From an article by RanjayGulati, Nitin Nohria and Franz Wohlgezogen…
The great recession of 2007
Almost all business leaders reluctantly admit that the current crisis also marks an inflection point: The world after it is unlikely to resemble the one before it.
They studied 4,700 public companies – only 9% flourished after a slowdown [doing better on key financial parameters than they had before.
These post recession winners aren’t the usual suspects. Firms that cut costs faster and deeper than rivals don’t necessarily flourish. Business that boldly invest more than their rivals during a recession don’t always fare well either. And companies that were growth leaders coming into a recession often can’t retain their momentum.
Breaking away from the pack are companies that reduce costs selectively by focusing more on operational efficiency than their rivals do, even as they invest relatively comprehensively in the future by spending on marketing, R&D and new assets.
In my blogs, I have been trying to help companies come out of this recession as winners. I have been saying over and over that ‘with the economy in its current state, now is the time to look for ways to become more efficient. Why? Efficiency will lower costs which should result in higher profits’.
Coincidentally, their article points to operational efficiency as a ’key’ ingredient to success.
If your company has yet to begin indentifying their ‘high value’ processes and targeting them for improvement, now is the time. ‘High value’ means that even a small improvement can amount to some tangible dollar savings.
Many companies follow a process that includes these steps for improving their processes:
- Document the process as it exists today
- Measure [metrics] the time it takes today
- Identify potential improvements looking for efficiency and automation
- Implement the changes
- Measure the new process to see if you were successful
- Make changes [improvements]
- Implement & Measure
The economy may be turning around, but it is not likely to happen quickly. And, the world after it is unlikely to resemble the one before it. Companies must start addressing efficiency now, waiting will not benefit your company.
Has your company taken on improving its business processes?
Keeping it Real!