McKinsey Quarterly's most recent issues have offered insightful articles about the necessity for rethinking some business practices to adapt to current conditions.
In this informative piece from the December 2008 issue, Richard Rumelt makes the case that we are experiencing not just a recession, but a "structural break" -- a sudden shift in the way business is done. Rumelt suggests that this shift will require not just belt-tightening, but detailed reworking of growth-based business structures and market strategies that so many companies have had in place to capitalize on previously favorable conditions. No organization can afford wasteful and time-consuming internal communications. Nor can the healthier business units continue to carry less-profitable units whose costs are hiding within the complex, multifunctional management structures we have built.
In short: the time to deliberately isolate business units' support structures, and collect data to identify areas of opportunity, is now.
Rumelt's conclusion:
"In ordinary hard times, the traditional moves are reducing fixed costs, scope,
and variety. But in hard times accompanied by structural breaks, you must
rethink the way you manage. Companies that survive and go on to prosper look
beyond costs to the detailed structure of managerial work. Several new issues
come to the forefront:
- How much extra work results from the way incentive and evaluation systems relentlessly pressure managers to look busy and outperform one another?
- Which information flows can you omit? Information that doesn’t inform value-creating decisions is a wasteful distraction.
- Which decisions and judgments can you standardize as policy rather than make in costly meetings and communications?
- How can you work with customers, suppliers, and the government to simplify their processes so that you can simplify yours?
Barr Corporate Success can help you develop and execute strategies which streamline processes, improve functioning of tight-knit teams, and produce a more effective, productive, profitable organization. Call (513-470-8980) or e-mail us to start today. Let's get to work!
Krissi recently appeared on the WCET (PBS) program "Business Beat", discussing what company owners, leaders and managers must do to succeed in today's difficult business environment with host Crystal Faulkner. See it here.
A transcript of their discussion:
FAULKNER: I’m Crystal Faulkner with the CPA & Business Advisory firm of Cooney, Faulkner & Stevens. My guest today is Krissi Barr, president of Barr Corporate Success.
Krissi, you go in and you help companies identify things they need to do to be more successful and then you actually stay there and help them get those things done. With so much changing today, what should companies be doing to plan for the future?
BARR: Three things. If you’re a golfer, you’ll remember the acronym “PAR”.
Prioritize – focus on what matters most.
Adapt to change – see change as an opportunity. Innovate.
And the R, responsibility. Take ownership of the outcome. Make sure you get it done. Take action today.
Surfacing across all of that is: Make sure your team is aligned to what your priorities are. And make sure the team, if it’s dysfunctional, builds a real strong foundation of trust, because you’re going to need that trust in these times.
FAULKNER: Well, how can people keep positive when it seems like employees, employers, and even the country is experiencing such tough times? What’s the secret of staying positive through all of this?
BARR: A lot of it is you. Focus on what matters most. Focus on the future. The power is in the future, it’s not in the past. So think about: What’s the core, what do I need to do?
A couple of basics: Take care of your own energy. Focus on: Are you exercising? Are you getting enough sleep? Do you have quiet time?
Tired people make mistakes, and right now is a time you can’t afford to make mistakes.
Take care of your financial house. Make sure that you have enough finances and cash and flexibility to be able to take care of those things.
The biggest one out of all of it – pivot. So many of us focus on what we’re afraid of. We go, “Gosh, I don’t want to lose that customer,” or “I don’t want to lose my job.”
You should pivot, and go, “I want to provide the best service for my customers so that they see I’m an ally in helping them get through this tough time.” Or, “I’m going to be the best employee, and produce the best results for my company, so that my company comes out of this stronger than ever.”
If you focus on what you want, versus what you don’t want, you’ll stay more positive.
FAULKNER: How can leaders and managers of companies help their employees stay motivated to do all those things you just mentioned?
BARR: That’s a tough one. I mean, you see customer or employees surveys. People go, “Communicate, communicate, communicate.” So I’m going to tell leaders and employees: communicate. Over-communicate if you have to.
Make sure people understand what your vision is, what you’re doing, how the people in the company fit into those priorities, what are they doing to contribute to success, what are they doing to that helps your customers. Everybody – I don’t care if you’re in the accounting department or in sales – at one point or another is servicing the client, maintaining the client, or selling to the client. And they need to understand how they fit. That’s the best way.
And also, don’t judge as much, but coach. Coach employees. When they see that you really care about them, that you’re committed to this – because it’s a lot of hard work – they’re going to trust you.
FAULKNER: Krissi, that’s wonderful advice. Thank you so much.
