Management Intelligence

Cost cutting is a sign.

A sign that poor decisions were made previously, that fat was allowed to accumulate. Sure, as with the car manufacturers, when demand slumps 40% the best we can do it lose money in a organised fashion. But the US car industry has been pumping out cars in low demand for a decade.

Sub prime debacle was the fuel, but endemic of what was happening at all levels of business. That is fundamentals were being ignored and rampant debt funding, in pursuit of optimizing and quick profits.

The ponzi scheme, ripped off wealthy otherwise ‘smart’ people. These same people then served as the first line of defense when accused of dodgy dealings. This demonstrates the lengths to which people will go to defend decisions, how people delude themselves.

Common Sense
The fist line of defense for silly decisions caveat emptor, is common sense. It pays to be skeptical. Relying on regulators will get you know where. Further a little knowledge is dangerous. Knowledge is critical step, and not just knowledge, but the application there of – or wisdom.

Human ego also needs over coming, after having mad a bad decision, delay and denial occur. Humans make avoidable mistakes. Preventative is always better then contingent actions

Market strength hinges on managing for the future.
Apple and Intel, show that the only course of action in downtimes is to maintain or even increase spending. Both did so in the last recession and Apple most noticeably came out with a raft of leading edge products. Its obvious strategy - take the opportunities that others cant afford or are scared to afford.

Anything less than investment in driving market leadership is tantamount to failure.

A quote from Rhodes & Stelter in a recent article in the Harvard Business Review:

‘Loosely run operations, sluggish unit sales, and an over-extended enterprise leave you vulnerable to economic shocks’.

Shock, horror…no surprises. However it does give a clue to what has caused much of the issues companies are now facing.

Good managers, always rooting out activities that have little value to the customer. Perhaps if a downturn is good for anything it is that reforms put off and not accepted now have impetus and can create momentum.

Robert Heller, in his February 09 Thinking Managers article articulates the opportunities well.:

“Whether you are looking at the merits of off-shoring, reallocating the marketing spend toward immediate revenue, or revamping your pricing strategies, or anything else, the dust is full of diamonds waiting to be picked up.”

Cutting costs, selling unproductive assets are all good decisions, perhaps, in the current environment, but they are systematic of previous poor decisions. The good managers will be the ones who look for the lessons here and ask how can we improve management in the future no matter the market conditions.

How can values and habits be changed to eliminate waste whatever the conditions. Crisis management must include learning lessons for the future.

The Cure:

Deep management intensity
Within the operations of the business and the outside world. In times of turmoil opportunities abound, we know this. Taking advantages of them takes fast reflexes, and aggressive attitude. Serious changes to the status quo.

Aggressiveness
Aggressive pursuit of good ideas, pursued by small entrepreneurial teams and led by charismatic leaders. History has a litany of examples, from Steve Jobs with the Apple 2 computer and the Mac. And John Opel of IBM who brought out the first PC at IBM, during the 1981 recession.

In both cases they were create by an aggressive team of engineers, who were able to beat all sorts of odds to release products within records times (one year in the case of IBM).

Small Teams

Small teams are the key. And the clue is they weren’t trying to survive, but they were trying to create something of value and thrive. Pursuing creative ideas and strategies on what they perceived customers wanted and needed and delivered it to them.

Bottom Line
Now is the time to be aggressive and make great waves. Problems can’t be solved at the level they were created. You need to go up a level and strategise your way forward, manage for the long term (long, long term) and thrive.

(C) Daniel Lock. All rights reserved.