Building Business Value | Corporate Management Strategies

Are You a Bottom Line Manager or a Top Line Leader?

I was in a meeting recently when I overheard a senior executive make a bold pronouncement:  “I’m a bottom line kind of guy”!  There is nothing wrong with this mind you.  Harry Truman was famous for the “buck stops here” sign on his desk.   Most of us feel great when we finally “get to the bottom” of a sticky problem, but as the economy has stagnated and recovery has slowed, I’ve noticed an overemphasis on bottom line management in many companies.

What are Bottom Line Managers? These managers concentrate on the expense side of the income statement. They sit at their desks with their operating budgets in hand, dutifully reviewing each and every expense report to make sure it is in the budget. Organizations spend thousands of hours developing, reviewing, and reconciling operational budgets and very little time discussing their customers.

Top Line Leaders, on the other hand, focus on the revenue side of the equation. They understand that the only way to create new opportunities is to find new customers.  I saw a documentary on the history of Apple last week on CNBC and marketing guru Guy Kawasaki shared his philosophy that “sales cure all ills” and I remember thinking “ain’t that the truth".

Top Line Leaders focus on substantially increasing revenues by finding new niches, new or modified products and services, or by expanding geographically or online. Top Line Leaders build a leadership team that includes Bottom Line Managers, but the Top Line Leader is always first among equals.

Many growing companies experience an overwhelming urge to put in place a "manager" who begins to control expenses. Thomas Watson, Jr., the long time CEO of IBM, is quoted in his book “Father, Son and Co” as saying that IBM “didn’t have an operational budget until it was over $400M in revenue”.  Obviously, expense control is important and essential to a company's long-term health, but revenue generation and the expansion of the top line should drive expense decisions.

Stagnant businesses have an abundance of Bottom Line Managers. It is not a creative job. The hard part is Top Line Leadership.