I have previously posted some perspectives about the ineffectiveness of many cost cutting programs. Many organizations fail to realize that, in order to be sustainable, cost reductions need to be planned and they need to be aligned with company strategy. Willy-nilly cost cuts will not last and they threaten the very core of an organization.
In a recent white paper, three McKinsey & Company associates take a hard look at what it takes to make meaningful and sustainable cost reductions. In part, they write, "Why is it so difficult to make cost cuts stick? In most cases, it’s because reduction programs don’t address the true drivers of costs or are simply too difficult to maintain over time. Sometimes, managers lack deep enough insight into their own operations to set useful cost reduction targets. In the midst of a crisis, they look for easily available benchmarks, such as what similar companies have accomplished, rather than taking the time to conduct a bottom-up examination of which costs can—and should—be cut. In other cases, individual business unit heads try to meet targets with draconian measures that are unrealistic over the long term, such as across-the-board cuts that don’t differentiate between those that add value or destroy it. In still others, managers use inaccurate or incomplete data to track costs, thus missing important opportunities and confounding efforts to ensure accountability."
The entire white paper, "Five Ways CFOs Can Make Cost Cuts Stick", is available in our resource library. Click here to go there.
Taking Advantage of "Good Conflict"
In an October 25, 2010 post on AMA's Thinking Management Blog, there's a short blurb about good conflict:
What Is "Good" Conflict? How Can I Take Advantage of It?
Conflict is natural. However, a lot of the time when individuals clash, they can become so concerned with defending their turf that mutual distrust replaces basic communication techniques like “listening”.
Many people don’t realize that conflict can be an excellent way to find effective, efficient solutions. Here are some quick and easy ways to turn a potentially volatile situation into a “good conflict”:
Identify common goals. As differences arise, remind the parties of their common goal or mission. Ask them to review their goals to focus solely on shared or compatible ones. Once the goals have been identified, the group can move on to discuss how these goals can be shared. Make sure to keep the conflict away from personal issues.
Clarify, sort, and value differences. While contrasting viewpoints will surface, so will evidence that the participants have much in common. This commonality should be emphasized.
Gain commitment to change. Goals may be shared but the means of reaching them may vary. You want to reach consensus on the best way to reach a shared goal. Reconciling conflicting visions forces people to think creatively and put everyone in a position to move forward.
Your goal as a manager is to prevent a conflict from becoming a disruptive force, not to prevent conflicts. Whereas positive conflict can come up with new solutions to existing problems, disruptive conflict can create problems.
Business Intelligence Data & Metrics, A Focus Experts Briefing
by Eric Britten
If you're not familiar with FOCUS as a resource for business information, you should check it out. (Click here to go there.) Here's the introduction from the site:
Focus provides millions of professionals with the expertise they need to make better business decisions. At the heart of Focus is a network of world class business and technology experts. These experts power the real time Q&A, world class research, and personalized support that so many businesses now depend on. Best of all, Focus is free and available to anyone who wants to make better business decisions, faster.
Recently, Focus published an expert's briefing on business intelligence (BI) and key performance indicators (KPIs). Contributing authors to the briefing are Kirsty Lee, Wayne Kernochan and myself. You can view the briefing in our Article Library. Click here to go there.
If you're not familiar with FOCUS as a resource for business information, you should check it out. (Click here to go there.) Here's the introduction from the site:
Focus provides millions of professionals with the expertise they need to make better business decisions. At the heart of Focus is a network of world class business and technology experts. These experts power the real time Q&A, world class research, and personalized support that so many businesses now depend on. Best of all, Focus is free and available to anyone who wants to make better business decisions, faster.
Recently, Focus published an expert's briefing on business intelligence (BI) and key performance indicators (KPIs). Contributing authors to the briefing are Kirsty Lee, Wayne Kernochan and myself. You can view the briefing in our Article Library. Click here to go there.
The Top 3, 5, 7 or 10 Reasons Why Businesses Fail
by Eric Britten
OK. So, I Googled "why small businesses fail". My screen filled with links to sites across America and around the world explaining the top 3 or the top 5 or the top 7 or the top 10 reasons why small businesses fail. Well, management professionals are like everyone else - they all have their opinion. In general, all the lists were variations on most of the same reasons.
One post said that Dun & Bradstreet said 88.7% of businesses fail due to management mistakes. Now there's a truly erudite explanation. Actually, it's probably a true statement, but the lack of detail renders it fairly useless when trying to understand anything that might help a small businessperson. So, I dug deeper and found there were three groups of causes that made it to most everyone's list:
Thinking about the list some more, I also realized it was the answer to a question that I've been wrestling with for a while. Alaska Business Monthly recently asked me if I would write a column for them next year. They have named it "Business Basics". They left it up to me to decide what to write about. Now I know what I will write about. I'll write about management, marketing and customer management, and business planning. I'll work hard to develop some unique and interesting approaches to these subjects. If you want to see if I can do that, check out the column. It will run in the January, March, May, July, September and November issues of ABM next year.
Meanwhile, you can check out two articles in the management library on my website: (1) The Seven Pitfalls of Business Failure, and (2) Top 5 Reasons Why Small Businesses Fail. Click here to go there.
OK. So, I Googled "why small businesses fail". My screen filled with links to sites across America and around the world explaining the top 3 or the top 5 or the top 7 or the top 10 reasons why small businesses fail. Well, management professionals are like everyone else - they all have their opinion. In general, all the lists were variations on most of the same reasons.
One post said that Dun & Bradstreet said 88.7% of businesses fail due to management mistakes. Now there's a truly erudite explanation. Actually, it's probably a true statement, but the lack of detail renders it fairly useless when trying to understand anything that might help a small businessperson. So, I dug deeper and found there were three groups of causes that made it to most everyone's list:
- There was the largest bucket of all, poor management. Within that category were specifics such as lack of experience and knowledge about procurement, finances, hiring and firing, managing employees, internal controls, etc.
- Next was the bucket we could call marketing and customer expertise. Those reasons had to do with issues such as not knowing how to market their product or service, not being able to define their market segment, not understanding their customer's needs, and being out of touch with their customers.
- Finally, there was the bucket we'll call lack of planning. That covers lack of a basic business plan, creating strategic and annual operating plans, and, in general, setting aside time to think about the business, how to manage it, and where it's headed.
Thinking about the list some more, I also realized it was the answer to a question that I've been wrestling with for a while. Alaska Business Monthly recently asked me if I would write a column for them next year. They have named it "Business Basics". They left it up to me to decide what to write about. Now I know what I will write about. I'll write about management, marketing and customer management, and business planning. I'll work hard to develop some unique and interesting approaches to these subjects. If you want to see if I can do that, check out the column. It will run in the January, March, May, July, September and November issues of ABM next year.
Meanwhile, you can check out two articles in the management library on my website: (1) The Seven Pitfalls of Business Failure, and (2) Top 5 Reasons Why Small Businesses Fail. Click here to go there.
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