“Beef. It’s What’s For Dinner,” is a successful advertising campaign with concept of incorporating beef into a healthy diet. I’m one who enjoys a nice steak dinner so this advertisement and concept easily catches my attention. Currently, my brother is working for a company that produces naturally raised beef for the food service industry. At a recent family dinner, we discussed the true cost of a steak.
After some back and forth discussion and analysis using business acumen, we wound up agreeing on the following: Most retail outlets price their steaks by the cost per pound. This is their way of representing the true value of a steak. However, after discussing this information and challenging each others perspectives a bit, we came to the conclusion that the best valuation is not the cost per pound, but the cost per edible portion. Steak contains water, fat, and bones that may be cooked off or not consumable. Ultimately, you are paying a price for a piece of meat and should want to consume as much of it as possible. Now, I realize that this is not the only way to value a steak, but is the best overall representation of its true cost and value.
I share this simple analysis with you, because if organizations can get managers and employees to think and speak the language of business, it will pay dividends to the bottom line. The way information in business is represented can be tricky and confusing when talking about finance, economics, and strategy. By developing business acumen skills, more people will begin to understand and identify the true costs and understand how these decisions can greatly impact the bottom line.
Next time you’re involved in a purchase or assessing how viable an initiative is for your company, take a step back, process the information and ask the question “what is the true cost”? It might surprise you.