Most of the companies are looking ways to reduce costs right now. Keeping your product(s) cost competitive should be number #1 priority in your list and you should make it as a solid process by minimum on annual basis (and separately for every single larger project).
Lets put this in practice, if you have a business with a 5% operating profit margin and we will take out 10% of your costs, you’ve already tripled the margin to ~15%.
80% of the sales and actual cost opportunity comes from the best 20% of product ideas.
This is one of those blindingly obvious things that people know but ignore and this applies to sales and marketing too. 80% of your customers are interested only 20% of your products, but meanwhile we are spending 80% of our time on the things that does not really matter.
In our head we are clearing the ground by crushing on some mega market trend opportunity, but somehow that rarely(never?) happens or we could be working with the opportunity which really does not bring money to the house, but it’s fun. But what happens when this 20% sales cycle ends?
A strong growth-, continuous improvement- and cost-management culture is key for creating an efficient and effective organization. It’s a mindset, where people won’t stop after achieving targets, they are already working on the next improvement and constantly trying new ways to improve efficiency.
Reality is, that often when it comes to cost savings- or continuous improvement discussions there are people in the top positions in HR, marketing, sales, buyer positions etc. having as many reasons why some certain things are not possible as you have different departments. “No, already tried” “need more tools” “not possible” “just no” etc.
Actual core reasons often are laziness, creativity, knowledge or depending on the position:
too much kindness – they just love working with people and are afraid of getting tough, but it’s an art getting tough – in a tough but fair kind of way, It should not lead to conflict it’s when objectives gets clear and people are pushing even harder for better result.
Companies should ban the word “NO” and make people think instead:
how can we make it possible? and make it clear it’s a question about competitive survival. If you don’t cut cost and pass on price reductions, you’ll lose out to competitors who do.
It’s not only about skipping business class flights and buying priority pass for lounge access (buying priority pass would be actually “green-thing”) and staying in 10 USD hotel rooms in India (or at least sharing the room with someone in more expensive hotels) instead of staying in 5-star Marriott or Shangri-la hotel.
and do the dinners with a client or supplier always need to be at Michelin or 5-star restaurants? or car must be parked in the most expensive area at the entrance of the airport? and generally choosing car instead of public transport).
People who don’t have budget would naturally argue in the beginning, but sooner or later you may need to take these initiatives seriously. Of course, you could make a deal that the staff can stay in more expensive hotels, if they are happy with lower compensation or you can fix higher expenses to incentives.
How we believe, is that you’ll miss the whole adventure in each country and you won’t see how the people are living in the country. If you want to understand the market you must also understand the culture and how the people are living there “when in Rome, do as the Romans do”.
Ok, it’s understandable that some of you may not want adventures anymore. But what’s the point of staying in 5-star hotels? Functional TV is more important than proper internet access? Most of us, anyway spend only night time at the hotel, requiring electricity, internet, shower and bed.
(Yes, Iron too, but you can get it from the lobby – no adventures involved)