Wednesday, November 19

So you fcuked up! Move on!

I would like to take a view au contraire to the recent global meltdown. With most of the companies looking at slicing off their costs by targeting their cost centers ... they are doing a big mistake. What they should focus on, is how to monetize their cost centers ... how to turn their cost centers into revenue centers. Instead, what do we see ... job slashing ... 1000 sacked! ... 50000 sacked!! How is that going to help you? Yes, in the short run, your Quarterly statements might be able to absorb the hit the financial crisis has had on your revenues, but in the longer run, you have just sunk deeper into sinkhole that you are trying to rise from(pardon my french).

The entire reason why companies are seeing the financial crisis is because the finance giants were not cautious enough in making the investments on which they bet their proverbial asses, and are now reeling with the losses. So you screwed up ... big time. It takes a great man to admit his mistakes, it takes an even stronger man to move on. In Hindi there is a phrase ... agar yeh nahi to wohi sahi.

Organizations are there to do business, and there is business to be done. If the world says that the total amount of business has gone down ... well they have to be wrong :) ... or they are not just looking in the right places. So what if Lehmann Brothers closed up ... what if AIG has gone for a second round of rescue ... there are other firms who will step in the shoes of the fallen ones. Global business ... the show ... must go on. Where to look at business opportunities one might ask - see a problem, fix it ... can it be simpler than that?

So lets see the world back on its feet and totter to the trot that we were used to seeing.

10 comments:

Amit said...

Good thoughts, but do you have any steps to monetize cost centers?

Prasad said...

@amit - charge internet surfing fees at IT firms .. charges something like
1. normal sites - 5 per hour
2. matrimonial sites - 10 per hour
3. pr0n sites - 15 per hour (to be shared with everyone ... part of knowledge management)
4. job sites - 30 per hour

Ashish said...

Its easier to say that think of the long run and don't slash jobs right now. But to be profitable in the long run, one has to be survive the short runs.
Also, I haven't heard many companies targeting cost centers to reduce losses. (BTW pardon my ignorance, but what is a cost center?)

Most of the companies slash jobs but not permanently. You see many jobs re-created once the company becomes profitable.

So it really comes down to is - which department we can afford to cut temporarily so that our cost decreases.

Prasad said...

@ashish - Cost center is a department/division which does not generate revenues for the firm directly. So, the firm has to bear the cost of the same ... its a lame definition, but itll do. Ill give you an example ... symantec slashed jobs ... the first dept that was to go was R&D ... to control costs, companies will reduce their entertainment budgets, will reduce salary hikes ... all these factors do matter Ashish. Take for eg. the job slashing MBT (not TechM) had done back in 2002. Its name still carries the scars of that slashing. 6 Years ... and they still remember this ... thats a fk up in the short run being remembered over the long run buddy.

maxmayur said...

Yesterday a mail was circulated in my office by the admin saying there would be cost cutting across. First thing to go was switching down the air conditioners after 6pm. There are host of other measures listed too. I asked the admin head, "Are we losing money? or have any of our clients defaulted?" He didn't have an answer. And I know for sure that our pipeline too is strong. What is the cost cutting for then?

The truth is, companies are just taking advantage of the 'so called recession' and pinching us bit more harder. You said it right- there is a need and there is a solution. There is a company who can deliver it... meaning there is business.

These dumbasses dont know how to run companies and the employees bear the brunt. Suck it up guys... please do!

Prasad said...

@Mayur - Exactly! You said it .. suck it up!!

Ashish said...

Well, reducing salary hikes, reducing entertainment budgets and controlling costs is actually a good thing to do when the company is reeling. Again, reducing is the key word, completely dropping it is a bad thing.

R&D gets hit the first in every company, because they want to direct all the financial resources in making better products in the short run. They can always pick up the R&D later on. So unless the company is just trying to take advantage - as Mayur put it- there is no wrong in taking these steps as long as you revert them back once the economy is strong.

If an employee won't take a smaller pay hike when the company is reeling, then when would he?

Whirlpool is going through a similar downturn and I can see the way it is handling and agree to the steps it has taken.

Prasad said...

I wonder whether this downturn actually is an opportunity in disguise for outsourcing?

maxmayur said...

I see it as an opportunity. May be not in the immediate terms, but on the long run? surely.

@Ashish: ups and downs are a part and parcel of any business. You can't do much about it. But yes, there are better ways to tackle it so that you avoid getting into the same situation next time around. Biggest problem about the R&D folks is that they always try to come up with products that suit best of their own creative appetite, not always in line with what the need of the market is.

I might dine at a 5 star when I'm rich and survive on a wada pav when I'm poor. But eat I must. All a company needs to do is come up with right products/services for the right needs of the hour (for whatever the target audience). They will never recede.

Prasad said...

@Ashish - check out http://crankypm.com/2008/11/badness-all-around/