A Harvard Business Review article by Michael E. Raynor and Mumtaz Ahmed titled ‘Three Rules for Making a Company Truly Great‘ suggests that companies that are truly exceptional (which have done well over a long period of time) prioritise revenue over cost. They call this as the rule of “revenue before cost.”

Revenue before cost means that these companies focus on the topline rather than on the bottomline. This is not to say that they don’t try to minimise costs. They do that as much as or better than their peers. But they make sure that they pay enough attention to revenue generators. In effect, they focus on capitalising on tomorrow’s opportunities rather than on solving today’s problems, which is something companies are increasingly realising as important.

For a typical manufacturing company, “revenue before cost” might mean spending more on a specific sales force who bring in new customers, rather than on a new machine that reduces manufacturing cost of parts. However, some online sales companies seem to take this principle too far when they focus on sales even as sales-returns and related costs mount.

Indeed, like any business principle, “revenue before cost” will be an effective strategy only if it is implemented well.