Recession lessons: What businesses can learn from the downturnSeptember 1, 2009: 7:00 AM ET
Even as the global economy starts to show signs of life executives should reflect on the downturn for ideas they can apply as their businesses recover.
By Joerg Heistermann, CEO of the Americas, IDS Scheer
The last 18 months have changed the business world. Price cuts trump value in influencing buying decisions; instead of growth managers are focused on strategic cuts. Today businesses are forced to invest in productivity and efficiency to survive. And improving operational processes suddenly became a top priority.
Many companies had begun measure and monitor their operations during earlier downturns, of course, and those firms were in a good position to use that information to make smart decisions about, say, where cut – and crucially, where to add – more people.
But those who had not invested all along in process improvements had to cope with new economic realities without a real understanding of their organization's work-flow. Sweeping lay-offs, intended to cut costs often only debilitated the company from working effectively, caused chaos, and increased – not decreased – the cost of running the organization.
The economy brought people to our doorstep for a crash-course in process, but the companies that are exceptionally fast and efficient have trained their business rigorously every day like an Olympic athlete. Like businesses, Olympians train for power, flexibility, and speed. But mere survival is not what motivates world-class athletes, nor is it what motivates world-class businesses; both groups love to compete and are driven to win and be the best at what they do.
We need to apply the same analytical approach to measuring and improving business processes that helped companies survive the last 18 months, to the next 18 months and beyond as we shift our goals from survival to winning in the marketplace.
More efficiency today equals reinvestment cash tomorrow
Efficiency gains have allowed organizations to meet dramatically lower budget expectations. Moving forward, the same improvements can allow them to reinvest in research and development, marketing, and customer service to stay ahead of competitors. More productive domestic and global competitors will keep the pressure on and promise the demise of their slower counterparts.
Hopefully organizations will take what they've learned about their business and the processes that run them to continually train for operational excellence and become an Olympian.
After all, a global economic bust is not the only time when under-performing companies may fade.
Heistermann is CEO of the Americas for IDS Scheer, a Saarbrucken, Germany-based company that offers business process management software and services to corporations.