Economic downturns are inevitable, what can be done?
I’ve always enjoyed problem-solving. I love puzzles and helping my kids with story problems in math. Sometimes I have to remind myself there are moments when I just need to listen and not jump into problem-solving mode. This isn’t one of them.
Talk of recession seems to be everywhere, and I agree that the economy runs on a cycle of economic expansion and contraction. Like yin and yang or night and day, one leads to the other. Unlike night and day, we don’t know when a recession will come, but we know it will come. Understanding and realizing that fact suggests that businesses should be able to plan for the change. This got me thinking … what do the best-performing, post-recession businesses do to position themselves for success? Is it as easy as applying cost-saving measures? What are the business decisions that enable companies to outperform the competition? After a bit of research, I found that Harvard Business Review (HBR) explored this very topic in a previous issue*. What did they find?
Position your business to weather the storm
Economic downturns happen, but can you hedge against the effects and how? HBR studied three global recessions from 1977–2005 and found some interesting results. The findings suggest companies that blend thoughtful cost-saving with strategic investments perform best as recessions turn to expansion. But it’s not as simple as combining defense and offense.
HBR analyzed the data a bit deeper and identified that one particular combination of actions resulted in the greatest likelihood of producing post-recession business winners. HBR refers to this mix as the “progressive” approach. On the defensive side of the ledger, the progressive winners cut costs by improving operational efficiencies (not necessarily reducing headcount more than the competition). Offensively, the winners tended to use a multi-pronged approach to business decisions: invest in market development and invest in new assets.
The winners responded to a slowdown by reexamining every aspect of their business. They tended to focus on actions that improved efficiencies and reduced operating costs on a more permanent basis. They also strategically acquired assets with post-recession operations in mind. When demand returned, those reduced operating costs and strategic purchases allowed profits to grow faster than the competition.
What action can you take?
So, what investments can be made that improve efficiencies and reduce operating costs at the same time? According to numerous thought leaders, including HBR, Forbes, Gartner, Morgan Stanley, McKinsey and others, automation of business processes is an ideal candidate.
Automation can complete critical –yet mundane and repetitive — tasks with precision, on time, every time. Automating processes like application and system testing and other business actions enables businesses to achieve more without adding headcount and allows employees to become further invested in more interesting, higher value business activities. Resulting in higher quality outcomes, lower costs, more efficient operations and more engaged employees – automation does fit nicely into the roadmap identified by the HBR analysis.
MCANTA delivers automation services that accelerate the ‘winning’ business approach identified by the HBR study: permanently reduce the cost of doing business and free up personnel to do innovative, more valuable work. We pride ourselves on delivering white glove service and being able to automate with any system or application – mainframe to mobile, Citrix to cloud.
For more information and a free automation consultation, contact dhughes@mcanta.com at MCANTA’s Automation Center of Excellence.
* Harvard Business Review – Roaring Out Of Recession
