Boom and Gloom

Boom and Gloom

Plan for the worst, hope for the best

I see the recent decrease in stock market prices has been immediately balanced by the increase in doomsayers. This follows the time-honoured tradition where economists and other seers say exactly the opposite of what they said last week (that is, if market moves contradict what they'd previously forecast).

A rational person might observe that even after January's plunge, the stock market is still above where it was at the end of 2006, 15 percent up on two years ago and has doubled in the past five years. This observation does depend on an ancient, now little-used, method called analysis, where actual historic data forms the basis of a projection. This method is not a favourite among the fiscal pundits who in their living memory (which is about 12 months) have only seen the market go up, so any direction other than up immediately indicates the end of the world, the sky falling and the likelihood of having to sell the Hummer.

While this is all very tragic for economists, the real question is, as always: How will it affect me?

My CEO reads the business section of the papers each morning - at least the headlines - so she's likely to mistake the gloom stories for reality and plan on introducing cost cutting measures to cater for a downturn. It's easy to imagine how, if other CEOs do the same, they may actually spawn the downturn they've read about, in an elegant example of cause equals effect.

In uncertain times such as these, it's good to focus on certainty. For example, I'm certain my CEO, in preparation for decline of which she's now certain (because she read it in the newspapers) will demand a list of areas where we can cut back. I need to prepare some cost saving measures that will give the impression of making major sacrifices while limiting the cuts to non-essential areas.

I looked at the last real downturn in the early 1990s to educate myself for what might recur based on facts. Given no one else seems to be doing it, I can just repeat anything from back then and I'll be seen as a visionary.

The first thing companies do in lean times is eliminate unnecessary spending. The initial focus will be on the two areas judged easiest to cut back quickly: stationery and staff. My pre-emptive task this week will include stocking up on pens, post-its and paper in anticipation of the stationery cupboard progressively de-stocking. Next I'll inflate the number of people I plan to hire so I can then scale it back to demonstrate restraint, while simultaneously hiding my staff in other departments to get their salaries off my books. I can sell that as an initiative to move the IT staff closer to the users, enabling them to be more responsive to the needs of the business.

When reducing expenses on people and pens doesn't work, companies look to major proposed projects to discover what can be cancelled, deferred or scaled back. As the most expensive projects in the company seem to reside in my department, other managers will argue strongly for IT cutbacks as the simplest fix to save them having to consider any meaningful reductions of their own. Obviously any IT project will be carefully examined by the executive committee for business benefit and value-add before it is inevitably scrapped so I need to bring forward my equipment and licence purchases, locking them in before the bean counters get their "Refused" rubber stamps made up. I'll check which of my vendors end their financial year in March or April to take advantage of the better discounts from salespeople who need to make their year-end numbers.

To the Max

I'll prepare my list of projects in order of maximum impact (and maximum visibility) to the rest of the business so I can share the pain with them - it's the collaborative thing to do. The area that will cause greatest distress to other managers if reduced is the help desk and customer service sections. I've been looking at how other companies have transformed their customer service operations, and realize I'm currently doing it all wrong. I'm actually offering customer service.

World's best practice, or at least the common approach (and I think that's the same thing), is to gradually reorient the service delivery method to reduce the cost of provision, with a target of zero cost for zero service.

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