At the strategic level, it is essential to recognize and highlight those activities and costs that generate a favorable strategic imbalance for the company in relation to its competitors.
These activities and costs are intended to clearly mark a vital competitive difference for the organization, a difference in most of the time not captured by traditional managers, who stick to a way and way of seeing things that does not fit with a true strategic thinking.
Locked in paradigms of the first and second industrial revolution, in a way of thinking the organization in the style of Taylor, Fayol and Henry Ford, they do not understand that these ways of managing the company respond to a technology that is no longer in force.
When the technological change takes place, they respond to said changes regarding the use of new machinery, supplies and processes, but preserving the previous administration methods. This way of seeing and acting is not only characteristic of businessmen, but also of politicians, trade unionists and worst of all, of many consultants not updated in this new way of generating value.
This explains the scant results achieved in many companies when applying process reengineering, total quality management or continuous improvement systems.
In the same way that the new technical-industrial components apply, they want to apply the new management methodologies, without coming to understand the need for a real cultural change. The lack or absence of a cultural change that adapts to the new requirements of the environment, and especially of the technical-scientific change, make any attempt to make the company more competitive fail.
The perspective from which the production processes are viewed gives rise to a certain inclination regarding the practical management of the processes.
In a time like the present one, all the activities tending to increase the knowledge and intellectual assets of a company are as important for the future of the company as well as for giving a satisfactory answer to the market requirements.
It is the best compliance with these requirements that allows the company to increase its market value, because the higher levels of satisfaction generated, correspond to a greater flow of future income, which implies the present value of the organization.
The future will undoubtedly be for those companies that see training, knowledge management, research, prevention, effective information and the correct interpretation and monitoring of their ratios, an investment aimed at generating a high-performance organization. committed to excellence.
Definition
To the question, what is a strategic activity? It should be answered that these are tasks that are carried out by the company itself or contracted to third parties, generate a difference in relation to third parties, or give rise to magnitude increases in the profitability of the company.
Strategic costs are those expenses produced by strategic activities, and have the virtue that when effectively increased, they end up generating a reduction in total costs. There is talk of an effective increase in that the costs incurred allow the projected results to be obtained.
Not any cost by the mere fact of being conceptualized as strategic is such, since the incursion in costs by the mere fact of doing it, without a strategy and authentic quality in the action, does not give rise to any other result than higher total costs and lower cost effectiveness.
A special feature regarding strategic costs is that they respond to the 80/20 Principle, in the sense that 20% of the total costs they give are responsible for 80% of the benefits.
A strategic cost is in many cases a real and true investment, since its results can be felt over time, as in the cases of quality training, advertising, the implementation of prevention systems and information systems.
Another form of strategic costs are those that, when increased, generate a more than proportional increase in income.
In what is currently called the Age of Knowledge, everything related to training becomes of fundamental importance when it comes to making a difference with the competition.
Enumeration
Among the strategic activities we have:
I. Education and training - Rapid Learning Organization
II. Information Systems
III. Statistics (both internal and external)
IV. Research and development
V. Prevention
VI. Audits: Internal, Operational and Administrative
VII. Preventive Maintenance
VIII. Supplier Selection
IX. Knowledge Management
X. Implementation of Continuous Improvement Systems in terms of quality, productivity, levels of satisfaction and response times
XI. Quality or Bad Quality Cost Systems
XII. Balanced Scorecard / Command Board
XIII.
XIV reengineering. Planning
XV. Budget Control
XVI. Management Control
XVII. Statistical Process Control
XVIII. Fraud Prevention and Elimination Systems
XIX. Systems for the Prevention, Detection and Elimination of Waste
XX.
XXI Occupational Safety Systems. Risk Management
XXII. Competitive Intelligence
XXIII. Benchmarking
XXIV. Strategic and Operational Marketing
XXV. Activity-Based Costing
XXVI. Six Sigma
XXVII. Kaizen - Just in Time
XXVIII.
XXIX Quality Circles. Suggestion Systems
XXX. Five "S"
XXXI. Human Relations Management
XXXII. Human Resources Inventory
XXXIII. Advertising
XXXIV. Diagnosis
XXXV. Turnaround
XXXVI. Market Studies and Research
XXXVII. Matrix Internal Control System
XXXVIII. Credit Analysis
XXXIX. Public Relations
XL.
XLI Contingency Plans. Comakership
XLII. Quick Tool Change System or Quick Preparation Times
XLIII. TPM - Total Productive Maintenance
Effects over time
Although the reduction of strategic costs immediately gives rise to a significant increase in results, these are degraded over time as a result of a lower capacity of both personnel and facilities to meet the greater demands of the company. market.
Therefore, the reduction of strategic costs ends up generating in the medium and long term an increase in total costs, or a more than proportional reduction in income in relation to the reduction in expenses.
Now, what about an increase in total costs? In the long term, it generates lower total costs in relation to the income generated, or what is the same, greater positive results. In the short term, effectively applied, they are also in a position to generate immediate results.
Measurement
The best way to measure the results is by comparing the increase in strategic costs with the level of total costs, and the latter with total income in periods of at least six-monthly periods, in order to allow the effects of the activities to be considered.
Then monitoring said measurements through the application of Statistical Process Control will recognize the new capabilities of the process to generate added value.
A good way to analyze the effects over time is by using the Scatter Diagram and the corresponding Correlation Coefficient, corresponding to the increases in strategic costs and the corresponding increases in Return on Investment.
Strategy
Once the objectives to be achieved have been established, managers must determine the strategy leading to their achievement. For this, it is necessary to previously determine where the main problems or inconveniences to overcome are passed, and then establish the strategic activities to be developed.
It is essential to be clear about this for what it is a strategic activity, and why it is. A confusion or misunderstanding around it will end up generating a result contrary to the one sought.
The mere fact of correctly recognizing the costs and strategic activities implies a strong difference in relation to those direct competitors who have failed to recognize it.
Will our strategic costs be focused on less expensive processes and products, or on the generation of differentiated and high-quality products and / or services?
Traditional thinking
For the traditional administrator, keeping statistics implies greater bureaucracy and consequently higher costs. But competitive organizations know very well that it is even necessary to incorporate a person in charge of the statistical area or subject, aware of the fundamental importance of measurement as tools for both cost control and systematic reduction.
If you want to improve, you need to invest. It is not only a monetary investment, but also time and effort. Many entrepreneurs and managers seek magic solutions, such as courses "Learn continuous improvement in 24 hours", or "Generate Quality without sacrifices."
None of this exists, in order to improve it is necessary to commit and act accordingly, making critical decisions, including the need for a profound cultural change.
Claiming an organization of excellence is not something that can be achieved without discipline and perseverance. And only a company of excellence is in a position to consistently generate added value for its managers, staff, customers, users, suppliers, investors and society in general.
Traditional thinking leads to the decline of the company, its early aging, and the systematic loss of competitiveness against other competitors. Only a systematic destruction of the old paradigms, and a consequent reworking in the way of thinking and seeing reality, will allow entrepreneurs and managers to constantly rearrange themselves to the new times.
Old-fashioned entrepreneurs believe that it is enough to buy the machines, build the shed, and hire workers and vendors to compete. Rather, they don't even have a clear idea that they are competing. Faced with an ever-increasing demand from consumers, and more intensive and global levels of competitiveness, the old ways of doing business are no longer valid or plausible.
The Age of Knowledge
Much is said about the Age of Knowledge, but the mischief that is committed in the name of this era is serious and every day greater. The issue is not the arbitrary and unfounded sum or method of courses and seminars, but a true management of corporate experiences and knowledge. Only through this management, carried out effectively and efficiently, can a true and clear generation of value take place.
If there is something that prevents a clear capture of the activities and strategic costs, it is precisely that arbitrary and lacking in methodology that has both the training of professionals and the planning of strategies by employers.
Acting methodically is the main strategic activity, the basis for the effective development of other business activities.
The conceptual lack or absence restricts the absorption capacity of new ideas. For this, the capacity for abstraction is essential, something not very common in these times, a place through which the strategic analysis of activities and costs must travel.
Conclusions
If a company aims for excellence, competing effectively in new markets and achieving significant competitive advantages, it is essential, fundamental and critical that it properly analyze what its activities and / or strategic costs should be. In order to build a new cost and process structure from this, allowing you to achieve greater flexibility, speed, better costs, better quality, and better levels of satisfaction every day.
Strategic activities go far beyond the concept of value-added activities for customers and for the company, they are a "lever" factor, which, by concentrating resources (input) on them, result in the generation of high-output relevance.
Trying to achieve quick results in exchange for the destruction or reduction of strategic costs ends up generating the reverse effect, with the corresponding loss of competitiveness.
Concentrating effort on those vital few, without wasting time and effort on the trivial many, constitutes the new strategy for change. A change that is based on the continuous improvement of products and processes.
Those who pretend to be competitive leaving aside strategic activities and costs are bound to perish in the attempt. It is not feasible to achieve consistent results in the medium and long term, without discipline and a constant effort to achieve the systematic elimination of waste and waste.
Everything that is waste, be it material, human, monetary or time, loses vitality and energy to the company, preventing its growth and development. Companies have their source of energy, and it is in this direction that the analysis of activities and strategic costs is focused.
Bibliography
Analysis of Activities and Strategic Costs - Mauricio Lefcovich - www.ilustrados.com - 2006
Kaizen Strategy - Mauricio Lefcovich - www.gestiopolis.com - 2003
Improving Company Processes - Brother James Harrington - McGraw Hill - 1993
SMART. The Fundamental and Most Effective About Change - David Firth - McGraw Hill - 2000
Creation. The new business logic - Guillermo Bilancio - Ediciones Macchi / Mercado - 1999
Cost reduction by assigning productivity to costs - Mauricio Lefcovich - www.pais-global.com.ar - 2005
