Rx for Lean Times

No doubt about it. Watch the news even for 5 minutes and you are inundated with the state of the economy and news of hard times all around.

The House rejects the bail out deal and the Dow begins a very strong downward slide.

What to do?

Conventional wisdom says to cut back on all fronts. Cut out all excess spending, all unnecessary people, move to lower cost channels.

Uncommon wisdom says that while cutting spending is prudent, building revenues, stimulating demand and planning for growth in better times is even smarter.

So what is the prescription for lean times?

1. STAFF REDUCTIONS – Before you issue the normal across the board cuts, you should skip this step and move on first to revenue generation first, particularly if you have already cut into the muscle and even into the bone of your organization. If you cut too deep, and your competitors are not in the same position, those cuts could cost you market share.

But if you must cut back, draw yourself a picture of your organization, but this time do not use hierarchy as the structure. This should be a circle, one that puts the customer at the center, surrounded by those that directly touch the customer. The ones that generate revenue directly should be inviolate when doing cutbacks, so mark them with a green dot (the keepers). Those that provide customer support, which often generates indirect revenue (e.g. strong relationships encourage contract renewal or repeat business), should also be last in line for staff reduction, so also mark them with a green dot. Those that support customer support personnel should be separated into two groups. In green, highlight those that support revenue generating employees. In red, highlight those that support or manage the non-revenue generating group.

As in any staff cutback, those that consistently under perform should be considered first, as those that remain will have to work harder and take on more and need to be able to handle the additional responsibility. As you get out to the third circle and beyond, ensure that where possible, you identify project oriented personnel, where if you cutback these positions you can bring in consultants as needed to complete the projects. This will lower your fixed costs. Flatten where possible, cutting out layers of management.

2. SHIFT CHANNELS – Anyone who has read anything that I’ve written on this subject knows that I am a very strong proponent of the higher yield, variable cost travel agency channel. Yes, it uses the GDS, but it produces a higher yield than online. Stop singing the “gotta own the customer on my site” song and try investing the same energy making up with the travel agency community. They are still a powerful sales force and would love to have a reason to sell your product.

3. FOCUS ON GROWTH – OK, now I know this one is counter intuitive, but there is truly no better time to hire a growth consultant to come in and help you figure out how to do more with less. There are new markets out there that are just waiting for your attention. You have the products and services to sell, you just need to be aware of the tools that you need to service new markets. In some cases it is technology, in most cases it is just tapping into the ingenuity that you have within your team. The front line is the best place to find this hidden asset.

4. STIMULATE DEMAND – No, I have not lost my mind. There is in fact consumer demand out there that given a little stimulation will materialize into new business. Consumers are cutting back. No argument there. Instead of flying to Tuscany, perhaps they will drive to upstate New York or to Oregon to check out the wineries there. Instead of buying a new couch, they will go to the playoffs or plan a trip to the Final Four. Instead of a 2 week trip throughout Australia and New Zealand, perhaps it is time for the great American road trip. Check out roadescapes.com and let us share how we can map your narrative content about US road trips to stored, adoptable trips in our system. It is new new dynamic advertising tool – dynamic packaging on steroids.

5. INCUBATE NEW IDEAS – One of the hardest things for large companies to do is to expand beyond their core products and core competencies. But sometimes that is truly the best way to grow. At Solutionz, we can help incubate new ideas, outside of your organization. We take people from your team and work with them in an entrepreneurial environment to create something new that can then be assimilated back into your firm – or not!

Our most successful venture on this front was building LasVegas.com for original owners Mandalay Resort Group and Park Place. It never would have worked being run within the two billion dollar casino firms.

6. VISUALIZE MOMENTUM AND GROWTH – All this focus on the negative will only produce one thing – stagnation. It is a little like standing in front of an elevator panel. If you push the down button it is absolutely certain that when you get in the elevator you will go down. Push the up button and you WILL go up. Plan only for decline and that is where you will go. Plan for and focus on growth and as the economy recovers (which it most assuredly will), you will be at the head of the pack – well funded, growing, strong and an industry leader.

Check out www.solutionz.com. Give us a call.

Choose growth. It’s more fun!

Chicke Fitzgerald

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