Even in downturns, human capital has to be protected

February 19, 2009 By Leave a Comment

Because they didn’t have the time (or the will) to make the structural decisions that would help to face a downturn, companies often react by acting on the easiest adjustment variables :

• Cuts in bugets

• investments putt offs

• employees lay offs.

It makes it possible to attend to the most urgent things first even if I think it only defers what’s unavoidable. The focus is on cost and not on revenue, and  costs can’t be endlessly cut except if you want to turn a company into an emplty shell. Any cut expenditure won’t be able to be cut again the next quarter or the next year because it won’t exist anymore.

I’m one on those who think that the goal of any enterprise is to make money and that thinking only in terms of expenses only makes it possible for directors to act like firemen. But it’s easier to cut costs instead of trying to find an innovative way to drive incomes.

Whatever, this kind of policy also have dramatically bad effects for the future.

[Read more...]

Filed Under: Management & HR, strategy Tagged With: , , , , , , , ,

Investment or consumption : sounds like “déjà vu”

February 19, 2009 By Leave a Comment

In many countries there is an intense debate to know if governments should stimulate economy by boosting investment or consumption.

It’s about two clearly different approaches : in one case you try to limit the effects of the crisis and their impact on household (and so on enterprises as a side effect), in the other you try to build the foundations for a perenial restart, helping enterprises to build the futures.

Logically, when people and enterprises suffer what’s needed is to calm the pain down. But it prevents from dealing with the deep causes. If the causes are targeted, it helps to build better tomorrows but the effects will came later and in the meanwhile it hurts.

There is no miracle solutions. In an ideal world, people would prepare the future when everything’s all right and keep resources to kill the pain when it will come. In the real world, nothing is done when things are right (of course…since there’s nothing wrong so why change), people refuse to see the limits of the current situation et when things collapse so much resources are needed to fight the pain that nothing is left to deal with the deep causes and think long term;

That’s not without making me think of what happens to enterprises. An obsession for short term that makes them focus on local miracles when a global approach would be needed. By not looking further than the end of their noses, enterprises can only be affected without being able to anticipate. Nursing without really fighting the disease.

Criticizing people is a too easy thing ; if they act this way it’s becasue it’s what they’re asked to make them focus on what’s immediate instead of the core of things. So when something unforeseen happens (and unpredictability is the very nature of today’s economy, one of the key characteristics of knowledge economy) they can only react because anticipation is not in the management DNA.  And the resources that are used to react are not available anymore to anticipate when things become more calm. Endless recuring process.

This propensity to be permanently off-beat is one of the causes of wild fluctuation economics and enterprises experience regularly. It’s called cycles. The good news is that a negative cycle always ends one day. The bad news is that so do positive cycles.

consommation, court terme, crise, investissement, long terme, relance

Filed Under: Economy & New Models, Management & HR Tagged With: , , , , , , ,

Boards in the mist

February 11, 2009 By Leave a Comment

Boards have to be mobilized in order to make the right decisions to survive the crisis. Nothing new. But according to this essay from McKinsey, it’s far from being that simple.

Three reasons are put forward

• Boards follow unchanging procedures and ritualss. Defines shedules on a yearly basis, documents  and agendas fixed many weekds ago.

It may seem absurd that people who make strategic decisions are traped into such straitjackets but this is facts. With all the consequences we can imagine on adaptability.

• Interaction modes that are not constents with the purpose. Boards are the place for consensual discussions, members only validate what has been done in preliminary works. It’s in no way a place for brainstorming and reflection from which anything innovative will emerge.

It seems that the only conflictuous point in a board meeting may be power. Not strategic issues.

• Many board members are not in touch with what’s going on in the economy. They are more comfortable with “preservation” strategies, waiting for things to solve themselves rather than with trying to take the initiative.

As a result, they will find themselves struggling to withstand tough conditions and badly positioned in the new environment.

Conclusion : board have to get rid of received ideas, to learn to think differently in order to find the means for strategies heading to the future instead of to become ossified on the present. Unlike halves-strategies.

Filed Under: Economy & New Models, strategy Tagged With: , , , , , ,

During the downturn social networks are more at work than they ever did

December 15, 2008 By Leave a Comment

This is the obvious evidence that, before predicting the end of some trends, it would be necessary to wonder about their goals. In brief, instead of saying that a new born generation of tools will soon disappear, it’s important to think about their usefulness, their value. No matter it’s a downturn time or not, people are more likely to may for a useful service than using a useless service for free just when they could do something more productive instead.

The case of linkedIn is very interesting in this perspective. Ok, their fundraising was closed weeks before the “official” begionning of the crisis but it means something. It’s the evidence that when a service delivers a real value and many users agree to pay to use it, the future seems not to be so bad. Who would agree to pay to use Facebook or Twitter ? Not me. [Read more...]

Filed Under: Management & HR, Web & Usages Tagged With: , , ,