Written by Daniel Murray
While the world has faced pandemics before, our communities and economies are vastly different today than they were during the Spanish Flu. The interconnected networks of our modern ecosystems are vast and complex.
As the economic crisis unravels, the next downward spiral begins and if you are a business leader, you will almost certainly need to face the reality that you need to reduce expenses to save the business, but where to start?
Here is a 5 step process leaders can adopt to clarify their intentions, engage their most passionate people and drive bottom line impact as quickly as possible.
STEP 1: Set targets and intentions
STEP 2: Engage all of your people
STEP 3: Roughly size and prioritise
STEP 4: Implement quick wins
STEP 5: Build a curious culture
1. Set targets and intentions
As a leader in a position of responsibility, you are accountable for the decisions that your people make than you might give yourself credit for.
During critical situations, many of your people are searching for guidance and you are the unconscious focus of their attention. So, ground your intentions first, define:
- the target number (in terms of oveall cost figure). Work out your numbers and define a clear target on where you need to land in terms of business expenses within a specific timeframe.
- the guiding principles. These are not rules, but they are the values and ideals to help us make challenging decisions. Such values are both personal and company related, they will provide your people with an insight into your leadership beliefs and signal the spirit with which you are wanting the cost cutting to be managed.
Some examples of good guiding principles:
- Don’t destroy things our customers love
- Don’t get rid of people until we get rid of the work they do
- Our suppliers are as valued as our customers
2. Engage all of your people
When it comes to looking for cost savings in your business, don’t think you know all the answers. You are a leader of intelligent and skilled people and your job is to engage with them to include them and make them part of the solution.
The most successful leaders use this three pronged approach to engaging with their teams:
1. Communicate the intent. Share with everyone the problem you are facing, your cost savings target and the guiding principles. Be transparent but also project a sense of hope and determination.
2. Build a powerful working group. This is a small group of people you deeply trust to drive the process forward.
3. Capture the wisdom of your crowd. Get your Working Group to run a workshop or a series of workshops and invite everyone in the business to participate. Once the challenge, target and guiding principles are explained, ask everyone to share their ideas on where they think savings can be found. We often advise these to be spread in different categories for ease of comparison and – while they may not be all gems – some may be game changers.
3. roughly size and prioritise
You now have a pile of ideas for cost saving, many of which you are probably thinking won’t work. Some of them seem too complicated and others too expensive. Often this results in Analysis Paralysis.
What we need to avoid Analysis Paralysis and ensure the best ideas get actioned first, is a simple triage system.
The Working Group should assess each idea for two simple dimensions:
A. How big might the savings be?
B. How easy might this be to implement?
Use this map to quickly estimate which ideas should be in each category. Focus more on relative position than highly accurate analysis in the first instance.
Curious cultures ask:
- Why do we do that?
- Do we need to do it that way?
- Do we need to do it at all?
As opposed to: “That’s the way we’ve always done it”.
4. IMPLEMENT QUICK COST-SAVING WINS
In general, you should always be obsessed with your customer and how you best serve them. This means alway responding and innovating around their needs.
Many organisations have had to innovate in order to serve their customers during this crisis. For example virtual only appointments or online-only payments. This is exactly the right decision.
However, when your goal is more about cost-savings then embrace the quick wins. amongst all the ideas captured, identify those that are easy to implement and generate savings, no matter how small.
By implementing quick wins:
- Everyone gets the signal that change is happening at all levels
- You empower your people to search for savings at all levels
- You build a culture of efficiency, as more ideas begin to surface from the business.
This culture has a long term impact on your cost base.
5. BUILD A CURIOUS CULTURE
Have you ever heard the story of how post-it notes were invented?
In 1968, Dr Spencer Silver, chemist at 3M, was on a mission to create a super strong glue. Sadly, his attempts resulted in the opposite: a glue with a very low adhesive strength.
While this could have been seen as a failure, the culture at 3M empowered Dr Silver to keep showcasing and discussing his findings for seven years, until a man called Art Fry came along. Intrigued by these extremely weak glue, Fry thought this could solve his problem of holding bookmarks in his hymnal while singing in the church choir.
After some playing around with glue and paper, post-its were born and with them a multi-million dollar industry.
Based on these strategies, it is now time to make an action plan to help you lead your people through crisis. Take some time to consider what actions you need to take to cut costs without killing your culture.
Are you already implementing any other actions? Keen to hear your thoughts, drop us a comment!
Loved our blog? You can receive this and more content straight into your inbox. Subscribe below!