1. “Six Trends Significantly Impacting
©2010 Profitiviti. All Rights Reserved. This document is for informational purposes only.
Business Performance” 1

2. BUSINESS CLIMATE
Companies Continue to Deal With Tremendous Uncertainty & Risk
BankruptcyData.com
BankruptcyData com shows a surge in bankruptcies from 2008 2010 with 2010 totals
2008- 2010,
expected to exceed 2009 by around 17%. Companies have cut spending, unemployment
is high and headlines show continued volatility. Although sentiment is more positive than
in months past, many companies are still figuring out how to succeed in our new economy.
Research has shown that there are six main trends which are significantly impacting
business performance today. Some trends affect one company more than another,
however they all impact consumers, employees, cost structures and efficiencies.
Mastering the methods for mitigating the critical business risks associated with these trends
will greatly improve your company’s profitability and productivity.
“Finance executives fear that the deep cuts they made in the face of the economic
crisis are not without consequences: 46% say they have taken actions since the
beginning of the recession that they believe could reduce their company's long-term
growth prospects.
prospects.”
- CFO.com
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3. TREND #1
Businesses Are Consistently Operating in Reactive Mode
Senior executives lead very busy and complex lives. Also, companies are doing more with
lives Also
less and day-to-day activities require their complete attention. Strategy sessions, in-depth
planning and detailed analysis efforts are minimized or non-existent. Tomorrow’s plans are
being sacrificed for today’s emergencies.
Causes
- Limited resources, limited skill sets, limited tools, limited money, limited time
- Most corporate reports are based on past performance and are not future-looking
- R
Resources are rewarded for their last minute heroics and fire-fighting
d d f th i l t i t h i d fi fi hti
Outcomes
- A culture of disengaged resources due to “flavor of the week” directives
- C
Consistent turnover in leadership roles and high-performing resources
i i l d hi l d hi h f i
- Unpredictable swings in revenues, cash flow and profitability
Needs
- Take control through periodic and proactive planning with f
k l h h d d l h forward-looking analysis
dl k l
- Define a short list of strategic initiatives, then surround them with common goals and incentives
©2010 Profitiviti. All Rights Reserved. This document is for informational purposes only. 3

4. TREND #2
Fighting Clutter & Information Overload
The Information Age has given way to the Attention Age. We are all hit with over 30,000
Age 30 000
messages per day – work and personal e-mails, texts, advertisements, commercials,
Facebook, twitter, Linked In, product placement, company logos, etc.
Causes
- E-mail lists are cheap: people waste 21 hours per year deleting SPAM e-mail (Ferris Research, 2008)
- Smart phones provide anytime, anywhere and any device access to information
- Lack of forward-looking strategic direction breeds busy-work in all levels of your business
Outcomes
- Attention has become a scare resource, with your consumers, suppliers and employees
- 56% of consumers avoid buying from companies that advertise too much (
% y g p (“Attention Age Doctrine”)
g )
- Employees disengage from tasks quickly if priorities aren’t clear
Needs
- Companies must use innovative targeted advertising which is not perceived as intrusive by consumers
innovative,
- Communication on corporate goals and objectives must be consistent and frequent
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5. TREND #3
Increasing Marketing Costs With Decreasing Effectiveness
With innovation new marketing platforms emerged – Google AdWords social media sites,
innovation, AdWords, sites
e-mail distribution technology. Although low in initial cost, resources were required for
daily maintenance. Additionally, brand loyalty has been dramatically decreasing since
2003. Consumer acquisition and retention costs are rising rapidly.
Causes
- Over 26,000 new products and brands are introduced every year
- Companies are throwing a lot of marketing at the proverbial wall and hoping that something sticks
- Costs have increased in all channels: pay-per-click, postage, media advertising
Outcomes
- In 1992, it took 4 attempts to reach a consumer; in 2008 it took 8.4 attempts (Pacific Bell Study)
, p ; p ( y)
- More expensive contact methods (call center; direct mail ) for consumers who opt-out of e-mails
Needs
- Develop flexible sales and marketing strategies using high margin items and accurate consumer data
- Implement programs to obtain consumer referrals and maximize strategic alliances
©2010 Profitiviti. All Rights Reserved. This document is for informational purposes only. 5

6. TREND #4
Supply Chain Costs Are Volatile & Managing Demand is Poor
For companies that source products/materials participating in a global economy provides
products/materials,
unique opportunities and challenges. Items made with cheaper labor in one part of the
world, tends to bring with it certain supply chain and lead time trade-offs. Supply chain
risks are further constrained when sales incentives are out of alignment.
Causes
- Commodity and fuel prices change quickly, and currency is constantly fluctuating
- Weak skill sets and rushed timelines lead to short-term and/or unfavorable contracts with suppliers
- Poor execution in end-to-end business processes (e.g., processes that cross departments)
Outcomes
- Stock outs; this happens when sales incentives are not aligned with inventory levels and lead times
; pp g y
- Increased expediting and inventory costs due to inefficiencies in managing demand
Needs
- Develop long term alliances vertically throughout your supply base
long-term
- Implementing efficient cross-functional business processes with clear accountabilities
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7. TREND #5
Organizations Are Damaged & Employees Are Scared
One of the biggest fears for employees today is whether or not they will still have their
jobs when they arrive at work in the morning. This uncertainty has kept stress levels
elevated as it challenges our basic needs of security and providing for our families.
Causes
- Corporations made deep cuts in headcount, some without enough strategic analysis beforehand
- Unemployment is high and a jobless recovery is the main sentiment
- Those finding new jobs are taking title and pay cuts out of necessity
Outcomes
- Few employees are challenging the status quo
- Innovation has decreased; there’s only enough time and money to keep the lights on
; y g y p g
- High-performing resources have left companies for new challenges and opportunities
Needs
- It’s more important than ever to build trust at all levels of your organization starting from the top
It s organization,
- Leadership talent is key; you need the right people, with the right skills in the right positions
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8. TREND #6
Business Insight is Limited & Typically Based on Past Performance
For the most part, business data exists because a set of transactions has already occurred.
part occurred
Business Intelligence is a start, but predictive analytics leads to competitive advantages.
High-performing companies are future-thinking and constantly mitigating risks before they
become problems.
Causes
- Reports are viewed as deliverables, so people will create new ones just to show that they are busy
- Very few companies model their business strategically, as data is usually gathered by department
- Assembling the right data requires a strong understanding of business requirements by IT developers
Outcomes
- Most executive reports are rarely reviewed; burning issues always generate phone calls
p y ; g y g p
- The majority of reports are departmentally focused and can be misleading
Needs
- Question all reports unless they tie back to your financials or key performance indicators
- Utilize forward-looking analysis to improve decision-making for times when rapid answers are needed
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9. NEXT STEPS
No Need to Over-Complicate Things
You cannot build a truly great company by constantly operating reactively. It’s important
reactively It s
that you begin or enhance your current business planning processes to make them
forward-looking, holistic and consistent.
Following
F ll i a simple, iterative framework will i
i l it ti f k ill improve your business performance
b i f
(profitability and productivity).
Align Gather and integrate key data points to model your business: people, process, spending, revenue
Analyze Slice and dice your operational models for insight to identify improvement opportunities
Decide Use the insight to define a short list of improvement efforts
Improve Assign high-performing resources to deliver positive results
©2010 Profitiviti. All Rights Reserved. This document is for informational purposes only. 9

10. CONTACT INFORMATION
Contact us for additional discussion. We are also available to provide
insight when developing your plan for improving performance.
Profitiviti
5000 Birch Street
West Tower, S it 3000
W tT Suite
Newport Beach, CA USA 92660
www.profitiviti.com
Steve Raack
949-260-2029
sraack@profitiviti.com
k@ fi i i i
©2010 Profitiviti. All Rights Reserved. This document is for informational purposes only. 10