When entrepreneur and author Wendy Lipton-Dibner was in high school she took an economics class that influenced the rest of her life. The students were assigned to spend the semester in field research on four local businesses each, ranging from family-owned restaurants and franchises to enterprise companies.
“ No one can capitalize on this economy better than someone who is driven to make a difference in people’s lives.” – Wendy Lipton-Dibner , Focus on Impact
There was just one objective for the research: Come back and explain how each business makes money. From an economic perspective, and particularly for the time period (early-mid 70s) the assignment made sense. It brought home a powerful point: No matter what the business model, product or service, each of these companies shared a common goal—to maximize profitability.
Everything these companies did, from product development to customer service, was directly aligned to minimizing expenses and maximizing sales. To many it still seems common sense: you should focus every aspect of your business on accomplishing your singular goal. Make money.
Lipton-Dibner learned the lesson well, but she also learned the bigger lesson her econ professor hadn’t realized or intended: Not one of the four companies she studied had increased its revenues over the time she observed them. Furthermore, some 35 years later, none of the firms she studied is in existence today.
So what went wrong?
As Lipton-Dibner progressed further in organizational research she has ultimately studied more than a thousand organizations in sectors including healthcare, small business, global corporations and nonprofits. She has also owned and operated multiple companies of her own. She has gained a healthy respect for money.
“I love money,” she says. “Money is security. Money is freedom. Money is fun.”
But she also learned a guiding principle that drives her work and counsel to others today: Traditional business models don’t work for “difference makers.” What is a difference maker? It is someone with a message, a product or a service designed to help others lead happier, longer, healthier, safer, more productive and enjoyable lives.
The millennial generation is replete with Difference Makers. They exist in every generation of business as the thinkers, dreamers, influencers, inventors and product developers who have their customer or end user in mind. When Difference Makers participate in businesses that are focused primarily on money, they fail. Likewise, their businesses fail. According to Lipton-Dibner, “When you focus on money, you have to invest significantly more money to make up for the problems you caused when you focused on money.”
There are two types of businesses, she maintains: those that focus on making money, and those that focus on making a measurable impact in people’s lives. “Guess which type makes more money?” she says. In companies that have lost sight of the missions that initially drove them, the following things happen, which she is able to prove with empirical data:
Annual revenues reach a peak and then stop climbing, or drop.
Top performing salespeople lose momentum soon after they reach maximum commissions. When asked to explain, they say they’re goal-driven, and hitting their top tier was much more rewarding than sustaining it.
The salespeople have no connection to the difference they’re making for their customers as the result of their sales.
Salespeople refer to their customers as “prospects,” and while they develop relationships with the customers, the relationships are transaction driven, and they have no interest in maintaining them for any reasons beyond re-order sales.
Sales managers encourage competition over cooperation, leading to back-biting, stealing and conflict.
Marketing campaigns turn their focus to immediate value-for-the-money and fast-action sales.
The fast-action campaigns diminish the company’s brand, turning all interactions into discussions of price points and deals.
Then, the denouement:
To recover from the price wars they’ve created, the companies transfer the money pressure to the departments, requiring them to cut costs and further lowering the quality and the impact of their products and services.
Purchasing departments order lower quality supplies.
Personnel lose respect for the products, leading to poor work ethic, poor productivity, reduced teamwork, and discussions about bonuses being lowered and staff being cut.
High turnover ensues, engagement suffers, customer service diminishes, and revenue sinks.
In contrast, Lipton-Dibner has observed what happens when companies turn their focus away from money and turn to ethical growth strategies for delivering one-of-a-kind products and services that make a measurable difference in people’s lives. (To be clear, while the shift in mindset from profit to impact is vitally important, Lipton-Dibner has developed a strategic model and process for creating a measurable impact in the steps from product development to delivery to customer service and teamwork.)
In Lipton-Dibner’s early professional career, after testing her theories on a number of companies, she landed a major training contract for a leading U.S. telecom company. She loved the company, and she loved even more the fact that they were open to her strategies for shifting their focus away from money.
Division by division she took the executives through extensive 3-day trainings, beginning with the external salespeople. She persuaded them to break through their traditional thinking and to put their entire thinking and focus on making a difference through their products and services for the customers they served.
The contrast was astounding. Within 30 days each team had increased its revenue by a minimum of 200%, and sales continued to rise for the entire 18 months she and the company tracked their results.
Another surprising result also occurred: An increasing level of business began to come from referrals – another indication the business was making an observable and positive difference for the customers the company served. Customers shared their happiness with others. New customers migrated towards the favorable results.
With no cancelation clause, all of the money the team had collected would have to go back. But she’d already spent the deposits on salaries, bonuses and extravagant marketing.
In the young business, Lipton-Dibner hadn’t yet drawn a salary herself as she continued to live on residuals from the sale of her original company. She withdrew her savings to pay refunds to her would-be clients and to cover her employees’ salaries. Then she resorted to credit cards. Finally, she was out of options. In the most painful day of her life, Lipton-Dibner called her team members to let them know she was shutting her doors. They were gracious, but her pain was intense.
Ultimately, she filed for bankruptcy and learned once again the lesson she’d employed at the start: Eliminate the focus on money, and concentrate on the impact she could make for customers once again. She obtained a full-time position selling cosmetics at a large department store. She spent her days talking with customers, offering them complimentary information about skin care and color selection and inspiring them to take time for themselves. If they chose to buy products, she referred them to the other employees, giving away the commissions she could have reserved for herself.
The crowds of people at Lipton-Dibner’s counter grew with the passing days. She expanded her advice to include ideas for motivating families, co-workers and bosses, secrets to elevating self-esteem, communication strategies, and other topics her customers asked about. She rarely mentioned cosmetics, but as the customers stayed they listened to her ideas, they bought products and they came back with their friends.
The department was breaking sales records. The employees loved Lipton-Dibner because they were getting commissions from the engagement of the audience she drew. The manager was thrilled. Every night she went home feeling enriched by the difference she was making in a growing number of lives. News quickly spread to the corporate headquarters of the cosmetics brand she represented and they hired her as a consultant. Soon she was back in business, teaching organizations to increase their revenues by focusing on impact once again.
These days Lipton-Dibner doesn’t think about money (although she admits, in fairness, her husband and business partner watches carefully over the corporate and personal accounts). She has learned once again the lesson that drives every aspect of her own business and the advice she offers to others. It is, she maintains, the number one secret to business success: When you focus on impact, the money will come. For prospective entrepreneurs who’ve not yet taken the leap she invites them to consider a pivotal question: “What could I do in the world if I learned to harness and capitalize on my power to impact people’s lives?”
Portions of this story are excerpted from an early draft of Lipton-Dibner’s upcoming book, Focus on Impact, available at www.focusonimpact.com with an anticipated publish date of Nov. 3.
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