When I became CEO of Novell in 1997, I got some great advice from Bill Gates on how to manage the company. He said, “spend 80 percent of your time on 80 percent of your revenue.” Not only was this great advice about focusing on the most important parts of your current business, it also spoke to the paramount importance of revenue as a business metric.
Why revenue? I like to say, “revenue solves all known problems,” because it’s the one metric that project managers and company executives can’t game. Earnings (basically revenue minus costs) on the other hand, is subject to all kinds of accounting and management antics. Is top-line revenue growth looking a little meager? Just boost those earnings by hiring fewer new software engineers, putting off that important R&D project, or switching from LIFO inventory accounting to FIFO. See why managing to your quarterly earnings is a problem?#HowGoogleWorks #google #accounting #business #management