Monday, October 24th, 2016
When they’re in a period of hypergrowth, most companies focus almost exclusively on revenue growth and market share and overlook the importance of operational excellence. When the good times come to an end those companies are left reworking their costs and searching for efficiency, sometimes for the first time.
Creating efficiency often requires investment, and it’s hard to get any expense approved when cash is at a premium. People are typically first or second in terms of cost, so businesses regrettably turn to layoffs.
The good news is efficiency doesn’t have to wait until the other shoe drops. If your company is doing well, start investing. This will prepare you for growth and unexpected downturns. For instance, suppose a company that is in growth mode but in a market that is in a bit of turmoil. The company’s management team and board are assessing the business, and while its infrastructure has no significant issues, executives know they can’t scale the business without continuing to hire people. The managers are looking at investing now to create an infrastructure that will allow them to grow efficiently when the market creates new opportunities.
Efficiency takes into account people, processes, and technology. You need all three to improve operations. New tech appears every day, and some companies simply throw technology at a problem in their excitement. But if you don’t prepare your people to use it, the solution won’t be used fully, or will fail completely.
As you study productivity, look for critical business processes that use Excel. It’s probably the most prolific business tool in the world, but overuse of Excel usually indicates serious problems in systems support. Pinpoint where this is happening, why, and how to fix it to reduce inefficiencies, errors, and risks in your business.
Summing-up: A sudden drop in profits can happen in any industry or company. If your business is thriving, take some time out from celebrating your profits and think about efficiencies as you grow. If you’re in crisis, find ways to apply these strategies. You may be able to change the course of your business and save those jobs on the line.