Melbourne Business School News Learn how to plan for future growth instead of chasing short-term profits

Learn how to plan for future growth instead of chasing short-term profits

Too many Australian executives chase short-term profits at the expense of planning for the long run, says Melbourne Business School Associate Professor Don O'Sullivan.

Don O'Sullivan giving a lecture

"Short-term profit chasers are incapable of deciding the perennial issues of how much, how fast and at what risk a firm can grow," Prof O’Sullivan says.

"They focus on easy-to-measure tangible assets, like stock and sales, rather than intangible things, like brand, reputation and customer relationships, which are necessary for long-term growth."

Planning for growth often requires a shift in the way companies structure their budgets and management reports, says Prof O'Sullivan, who works as a consultant on strategy and executive decision making for a range of blue-chip organisations in addition to teaching.

"Executives should augment their reports with future revenue drivers – including reliable demand-side goals with performance indicators around growth and the related risks," he says.

"It elevates the imperative to manage demand in your reporting cycle. Unilever, Nike and Amazon lead best-practice here."

To teach executives how to plan for growth, Prof O'Sullivan will launch a new two-day short course called Growing Demand at Melbourne Business School in June. The course will run again in September.

The program will cover the five factor executives need to consider to progressively shift their company's attention to revenue pool indicators within the market:

  1. Share of market growth/revenue expectation
  2. Growth potential within markets at the region or brand level and broader growth opportunities
  3. Market interventions necessary to deliver against these growth goals 
  4. Spend necessary to deliver market interventions
  5. Project-based budget allocation

Participants in the program will learn how to measure the potential of intangible assets such as brand equity – and their performance indicators – as well as how to budget for growth.

"Unfortunately, many firms take a ‘rinse and repeat’ approach to budgeting. It sees them budgeting the same as last year rather than take advantage of the different landscape this year," Prof O'Sullivan says.

"The resources they distribute to chasing demand need to reflect the scale of their opportunity. If not, then they should reassess budgeting for the year, especially as intangible assets become central to the firm’s performance."

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