Winners grow when they discover downsizing is just as much an opportunity for profitable growth as it is a time for mourning.
Restructuring, reengineering and reinventing are “miracle” techniques that can work wonders for an organization – to a point.
These techniques can boost short-term profitability by helping cut costs. They can be used to tighten an organization. They can even be used to help re-position it. However, these techniques can be very limiting, as they play upon the concept of downsizing rather than one of the profitable growth.
Downsizing is a method of creating a leaner organization with the objective to become more competitive. It is a means, not an end. Downsizing is a starting point to re-position an organization for growth.
Only growth is a building block for the future. Downsizing may strengthen the foundation, but it cannot add new floors to the building. Growth, on the other hand, is the foundation for a long-term future.
Downsizing leads to more downsizing. According to he American Management Association two-thirds of corporations that downsize their staff this year will repeat it next year. Thus, downsizing does not lead to a motivated staff, a creative R&D team or a bonded group of customers. In fact, the best staff and customers tend to desert the ship when they see it going down. Everyone wants to do business with a winner. Winners are not in a perpetual cycle of downsizing. Winners grow.
Growth is the only strategy that will provide long-term stability and profitability. Growth is the only common denominator that allows a firm to dominate a market, to increase market share and to develop new ideas and technologies into profitable products and services. Growth is the only strategy that forces you to think of new ways to satisfy customers rather than old ways to cut costs.
Many organizations are dominated today by mangers that have made an entire career of downsizing. They are number- and people-crunchers. They create profits by cutting costs rather than by expanding products and services. They are managers who are not ready for the world of profitable growth, which has to be the focus of the late 1990s.
Profitable growth is a strategy as well as a mindset. It is a strategic system of operating and thinking that focuses energy on strengths rather than weaknesses. It is a mindset that forces you to look outward rather than inward. In general, it is a guiding force to building the organization. Downsizing is the past. Profitable growth is the future.
Increasing revenue is a critical function of growth. This can be accomplished by traditional product or service innovation or by geographic expansion or by acquisition. Or, it can be accomplished by non-traditional and creative techniques such as joint ventures, strategic technology alliances and product enhancements from new technology sources.
There is no one best way. There is only the best way for an individual organization in a specific industry at a specific moment of time. The organizations that mobilize at the right time, in the right way and in the right form will be the winners. They will be gaining market share from their competitors and they will be generating revenue, while the losers will still be “downsizing” for pseudo-profitability.
Downsizing is the most tiring, all-consuming and emotionally draining process an organization can experience. It is like attending a funeral everyday instead of a party. It is a funeral for new ideas, new technologies and new horizons. It is a mourning for what has been lost instead of what can be gained. Downsizing forces everyone’s mindset into a process of cutting rather than growing and of losing rather than winning.
Growth gives everyone a breath of fresh air that makes the impossible seem possible. It encourages new ideas and techniques. It rewards people for creating rather than cutting. It renews the credibility of growth as both a strategy and a mindset.
Profitable growth is the next step beyond downsizing. It is the vision that will propel firms into developing a clear and credible plan for renewal. Profitable growth is the future?