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.
You can find the "original" french version of this blog here
