2 Juni 2009 | A comment by Per Andersen, Managing Director, IDC Nordic
It’s not always fun to open the daily newspaper. At the moment, there are a lot of headlines about the financial crisis and economic downturn. Everyone agrees: the 2009 economy is in recession. In their evening prayers, economists are praying there’ll be flat growth in 2010 and no further fall in the gross national product.
Businesses and organisations need to gear themselves up for recession. While some businesses are already feeling the effects of the economic situation, others are preparing for a scenario that’s very different from the one they had in mind when they prepared their 2009 budgets.
All businesses and organisations are now finding themselves forced to consider how the recession will affect them.
What are the challenges facing the CEO and business leaders in this situation?
The primary challenges are about changes and processes.
A well-functioning business is always heading for a destination. Now it’s time to reassess where the destination lies and in which direction the ship should steer. As the engine’s power fluctuates, different strategies will come into play as you steer your ship into safe harbour.
In times of crisis, the balance between short and long-term strategies usually changes. The demands made on companies in the short run, become harder to fulfil, so often the focus is on short-term initiatives. But it’s important that the CEO always keep long-term strategies in mind when planning short-term initiatives. The business will be better equipped to deal with tight market conditions, and be well-poised once the crisis is over.
Process optimisation
Among the many current business initiatives, there is a lot of focus on making processes more effective to keep costs down.
This is the challenge: the process for change requires adjustments to the way businesses – and employees – work. So it’s important that they are anchored in top management, and that employees are involved at key levels, because if employees continue to do things in the same way, there will be no change.
Business process management (BPM)
But how do you do this in practice? You could of course call it business process management (BPM). But in reality, projects come in many shapes and sizes. A LEAN project could be launched. Or you could look at business workflow. Or maybe identify some core processes that would be ideal for automation. And SOA can also play an important role.
Innovation
To improve processes, you need to innovate.
- Can you turn things on their head and do things differently?
- Can you reach new markets with your existing products and knowledge?
- Or create new services for your existing market?
- How are your customers reacting to the crisis – and what does this mean for your business?
In the present economic climate, these are questions that the CEO and management really need to answer.
Increased customer focus
At the same time, increased customer focus is often high on the list of the CEO’s short-term initiatives. When the market gets tough, most businesses have to ensure future turnover by retaining customers and stealing customers from the competition.
It goes without saying that there are fewer customers in a declining market. This means that it’s essential to be close to your existing customers and keep them top of mind.
Customers often consider renegotiating contracts, changing suppliers or consolidating the number of suppliers to reduce their costs. This is also why CEOs want to keep close to customers in a crisis – and why they have to be ready for opportunities to capture customers from their competitors.
Five key tips
Advice for today’s CEOs:
- Focus on optimising business processes. Remember that projects for process optimisation need to come from top management and involve employees at many levels
- Remember that implementing changes is about allocating the necessary resources. It’s essential your organisation has the energy to do things differently
- Focus on your customers and get close to them. Increase communication, meetings and understand the customer’s needs
- Think long term but act short term. It might be necessary to focus on short-term initiatives, but make sure that here-and-now solutions also match your business’s long-term strategies
- Involve company stakeholders in innovation processes
Source: IDC