The most important question I know a business leader must be able to answer is :
What asset you own and/or control that gives your customers a competitive advantage in the market in which it operates?
The ability to answer this question implies a number of very important things. The leader knows:
- What asset the business is working to get a return on.
- Whether that asset is owned or simply controlled.
- The benefit the customer derives from the product incorporating the asset.
- The benefits are wholly contingent on the market in which it operates.
- Having identified the asset, its value can be monitored over time.
In the Return On Key Component ™ Method, we refer to this asset as the “Key Component”. Without it, the business has no reason to exist. With it, the processes by which the product is created and its benefits communicated, and the risks inherent in the business, can be measured and monitored with regard to the return they produce on the Key Component. This return must be positive. The return must cover the cost of capital, return money to shareholders and be sufficient to reinvest in the business’s future.
What is your Key Component?