Thursday, January 05, 2006

Preventative Maintenance

All too often, management uses the rationale that 'things are not so desperate as to require a change agent' or review of practices - this is particularly true when market share is slipping but the marketplace is growing, shrouding the problems. Yet equally as often, by the time it is clear that help is required, after more cash is burned and more talent has exited the company, the problems are far more difficult to address.

"The time to repair the roof is when the sun is shining." - attributed to John F Kennedy

Look at what Staples CEO Ron Sargeant discovered, as quoted in Fast Company:"The economic slowdown has caused Staples to reexamine every aspect of its business. Over the years, we started catering to the more casual customer. But that's not where the money is, and that's not what we're really good at. Now we've stopped carrying about 600 items that appealed to the casual customer and added 650 to 700 items that appeal to the small-business customer instead. We've improved the quality of the merchandise we offer, because businesses have different needs than the casual consumer. Instead of advertising as much in the Sunday circulars, which businesses don't respond to, we put more into direct marketing, upgraded our Web site, and doubled our direct-sales force in four months. We took the money that we originally put into advertising and reinvested it in training for our associates, and we added more staff to our stores to provide better service. These are important changes. In some ways, I'm not sure we would have looked in the mirror so carefully if not for the slowed economy."

Don't wait until a slowed economy or slowed business model. Make a committment now, at the corporate, departmental and individual level to re-evaluate all the "knowns" and challenge conventional wisdom. Evaluate and focus on core strengths. Look to outsourcing, or look to take services inside. Seek new unexpected areas for growth or divestiture, new target markets. Fire customers by qualifying the most and least profitable accounts. Reset the organization, compensation, performance rewards, costs structures, vendors, payment and contract terms, and personnel policies. In short, have crucial conversations and make necessary changes today, before the clouds move in.Then rinse and repeat... after all, as well stated by another American President, Thomas Jefferson: "Every generation needs its own revolution."

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