In our professional careers we will have many high priorities, but some are more immediate than others and there can only be one top priority. Whether the goal is to improve the diversity mix of a senior management team, perhaps cut the environmental impact of a business or enhance the talent pool within an organisation. Everything comes second place to doing the day job to the best of one's ability. This can be frustrating especially when all the key stakeholders buy into the plan, vision and goals for these important projects. The projects are still important, and they are high priority but they are not the top priority!
It was during the depths of the financial crisis in 2008 that this lesson hit home for me. I had been given responsibility for optimising the cost and capital base of the business operations with the critical goal of helping increase our sub-par returns above a new hurdle rate. I was frustrated at the limited success we were making towards the goal even though the optimisation efforts were a clear high priority for senior management.
Banks at this time were doing everything humanly possible to cut their consumption of scarce financial resources and to shrink their cost bases. Our targeted reductions were feeding into the division’s and ultimately the firm’s numbers and my business in particular had historically been an out-sized consumer of financial resources which all banks had rapidly depleted during the crisis.
I was complaining that whilst progress was good it could be better, I needed the business CEO’s buy in to press ahead with even more aggressive reductions. I needed even more time from the incredibly busy front office revenue producers, the sales people, the structurers and the traders. The business CEO stopped me and politely but firmly explained the situation:
“Everyone agrees that reducing costs and capital are important but so is the ability to continue generating incremental revenues.”
His next few words have stuck with me ever since
“Revenue is the oxygen we breathe, costs and capital are the food and water that we consume. Without revenue, the oxygen, we die within minutes but we can survive for days or even weeks without the food or water.”
Revenue is the oxygen we breathe, without oxygen we die within minutes
sometimes it is only during a crisis that the obvious is made clear!