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Managing Your Company In Lean Times


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Companies of all sizes (SMB to large ones) are finding the current economic environment challenging. Business growth is slow or almost stagnated, new customer gains are far and few, customer spend has become very unpredictable and hence managing capacities is posing a big challenges. Browne & Mohan consultants based on their experience of guiding companies have compiled strategies that can be adopted to successfully maneuver the low tides. We suggest product or service offering changes, organizational changes, employee engagement changes, partner and ecosystem changes, sales and marketing structure changes that are appropriate to most companies.

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Managing Your Company In Lean Times

  1. 1. Browne & Mohan Board & CEO Advisors, Management ConsultantsManaging your company in lean times
  2. 2. Browne & Mohan Board & CEO Advisors, Management ConsultantsAcross developing and developed world, 2. Rebuild offerings & domaingovernment inaction, increasing cost of doing specialization: In good times, many small andbusiness and slowing down of customer medium companies would have added “me-too”confidence is scaring many companies. Skies are product or service lines. Some companies wouldnot falling, but with customer gains becoming far have added products or services that have littleand few many companies worried about growth commonality in terms of inputs, skills, assembly,and profitability. Many businesses are prisoners customer segments, channel partners or markets.of their past success. Their business model and its Transaction cost of managing unrelated varietycomponents (including sales, marketing and hurts them in leaner period as they do not gainorganization) that served them well in the past from “economies of scope”. A manufacturinghave not kept pace with current environment. company realized too much variety has increasedCompanies that thrived in benevolent market the number of products by 20%, but their revenueconditions are finding their naïve and growth was just 3%. The non-value addedconventional approaches are not yielding results. activities in their operations increased by 46% asRevenue predictability is poor and many more time was spent on unique set-up to cater tobusinesses have abandoned the annual plan and variety. Pursuing a platform strategy by ensuringresorting to rolling monthly or quarterly plan. high commonality between parts and products present purchasing cost benefits, but also improveBecause the market environments and product cash cycles.innovation rates differ across industries and thefirms in each industry, many different strategies Lean times are also good times to rebuild newcan be adopted to cope up in the lean periods. offerings. New products, services or practices thatProduct or service offerings, organization, sales allow the company to monetize low hanging fruits,process, competitor weakness, exploiting or help to reach out to the existing customercommonality and partner ecosystem must be needs or offer market arbitrage where they couldtaken into account to survive and grow in a be built in a market quickly, but monetized high inchallenging environment. In this article, based on another market are the best options. Several SMBour experience and the management literature, IT companies must realize that lean times are bestwe summarize major approaches companies to quickly build a product based out of theirshould use to brace successfully. service offerings. Productized services lead them1. Consolidate Business & get your business to higher market reach and revenues with nomix right: The worst enemy in tougher times are linear investments required in sales and supportunderperforming business geographies or SBU. In areas.good times, ambitious business owners wouldhave expanded without deep consideration of 3. Discover outsourcing benefits: Unlikecost and other advantages. Lean time is a good large companies that have successfully adopt JITmoment to evaluate each SBU or geographic outsourcing and other philosophies to push theirpresence for their contributions and consolidate inefficiencies and cash requirements to the lowerthe business. Move to smaller more functional chain, SMB companies do not have greatoffices than ostentatious glass buildings. Put experience in outsourcing. SMB gain majoremphasis on Outcome rather than on form. Many savings in terms of HR, procurement, engineeringSMB find homing strategy of consolidating their services and other outsourcing. Companies realizespoils at near markets is a better strategy in lean the savings from outsourcing can be substantial,times. gain from better market information and significant savings. A life science company used e-
  3. 3. Browne & Mohan Board & CEO Advisors, Management Consultantsauction to discover 15% savings for the packaging span of control across the organization, especiallymaterial, but also could reduce the total support in direct sales. Create self-directing teams thatteam for procurement activities. A construction bring a sense of urgency and company outsourced engineering help Companies realize having an army of salesdesk and parts management and gained 5% resources is not the answer, but a lean efficientincremental revenues because of inventory force lead by a senior pro and couple of junior toreduction, availability of right parts and improved do the door opening. Dump regional and productservice. specific sales teams. Cross train, consolidate and upgrade sales skills. Many smarter companies find4. Invest in customer experience: In tough mining existing clients by deepeningtimes, investing in customer relationships, understanding of their needs, ensuring rightimproving the total customer experience and solutions and process can offer them bettercustomer delight is very important. Customers revenue growth. Adopt and update KYC, measureand their businesses also face similar challenges as account mining efforts and incentivize accountyours in tougher times and cost-saving or value mining by delivery or implementation teams.enhancing solution from their vendors are alwayswelcome. By investing in improved customer 7. Bring agility, hunger and focus intorelations you not only build relationship capital, teams: In good times, with the high tides, manybut also defend your territories from your organizations bring in people who may appear tocompetitors. Another major advantage of have the right skills and tools. But in low tide,investing in relationship is you that you could plug many of the recruits fail to face up challenge, take“service recovery costs” and other leakages. A cudgels, learn and adopt new skills andpan-India business hotels chain discovered a small responsibilities. Lean times are the best momentsinvestment in customer loyalty and CRM helped it to discover the entrepreneurial individuals andto reduce gifts and upgrades that were causing it build a many leader centred lose 7% of revenue. Resource constrained Mongolian army bet many well trained Knights simply because it consisted of5. Beef up post-sales: Lean time is an many small groups of soldiers each unitopportune moment to discover the money your commanded by a leader and empowered to actcompanies is leaving from post sales service and independently in the best interest of his on table. A large industrial equipment firm The effect, loss for each team was few, overalldiscovered it could gain about additional 6% army was a decentralized unit each maximizing itsrevenue by investing few resources & integrating impact but acting under a general.its after sales operations. Integrate your postsales process, ensure parts and services are 8. Rediscover the organizational culture:monetized effectively, first call responses are high Tougher times are also ideal time to revisit theand customer feedback on services has a positive soul of organization. Evaluate the form andimpact on sales. Nothing like losing markets due content of the organizational culture. Manyto bad service and spurious spare parts. companies that have initiated “me-too” pizza-day, paan-day and other frivolous programs aping6. Rebuild organization: Tougher time is a other large companies realize these investmentsgood moment to gorge out structure and process are not what employees seek and they are a drainthat were built in benevolent days. Use the lean of its cash. Identify the right programs, trainingtimes to attract and retain a team of committed, and development sessions that show yourhigh initiative and multi-skilled resources. Reduce commitment to people’s growth. What
  4. 4. Browne & Mohan Board & CEO Advisors, Management Consultantsemployees appreciate lot more in leaner times is Brown, J. S., and Duguid, P (2001) Knowledge andthe trust management places in them to shoulder organization: A social-practice perspective.newer responsibilities and invests in their Organization Science, Vol, 12, 198-213retooling and reskilling. Lean times are a good Chebrough, H.W and M.M. Appleyard (2007).harbinger of positive change, rediscover the true Open Innovation and Strategy, Californiaculture you want to embody and imbibe. management review, Vol.50, 57-75.9. Partner ecosystem: Lean times are good Harrigan, K.R (1980). Strategy Formulation intime to increase the mindshare within partner Declining Industries, Academy of Managementecosystem. Participate in joint marketing or sales Review, Vol.5, 599-604.efforts. Invest in people to people relationships Harrison, B (1994) Lean and Mean. New York:with all your partners. Get your employee certified Basic Books.on partner products and platforms and completelyuse the training and development allocations from Kogut, B. and U. Zander (1992). Knowledge of theyour partners for employee development. Firm, Combinative Capabilities, and the Replication of Technology, Organization Science,10. Identify large competitor’s squeaky Vol.3, 383-397.wheels: Customers who had acquired services Kotter, J.P. (1996), Leading Change, Harvardfrom large competitors for brand and other Business Press, New York.considerations and disenchanted with thehighbrow attitude and low service delivery are the Leonard Barton, D. (1995) Wellsprings ofsweet spot. Go after these customers by offering knowledge: building and sustaining the sources ofby offering better services at personalized care. innovation. Boston, MA: Harvard Business School Press11. Brand aggressively: Tougher times Mezias, S.J. and Glynn, M.A. (1993). The threerequire more innovative and cost effective faces of corporate renewal: institution, revolution,product and brand engagement. Pursue low cost and evolution, Strategic Management Journal,social media and community branding Vol.14, pp. 77-101.approaches. Negotiate with media players anddiscover there are lots of cheaper, cost effective Spulber DF. (1998) The Market Makers, Howoptions including unsold inventory on air, and Leading Companies Create and Win Markets, McGraw-Hill: New for a song. Employee led branding is lowcost and effective approach in lean times. Involve Browne & Mohan insight are general in nature and does notemployees to pursue knowledge enhancing, represent any specific individuals or entities. While all efforts are made to ensure the information and status of entities in themarket influencing activities to inform and insights is accurate, there can be no guarantee for freshness ofinfluence the purchase decisions. information. Browne & Mohan insights are for information and knowledge update purpose only. Information contained in theSelected Bibliography report has been obtained from sources deemed reliable and no representation is made as to the accuracy thereof. Neither Browne & Mohan nor its affiliates, officers, directors, employees, owners,Benner, M.J., and M.L. Tushman. (2003). representatives nor any of its data or content providers shall beExploitation, exploration, & process management: liable for any errors or for any actions taken in reliance thereon.The productivity dilemma revisited. Academy ofManagement Journal, Vol. 28, 238-256. © Browne & Mohan, 2013. All rights reservedBoudreau, K. (2010). Open Platform strategies and Printed in IndiaInnovation: Granting access Vs. Devolving control,Management Science, Vol. 56, 1849-1872.