision. The team was thanked for their efforts, they had solved an important problem. But WAIT, HOLD ON A MINUTE, STOP RIGHT THERE, BEFORE YOU GO ANY FURTHER, is that all you are going to ask?

Why has no one asked if it is practical to do this? Whether something will be practical very much depends on its full scope, how it ranks against all the other things that need to or can be done and whether there are the right resources, people or funding, available to apply to it. Maybe at this time and stage of the company’s journey there is no practical way to achieve this possible task. Do not get me wrong, I am not suggesting that the default should be to shy away from challenges, a competitive company must be challenging its people all of the time. We all know that if we really put our minds and resources behind something we have a very good chance of achieving the goal. This balancing point, whether an endeavor is practical is equally as important to consider as whether it is possible.

Ok so we have said our piece about the art of the possible and the importance of knowing if something is practical, but “so what” you should say, if the end result cannot be profitable then the goal can be out of balance; we are in the danger zone. We are all in business to make money for the company owners and ourselves so there must always be the right answer to our profit question. In practice we may decide to invest our resources to achieve a goal even if there is no immediate profit, but there should be an expectation of profit at a later date either directly through this work or indirectly through a related revenue stream. In either case profitability is the balancing point and is crucial.

We need to balance the three Ps and not take them in isolation. In some companies there are different teams who consider these balancing points independently and when that is the case the collective can end up making a potentially damaging mistake, if there is not a good coordination and a clear realization of the connection between them. So train your full team to drive each other to balance the business decisions, to be aware of the pitfalls to avoid and the correct choices to make.

Examples of out of balance decisions are more common than we would like; take the case of a hard working sales person who is driven and sees all sorts of possibilities to win more customers with new or enhanced products. They go to the equally enthusiastic engineering team with a great challenge, “could we help our customers by adding a stronger container to our equipment”. After serious deliberation the team declare that it is possible and it is a great idea. Yes we have answered the art of the possible, but wait a minute, we had planned to change three other features and the budget will force a choice. Now we are balancing the practicality of this path along with the art of the possible. This situation will naturally lead to the tie breaker which normally will be whether the end result will be profitable. If we had stopped our due diligence by only looking at one aspect of the three Ps we would probably be selling a great, enhanced product that may have cost us more to make with no improvement in margin or worse a reduced margin.

In most businesses there are difficult daily choices to make with regard to balancing the three Ps, the art of the possible, a clear view on practicality, and a razor sharp focus on profitability. But get the balance right, and find a way to streamline the decision processes to reach the conclusion as efficiently as possible, and it will pay off financially for your company. It has an added benefit of motivating your teams, who will be part of an organization that is balanced and making great choices for its customers and its future.

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