Finance as Fuel
2.4 CornerstonesBeware of little expenses, a small leak will sink a great ship
What is finance as fuel?
Definition
The mindset and practice of valuing profitability as propellant and not a destination
Purpose
To foster economic awareness that ensure the financial resilience of the organisation
In our current society, capitalism and the monetary system are two well established ideas. Organisations operating in this context must adhere to these systems to be able to thrive. In practice this means gathering funds to cover the sourcing of resources, cover operating costs and selling services or products that provide value for the stakeholders while providing an income for the organisation to ensure funding for further operations and progress towards defined direction.
For governments the gathering of funds is performed through taxes and the services or products are what the government provides to its citizens. The profitability lies in making sure that the income and costs are in balance together with the provided value to keep and maintain and increase votes.
There are two mindsets when it comes to money and the acquisition of wealth:
- Monetary wealth as the destination
- Monetary wealth as fuel
Monetary wealth as destination refers to that the end goal is to accumulate as much money as possible (often as quickly as possible). For organisations with this as the end goal, there other more relevant approaches to achieving this. However the CUBE® framework is designed for long term sustainability and where the destination is a positive impact on society and the environment.
In the CUBE® framework, money is regarded as fuel. A resource to propel the organisation towards its destination. This means that it is important to ensure that there always is fuel in the tank, that the fuel is used to propel the organisation towards its destination (direction) and that the route is planned in such a way that fuel is added along the way so that the journey can continue.
To translate this metaphor, it means that profitability is important to ensure the ability to continue to operate. More fuel means increased ability to progress. Therefore, financial awareness and ensuring long term profitability is key to thrive in the long term.
Next Step
Read more about the next Cornerstone, Security by design…