Four Strategies Companies Need Now

By Bart Allen Berry

For most companies, mitigating for tough economic times means layoffs, lowering salaries and pressuring the sale force to perform miracles while at the same time laying awake at night wondering how to cover the overhead.  Companies can be proactive now, rather than just reactive to changing global economic conditions—and create some positive leverage now when it’s needed most.  Four progressive strategies can help create the operational and structural changes that will not only help your organization hang in there but to secure your market share and gain ground on your competitors.

The first strategy is an obvious one it might seem, but few companies attack cost optimization in an aggressive and systematic way.  Now is the time for particular attention to vendor and supplier relationships.  Like you, the companies who supply your parts and materials, services and support are very motivated to keep what business they have and are therefore—negotiable.  With the shared understanding that these are lean times, most will be willing to take less to keep your business.

A systematic re-negotiation with all of your vendor relationships, while getting competitive bids from others can yield very significant cost savings.  Recently, one of our clients at Navico Ensenada renegotiated more than 5000 vendor relationships in their global supply chain and managed cost savings as high as 17%.   This allowed them to continue to lower retail pricing in a tough market, hang on to valuable employees and to compete more aggressively.  No matter how long you have been working with your suppliers- now is the time to have a conversation about lowering costs.  Most will understand.

The second strategy of the four companies should be doing now is a systematic look at process optimization.  When you find yourself saying “That’s the way we have always done things around here” – that is the warning light telling you that you are probably missing an opportunity to cut costs.  From leaning up on warehouse inventory, to shifting work schedules to early retirement programs and office lighting optimization—the entire organization needs to re-examine how they work with an eye towards not only eliminating waste but towards actual process and work re-design to eliminate steps and entire processes altogether. 

With the quality movement of the last twenty years, much low hanging fruit has been eliminated to be sure.  In our experience working with organizations, we know that the next level of improvement takes more detailed analysis and more concentrated work to find additional optimizations—but they are always there for those who are willing to work hard enough to look.  There is no better time to find hidden treasures of cost optimization and radical process re-design that will set the bar higher for how you operate.  Most of these optimizations will then become the new “Way you do things around here”.

The third strategy for companies who want to plant themselves firmly on the path of recovery in these challenging times is to create a new organizational alignment with the workforce.  After the blood letting of plant closures and layoffs have happened, the people left need to be re-aligned, re-motivated and re-connected with a compelling vision for future and a clear plan to get there.  Coordinated efforts to reinvigorate the corporate culture and improve the organizational climate with clear messaging will help employees turn the page on the past and attack the future with new enthusiasm and initiative. 

Teamwork events and training will help confirm positive expectations of healthy and productive work relationships and build the skills to make sure that the workers who are left are as productive and cooperative within their workgroup and between departments as possible.  

Well-targeted leadership training can be one of the strongest returns on investment a company can make today.  Each organization has a set of strong influencers, important managers and supervisors that the company just can’t do without.  Many have strong technical skills but are not strong as leaders of people.  Interpersonal relationships between employees and those who supervise them can be an opportunity for mentoring and professional development, the creation of an innovative environment and a feeling of job stability, satisfaction, and ownership. 

Well-trained leaders will exert a positive influence throughout the organization, yielding higher levels of productivity from the rest of the workforce.  Those with weak leadership skills will allow additional problems, conflict, stress and dissatisfaction to sprout up that no organization can afford today.  Leadership training has always been a good idea, but today is also perceived as a workplace benefit- and can also help compensate managers for less frequent salary increases.

The Fourth Strategy is an optimization in competitiveness, which centers on the customer-supplier relationship.  Companies today need to understand, in the greatest detail possible, the intricacies of what makes their customer buy and return to buy again. With a magnifying glass on not just price, and quality, organizations need to understand all of the dynamics of the relationship with customers including: value, employee service behaviors, the psychological environment, how the commitment to the customer relationship is demonstrated, factors of timeliness and efficiency, ease of customer access and the degree of innovation the company demonstrates in the market. 

Each of more than 50 factors can be examined and measured through satisfaction surveys and customer focus groups.  With this information in hand it is then imperative to profile your strongest competitors with the same criteria.  In which of these areas are they beating your organization?

Perhaps your quality and price are the same, but they answer their phone with a live person instead of a voicemail system.  In today’s economy you can’t afford to lose even a few customers.

In my book, ‘What Customers Want!’ I have included a the 50 statistical predictors of satisfaction in any customer supplier relationship which can be used to internally and externally assess customer loyalty and return and recommend rates as well as profile what your competitors are doing better than you. 

With this information in hand, the entire marketing and sales approach, and internal systems which support higher levels of customer satisfaction across the board—can be optimized and improved.  No customer can get away when this strategy is systematically implemented.  There is no better time for a scientific and methodical approach to keeping your customers.

As many are facing agonizing reappraisals of reduced sales, smaller market share and downsizing in every dimension, organizations which compete smarter and who see the logic and power of implementing these strategies will be among the few who survive and thrive while the global economy re-defines itself over the next few years. 

Bart Allen Berry