Understanding the critical factors of a business keeps it going

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: tuning and the like. Naturally, these resulted in delays leading to vehicles being off the roads and very high costs. The company now realises that having its own workshop, mechanics and spares leads to far lower costs and much faster vehicle turn-around times.

A fast-food company decided to be different from the competition by focusing on the guaranteed delivery of its food within a certain number of minutes of an order being placed. Else, the customer received the food free. They then advertised this heavily and soon enough orders started pouring in.

The company poured its energy and resources in meeting its promise of guaranteed delivery within the promised time. Given the conditions in India, the costs of ensuring this started mounting. The company invested more in planning its delivery routes, restaurant locations and in technology. It was able to, in general, honour its time commitment. But then sales started slowing down. Upon researching the reason, they found that most customers did not like their fast-food anymore. The company had focused so much on its logistics that it had ignored the fundamental reason for its existence, namely quality and tasty food.

In addition, those who were ordering the food were those customers who were not very profitable to the company since they ordered low margin items.

It is important in each business, therefore, to understand what the critical factors for success really are. Many times, the reasons that appear to be attractive are just mirages while the ‘unglamorous’ activities of the business are the most critical. It is important, therefore, to really understand this and spend time and energy in ensuring that these activities of the business are built on a solid foundation.

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