Please bear with me as I get a bit technical and then relate the motor in your vehicle to the motor in your business. Not so long ago, engines and mufflers made lots of noise, spewed smoke, gobbled fuel, and used oil and coolant. A Key Performance Indicator/Metric for engines is the combined speed/horsepower/torque curve. For the better part of my career, I’ve been looking at these curves and how they differ depending on many aspects of the design of the engine, the fuel provided, and government regulations in force. Below is a typical set of curves from a 2012 article(1). On the left is a diesel engine and on the right a gasoline engine.
The diesel motor has more torque at lower speed, has a peak area of torque, then it falls off. This is the green line and it starts at a lower speed than the graph for the gasoline engine. In contrast, the torque on the gasoline motor stays relatively constant over a wide range of speeds. That is one reason that a vehicle with a diesel engine has as many as 18 gears, while the gasoline powered vehicle has 5-7 gears today. We want to keep that engine running at peak efficiency and/or cleanliness of combustion and/or fuel economy. It’s a well thought out and designed balance of all that is expected of the motor.
I’m purposely using the term motor rather than engine. It’s no surprise that electric motors are replacing some of the diesel, gasoline, natural gas motors. Each has a different balance that is right for some, but not all, applications of a vehicle. The next picture shows three current motors. The latest Cummins ISX15, a Hemi 426, and the electric motor in my Ford Mustang Mach-E. Please don’t get bogged down in the details of the curves. Just take note that they are different. Note that the motors all look different. They all “power” the vehicle and get it moving from zero to 100 miles per hour. One can pull 5,000 pounds while another can pull 80,000 pounds in a much larger vehicle. One is slow to accelerate and the other takes off fast and furious (I love that feel with the Mustang).
What’s that got to do with business? Plenty. I think in terms of REVing up a business where R is for Revenue, E is for Earnings, and V is for Value. REVing up suggests speed to me, as does my company name of Business Accelerants, since increasing speed is acceleration.
How have you designed your business to turn speed (revenue) into useful torque/horsepower (earnings) that allow you to do something useful (valuable) such as take that recreational vehicle up the mountains on vacation (make your company valuable to you and others). What compromises do you need to make to accomplish each in its appointed time? For a startup, they may sacrifice earnings in favor of speeding up the acquisition of subscribers. For another company getting great interest in the market, they may slow growth to allow better hiring and the deployment of capital equipment. Another company in dire straits may choose to cut expenses fast to conserve cash in the face of a crisis.
What kind of a motor is powering your business?
What are the design elements of that motor?
How do you balance the three key metrics of Revenue, Earnings, and Value to consistently grow all three over the long term?
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