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An Occasional
Newsletter
to our Clients, Readers, and Friends
1. Companies can end up in trouble when they are
hampered by rigid, one-size-fits-all methodologies designed
to deliver repeatable, predictable results. Instead of being
able to adapt quickly to adverse conditions and make timely
decisions, they end up getting bogged down by these bloated,
over-engineered systems. The best strategy in the world is
worthless if it isn’t achieved quickly. I have observed that
75% or more of the time taken in major initiatives can be
eliminated by jettisoning cumbersome decision-making
procedures.
The process must be streamlined. Management teams must have
the power to make quicker decisions – within days, or even
hours – and to shake up their systems to improve
performance.
2.
Focus on cash, actual cash.
Cash is precious. Until recently, many healthy
companies had access to an overabundance of cash and were
unconcerned.
Management needs to develop weekly cash forecasts for the
upcoming financial quarter and update the forecasts weekly,
comparing the actual figures to the plan. As the process
becomes more established, the forecasts can be updated
monthly instead of every week.
3.
Focus on high impact issues and take the shortest path to
the goal. Companies that are hampered by “fiefdoms” and
elaborate company traditions cannot act with clarity and
decisiveness. This has a very high cost in terms of success
and survival in difficult times.
4.
Management must have the courage to build a team that
can lead the company out of trouble quickly. Underperforming
managers cannot be left in place. When asked what they would
do differently, senior management consistently
expressed regrets that they hadn’t made more key management
changes sooner.
5.
Ensure that you are cutting fat, not muscle.
Companies need to use
a more surgical, refined approach when making cuts.
Be close to your
customers. Management needs to understand how their company
creates value for their customers. What drives sales and
margin growth? Who are the core customers? What are they
buying? What value do they perceive in your relationship
with them?
Management needs a very good understanding of both sides of
the value equation and must be able to adjust quickly when
needed.
Those of us who have
ridden economic slowdowns in the past have learned the hard
lessons needed to keep our companies profitable.
Senior management must focus on more than just
short-term survival; they must be aggressive with a
turnaround plan, and “quick on their feet” as the economy
adjusts to a new normal – moving quickly to implement the
changes.
Above all, be
optimistic. Don’t assume that decreasing demand and revenue
must be addressed by drastic cutbacks. Instead, take
advantage of the turbulent times; rethink how your business
works. An economic slowdown can be a tremendous opportunity
to strengthen your competitive position and financial
performance with the right mix of strategy, innovation and
courage.