What if fixed employment costs were variable?
posted 09.10.09 by Damon Hurst
Imagine being able to grow or shrink your business to reflect customer demand. If that was a strategic goal, where would you start?
I recently read a McKinsey Corporation article, "Innovative Management", which observes that "industries are becoming part of one big supply chain, connected by seamless, web-based communication processes". There is no doubt the digital age provides ever-increasing opportunities for companies to connect, but what if your customers and suppliers demand it?
The article states that organisations of the 20th century were built on assumptions of scarce capital and high interaction costs, leading to complex processes and attendant hierarchies - a protectionist model. They believe successful organisations of the 21st century will be built on assumptions of fast paced change, scarce talent pools and simplified, integrated transaction processes - a collaborative model. Or put simply, the strategy of controlling the weather will be replaced by the strategy of designing the best ship possible for whatever weather comes your way.
The hard to ignore IBM "smarter planet" marketing campaign running at the moment across print, web-display and social media business forums contains a similar message: connect deeply with your supply chain, compress the data and spend more time analysing the trends. In our experience, checking gaps in information from different internal sources and basic financial forecasting is as far as many businesses get.
It may be we are at a tipping point in terms of how we do business, and the next generation of Business Intelligence Software will be affordable to the 95% of companies not in IBM's target market.
The West Australian economy is dominated by large mining companies and their complex tendering and contract administration processes. If these large companies are acting on the above messages, no doubt they are looking for supply chain partners who are doing likewise. Right now it's an opportunity to connect closer to their workflows, thereby mitigating business risk. However, it's probable that very soon sophisticated data connections will be a requirement for doing business with these large companies. Will your business be there?
The starting point is empowering the people in your organisation to be quick and nimble, so the business can expand into new opportunities and contract before they disappear. It's also why Thirdman exists - to make your fixed employment costs variable.
One of our fundamental beliefs is that sustainable organisations don't grow in a linear manner, they grow in steps. The practical problem is a step up, or down, can be upon on you without much warning if you're not seeing the right information.
We often start our client relationships by solving urgent operational issues. This not only adds immediate value, but allows us to gather information that will help assess strategic development options.
Turning your strategic decisions into long-term action plans may involve implementing the next generation of Business Intelligence Software, the benefit of which is automated, real time information about your industry and supply chain. The sort of information that allows both a deep assessment of the past and access to the business of the future. In a nutshell, the opportunity to grow or shrink your business to reflect customer demand.