Radical Recovery Tools

StrategyDriven Evaluation and Control ArticleHow to survive and thrive in a down economy

You can’t turn on a television, open a paper or read a news feed today without hearing more depressing news about the economy. The crisis that started in the housing markets has unearthed a series of cascading consequences that few companies were prepared to handle.

How will this economic crisis play out? One possibility – every economist’s nightmare – is that we enter a depression. Another is that we wake up to reality, challenge the short-term profit demands of Wall Street, get strategic and build our businesses for sustainable growth.

Survive and thrive
In harsh economic times, the gut reaction of many companies is one of prudence and cost control: to take short-term actions that reassure shareholders and citizens. The biggest casualty of this type of reaction is often job loss.

Is cutting jobs the right thing to do? We do it because it’s quick and easy. Yet, the more jobs we cut, the more consumers fear for their future and stop spending. It’s a self-fulfilling prophecy: lack of spending leads to job cuts, leads to less spending – and so on.

Martha Rogers, co-founder of Peppers & Rogers Group, says, “This isn’t a financial crisis, but a crisis of trust.” She makes a good point.

Our actions don’t need to be all doom and gloom. While there’s no silver bullet, performance management philosophies suggest there are positive options before us. We already have the resources to survive and thrive. We just need to understand how to best deploy, grow or manage them.

If every organization has room to improve – perhaps even more than most realize – the first question we should ask is:

How do we get more out of what we already have without laying off? Start by focusing on three areas:

  • Cost reduction.
  • Productivity increases.
  • Innovation on a budget.

Cost reduction
Everyone is already reducing costs, right? Perhaps, but the better question is: Are we making smart reductions or further aggravating the problem?

In reality, most organizations are blind when it comes to cost. Peter Turney, President and CEO of Cost Technology, warns that many traditional cost-cutting exercises that companies are implementing right now could force their organizations into what he calls a “death spiral.”

Turney gives the example of outsourcing product assembly work. On a balance sheet, it may be clear that sending that work overseas is cheaper than doing it in-house, but when you look at the activity costs associated with returning products to the plant – including receiving, inventory and quality control costs – it may be more cost-effective to keep doing the assembly on-site. As this type of scenario plays out, it’s not uncommon to see further profit loss causing even more outsourcing in a continued effort to “reduce” costs – creating the spiral.

The same is true of customer profitability. All too often, those we think are our best customers – based on revenue – turn out to be our worst in terms of profit. If we decide to market our way out of the recession by attracting more of the same type of customers, we could be eroding profits further.

Turney’s point is that we tend to think about the cost of inputs and outputs and forget about the activities that support those outputs. Companies that can understand how individual processes are adding or destroying value can turn red balance sheets back into black.

What chunks of your revenue are profitable to your organization, and which are not? If you’re not applying activity-based management to your cost processes, you probably don’t know. To start reducing costs today, do an ongoing reassessment of which customers and products are building value in each quarter. The answers will point the way toward smart improvements and investments.

Productivity increases
Another obvious way to reduce costs is to increase productivity. Tor Dahl, economist and productivity expert, has been studying and helping organizations improve productivity for more than 30 years. He concentrates on removing what he calls “log jams”: things that sap energy, introduce inefficiency and create tension. Remove them, and it’s not unheard of to achieve 300 percent improvement in productivity.

“The only thing that creates new wealth in the economy is everyone being more productive than they were before,” says Dahl. “There is no other way.”

It’s ironic that so many leaders talk about employees being an organization’s best asset, yet the work force is the first thing that comes under attack when times are tough. Unfortunately, the employees who get laid off are often the same employees who know how to fix the organization’s problems. They’re simply stuck behind so much structure and politics that few feel empowered to make changes themselves.

Most employees don’t want to be unproductive. In fact, Dahl predicts that two-thirds of all stress and dissatisfaction at work comes from engaging in unproductive behavior. What can corporate leaders do to help everyone become more productive? Dahl suggests asking some simple questions:

  • What are you doing that no one in this company should be doing? Eliminate it.
  • What are you doing that should be done by somebody else? Delegate it.

The list goes on. With every answer and every solution, more time gets freed up. That extra time, along with the cost savings identified by Turney, can be used to focus on the third area: innovation.

Innovation on a budget
Carl Schramm, CEO of the Kauffman Foundation, says, “The question of innovation is central to getting out of this recession.” When most of us think about innovation, however, we think of new products that take years and years to research and develop.

To make innovation more affordable and bring products to market more quickly, Joel Barker, “the paradigm man,” futurist and author, suggests “innovation at the verge,” which he defines as bringing two or more elements of difference together in such a way that they create something new. Examples include:

  • Time-share condos, which combined the ideas of renting hotels and owning a condo.
  • The combined forklift/scale, which makes package delivery companies more efficient.

What two (or more) elements could you bring together to solve problems where you work? The answers could involve combining two systems, processes or job descriptions – not necessarily two products or physical objects.

A positive view of the future
Everyone needs to do more with less, yet everyone complains they have insufficient resources – people, money and technology – to be effective. At the same time, profit warnings are forcing organizations to compound the issue by reducing staff, freezing budgets and delaying purchases of any kind.

A more positive view explores ways to cut costs and improve productivity without laying off or reducing budgets. We have given you three areas to focus on in this article. Watch the Webcast series below for more insights.

Our hope is that readers realize there are positive options. If we act on them and help reduce the ranks of the unemployed, confidence will return, consumers will begin to spend, and we may see a return to the growth and stability of markets and economies.

This article was republished with the permission of sascom Magazine.

About the Author

Jonathan Hornby, a Senior Marketing Manager at SAS, is a visionary and thought leader in the field of performance management. His experience comes from a hands-on background within the banking sector of the United Kingdom, followed by extensive travel, dialogue, and collaboration with customers, management consultants, and respected thought leaders around the world. To read Jonathan’s complete biography, click here.

Lost in Translation

Increase the impact of customer insights and analytics. How to break down the barriers between the analytics community and the business.

Data is omnipresent and within our grasp yet business truths are still elusive. Finding meaning in that data requires sifting through droves of extraneous information for business insight. It means distilling raw information into a “story” about our customers, our business growth levers, and the business challenges we face – all with a view of moving the business forward.

To extract this information, businesses have found growing within their midst an “analytics community” – groups of data crunchers clustered in back rooms, mining information warehouses and marketing databases for – what exactly? The answer is not always clear, because the value of the information is not yet fully realized or leveraged.

Over the past two decades, data-rich companies have found their analytics teams playing the role of internal service providers. They are tasked with mining through data to find answers to particular business problems. These people – the statisticians, database marketers, modelers, programmers, market researchers and analysts of all stripes – are the people who sit between an organization’s mushrooming information sources (databases, market research studies, marketing campaign analytics, predictive modeling results … the list grows infinitely) and a business output.

But it’s no longer enough for analysts to stay within their silos of expertise and crank out analysis. The analyst community cannot measure its worth by how quickly reports are delivered, or how happy those insights make the people who ask for them. The analytics community must emerge from the service provider mindset and into one of driving business success. Analysts have the privilege and the obligation to ensure that their organizations fully leverage the power of their corporate data banks to propel the business forward.

The translation layer
For large organizations with many lines of business and deep, rich databases, making sense of information has become a business itself. What is needed now is a “translation layer” to ground businesses in fact-based decision making.

The analytics community is ideally positioned to become the translation layer. They have the skills to see the whole picture where everyone else sees only parts of the puzzle. They can provide clarity on strategic issues. But first, they need to move out from the back room and connect the dots across the business to ensure the puzzle makes sense, and how, within the context of the organization’s strategy, its data could be put to maximum use. This is when analysis evolves into insight and when businesses are able to compete on analytics.

From service provider to business driver
As data becomes increasingly central to organizations – and a key business enabler – the analytics community needs to evolve from service providers to business drivers. It is no longer enough to hand over answers to small, narrowly defined business problems. Analysts must work to become the essential “translation layer” between the wealth of an organization’s insights and profitable business applications.

Here are some ways to make that happen:

Better business knowledge
The analytics community must step outside of their silos of expertise to better understand the business overall. They need broader exposure to business strategy and priorities, business and financial performance, and market context. This means investing the time to help them better understand how the business makes money so that they are in a better position to support greater business growth and move the business forward. Investing the time to train and develop this knowledge base will change the kind of insights that are generated – and increase the value the analytics community can bring to the table.

Better return on insights
Analytics teams must align requests to the strategic priorities of the organization. They need to look both at how the business will benefit from where time is spent, and at the opportunity cost of NOT spending time in places where it will yield greater returns. Treating analytical resources like marketing dollars will help ensure wise investment.

Clear explanation of results
Analysts need to make connections across the insights team to fully understand problems and opportunities within a broad, full-picture context. They must reach out to analytical teammates (in modeling, database marketing, research, finance) to connect the unconnected. Insights must be thoroughly rendered and clear, making them easier to understand and act upon. Time must be invested for analysts to become better communicators (both written and verbal) to improve information clarity.

Moving forward
Business analytics teams love digging through data to discover statistical patterns that inform a problem. Executives are hungry for fact-based solutions to their business challenges. Follow the suggestions in this article to pair these two groups successfully – and improve your organization.

This article was republished with the permission of sascom Magazine.

About the Author

Lori Bieda is the Executive Lead for Customer Intelligence Solutions across the Americas for SAS. Prior to SAS, she was Vice President, Client Insights and DB Marketing at Canadian Imperial Bank of Commerce (CIBC) and was responsible for the creation of marketing and analytics strategy for the bank.

Evaluation and Control Program Best Practice 2 – Measure Against Excellence

In this hyper-competitive business world there are no points for second place. Companies not achieving excellence in key performance areas as defined by their chosen market often find themselves driven to irrelevancy by competitors and in danger of going out of business. Subsequently, organization leaders must know how their company performs against standards of excellence in the key areas to be able to make the investment decisions necessary to remain competitive.

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StrategyDriven Podcast Special Edition 38 – An Interview with Robert Morison, co-author of Analytics at Work

StrategyDriven Podcasts focus on the tools and techniques executives and managers can use to improve their organization’s alignment and accountability to ultimately achieve superior results. These podcasts elaborate on the best practice and warning flag articles on the StrategyDriven website.

Special Edition 38 – An Interview with Robert Morison, co-author of Analytics at Work explores how to leverage analytics to make better business decisions that ultimately lead to superior business results. During our discussion, Robert Morison, co-author of Analytics at Work: Smarter Decisions, Better Results shares with us his insights and illustrative examples regarding:

  • the tangible benefits leaders realize as a result of incorporating analytics in their decision-making process
  • balancing the art and science of decision-making and recognizing when the process is out-of-balance
  • types of questions analytics can help answer
  • the five stages of analytical maturity
  • the five key analytics DELTA components: Data, Enterprise, Leadership, Targets, and Analysts

Additional Information

In addition to the invaluable insights Robert shares in Analytics at Work and this special edition podcast are the resources accessible from his website, www.AnalyticsAtWorkBook.com.   Robert’s book, Analytics at Work, can be purchased by clicking here.

About the Author

Robert Morison is co-author of Analytics at Work. For the past twenty years, Robert has led breakthrough research at the intersection of business, technology, and human asset management. He has written or overseen more than 130 research and management reports on topics ranging from business reengineering to electronic business to workforce demographics. Robert is co-author of three Harvard Business Review articles and Workforce Crisis: How to Beat the Coming Shortage of Skills And Talent. To read Robert’s complete biography, click here.

Strategic Planning Whitepaper Introduction – Analysis

StrategyDriven contributors are pleased to introduce the strategic planning whitepaper: Analysis. This whitepaper outlines and describes the major steps taken to assess the organization’s internal performance and external environment in support of long range activity planning.

Strategic analysis is a critical component of the strategic planning process. An integral part of a company’s evaluation and control program, it provides executives and managers with a comprehensive assessment of the organization’s capabilities and market factors; revealing growth opportunities and vulnerabilities. Armed with this information, managers can more effectively chose from among today’s strategic alternatives to create the greatest future reward potential.