Managing for Success
Suppose that you have put a solid game plan in place for survival through whatever happens in the short to medium term. You are insulated to the greatest extent possible from shocks to your most vulnerable points. Now what?
While survival is essential, what it really does is set you up for success — taking advantage of rare opportunities created by competitor paralysis, distraction and weakness. You can of course decide not to pursue these opportunities but you can be assured that one of your competitors may well do so.
Taking Advantage of Competitor Paralysis
We will use the term "paralysis" to mean extreme cautiousness, distraction, and indecision rather than any "deer-in-the-headlights" meaning. A competitor that is paralyzed in this manner offers a rare opportunity for you to make major gains.
The most common target is a customer segment. Paralyzed businesses generate many unhappy customers as their cost-cutting and distraction take a toll.
Another target is a dated competing product. This may offer an ideal opportunity to introduce an evolutionary improvement while the competitor is chained by development budget constraints.
Focus Is Critical
Few organizations have resources sufficient to tackle a wide range of action initiatives. This is especially true in times of great uncertainty. You can only fund some subset of your action wish list and the real problem is likely to be selecting the best subset.
In times like these, natural caution will force most of us to err on the conservative side in undertaking anything new. This means that you must have some way of ranking your initiatives in terms of results relative to resources involved.
Most organizations have a whole host of models for projecting the results of a proposed business action plan. However, virtually all of these models will be implicitly based on the assumption of "normal business conditions". Using them to project results under conditions of great uncertainty may be quite dangerous.
To test each action plan proposal under uncertainty, you will want to use your vulnerability assessment model. This model projects a type of ROI where the "return" is the change in robustness, as you have defined it, relative to the investment you must make to implement the initiative.
This second projection will give you two metrics for deciding on whether to proceed: the normal ROI (or whatever you may use) and the robustness "return". A proposed action that has a solid ROI but appears to have a significant negative impact on robustness may not be a wise move.
Once you have ranked your action alternatives in this manner, you will be able to achieve a sharp focus. Focus on the top-ranked initiatives allows each to be given resources adequate for success. Without sharp focus, available resources can easily be spread ineffectively across too many actions or allocated inappropriately to each action.
Next: Action Plan for Success
Now that we have outlined some aspects of the process, we will conclude with a brief look at examples of actions that you might want to consider ... Next ...
Action Targets
What actions might you take in order to strengthen and grow your business in such uncertain times? Here are a few target suggestions:
1. Account Profitability
A careful analysis of customer account profitability will often reveal that many accounts are substantially unprofitable. We have seen analyses that place 20% to 40% in this category. These accounts are draining away profits generated by the most profitable accounts — profits that might be used to fund product development, increase your salesforce, or acquire a complementary business.
2. Supply Chain Complexity
A supply chain moves materials and products from your suppliers to your customer. It is usually quite complex and hard to analyze, making it difficult to manage effectively. Yet, it nearly always contains many aspects that can be improved, eliminated, or streamlined. Material and product flows can often be smoothed. Inventory duplication can be minimized. Each such step can reduce costs and release working capital. There is usually big money here.
3. Salesforce Productivity
Small improvements for a large salesforce can have a dramatic impact on profits. See Salesforce Productivity.
4. Best Customer Focus
Competitors may use price to attract your best customers. You need to make a special effort to keep these customers really happy — enough so that they will not switch for a better price.
5. Top Talent Hunting
Staff cutbacks and increased workloads may be creating much unhappiness among top performers who may feel that they are being unfairly treated. You might be able to attract some of these if you can offer the kind of environment they want.
Topics:
Managing for Success