At a time like the current one in which it is going from cooling to crisis, organizations must prepare for the moments that are approaching. The methodology and knowledge of these situations can be critical for the immediate future of the organization.
On these occasions, the most natural option is the indiscriminate reduction of costs in strategic areas (information systems, training, marketing, machinery, etc.). These types of decisions may improve the income statement in the short term, but they are bad solutions in the medium and long term since they weaken the basic structures of the organization.
For this reason, in the face of the classic indiscriminate cost reduction, the most interesting proposal in these periods is " cut two, invest one ", that is, cut costs that do not add value and concentrate and invest in the areas that add more value to the organization.
But, the first question to ask is is our company in crisis?
To answer this question, what you should do is analyze the current state and evolution of all the key operating parameters of the company (KPI Key Performance Indicators): economic, marketing and commercial, operational, human resources, etc.
This diagnostic phase is made up of three stages:
- Definition of the key results parameters. Analysis of the current state of the parameters and trends. Definition of strengths and weaknesses of the organization. Analyze the behavior of the environment, market and competition, etc. Identify opportunities and threats in the environment.
That is the first stage. It should be noted that although there may be a general crisis, that does not mean that there is a crisis in your sector or in your company. It must be taken into account that there are industries in which the critical resource is not the market.
If you have already done this analysis and it has been concluded that the company is in crisis, we propose a methodology that can definitely help you in the coming years.
Do a deep analysis of the company and its environment and identify the reasons for the problem. This is the most important phase since a wrong diagnosis is critical.
In this phase it is not to reach a result like "we are in crisis because we sell less." We must continue the analysis… why do we sell less? What is our proposal? Which customer segments are most affected? Which segments add value and which don't? What is our cost structure? What is happening to our competition? What is our competitive position in the sector?…
Having a strategic plan that defines the path, objectives and deadlines to perfectly overcome the crisis is critical in difficult times since, together with internal communication, it is the only way to keep calm and prepare the organization for the next cycle. positive.
After defining the plan, leaders are needed within the organization to develop and communicate the plan creating effective and efficient teams. They must "excite" the rest of the team as it is critical to the success of the plan.
The spirit is very important at the moment.
If you start not seeing the way clearly and abandon the boat, the teams are destroyed and you enter a spiral that is not a positive thing.
In this process, it is critical to monitor the results of the plan and to act according to its results.
This phase could be summarized as:
- Follow what is defined in the plan Keep going Keep controlling and acting
recommendations
In addition to this plan, there is a need for a series of values that help at the moment both in the formulation of the plan and in its implementation:
- Approach the recession as an opportunity and not as a punishment. Right now, your competitors may be naturally tempted to cut indiscriminately so they are mortgaging your future in the medium and long term. Prepare for when the positive cycle returns. You have to be aware that in business there are cycles and some years of good times have passed and now there is a recession. Think about all the projects that could not be developed in the "happy" times because the obsession was to sell and produce and think about investment projects for the future. Focus, focus and focus. Know exactly what adds value and focus on it. This is not always easy and requires different prior analyzes aided by tools such as customer intelligence, process analysis, etc. The solution is not to sell more. In many occasions it is thought that increasing the sales force solves something since more will be sold and everything will be solved. This is not usually true unless this measure is the result of an in-depth analysis. Study the technological and e-business possibilities. New Technologies offer important possibilities in cost reduction and business development, which must be analyzed at this time. Use customer intelligence. Clients should be known, since from their knowledge we can often identify business opportunities as well as areas for cost reduction.
As conclusions, at the moment, a positive attitude and experience in these situations are critical for the survival of the company. In addition, its competitors may have the natural temptation of an indiscriminate cut like the one discussed above, with which they are mortgaging their future in the medium and long term. You may have a clear opportunity.
