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    Rightsizing Your Business: Breakthrough Strategies to Create a Flexible and Profitable Business in Any Economy
    Rightsizing Your Business: Breakthrough Strategies to Create a Flexible and Profitable Business in Any Economy
    Rightsizing Your Business: Breakthrough Strategies to Create a Flexible and Profitable Business in Any Economy
    Ebook164 pages2 hours

    Rightsizing Your Business: Breakthrough Strategies to Create a Flexible and Profitable Business in Any Economy

    By Bill Welter

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    About this ebook

    Ever since the recession hit, “downsizing” has been the corporate mantra. Cut overhead, increase profitability, and the future will take care of itself. Most pundits agree that this is a shortsighted approach, especially in a volatile economy. While cutting overhead increases quarterly profit in the short term, it weakens an organization for the longterm. As result, “rightsizing” has become the new tool remain profitable and competitive. It forces the organization to reevaluate its goals, its market position both past and present, and where it wants to be in the future. This results in constructive measures that underscore the strengths of the organization to meet its goals for the future. Rightsizing Your Business, written by noted management expert, Bill Welter, is the first book either in e-format or print that clearly and concisely explains this important shift in management strategy and shows any business to proceed with effective rightsizing.
    LanguageEnglish
    PublisherSimon & Schuster
    Release dateDec 15, 2011
    ISBN9781440537356
    Rightsizing Your Business: Breakthrough Strategies to Create a Flexible and Profitable Business in Any Economy
    Author

    Bill Welter

    An Adams Media author.

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      Book preview

      Rightsizing Your Business - Bill Welter

      Rightsizing Your Business

      Breakthrough Strategies to Create a Flexible and Profitable Business in Any Economy

      Bill Welter

      F+W Media Business Now colophon

      Avon, Massachusetts

      Dedication

      To all those business leaders who adapt before they have to react

      Acknowledgments

      I would like to acknowledge the help of Ed Mason, Allen Summers, Jim Stickler, Bill Geist, Dan Baumgartner, and Sam Fiorella. Thanks for your quick response to my sketchy questions.

      Contents

      Introduction

      Chapter 1. The Secret of Success

      The Structure of Success: Simple, but Hard

      The Context for Success

      A Process to Guide Your Thinking

      The Secret of Success

      Chapter 2. Nine Factors That Define Your Capabilities

      Change Factors

      Rightsizing Driving Factors

      Rightsizing Enabling Factors

      Chapter 3. Target Markets

      Three Markets

      Remember, You Are Not Alone

      Radar Screen Thinking

      Rightsizing Your Target Market

      Chapter 4. Products and Services

      Your Total Offering: Look Beyond the Obvious

      Value Promise Versus Value Proposition

      Chapter 5. Organization and Staffing

      A Dilemma

      What’s Wrong with Being Lean?

      Are You Organized Right?

      Chapter 6. Resources Employed

      What Do You Have? What Do You Need?

      A Lesson from Factory Automation

      Lessons from Open Innovation

      Chapter 7. Locations

      Physical? Virtual? Both!

      Chapter 8. Infrastructure Technology

      Tools, Machines, Techniques, and Systems

      Social Media as Infrastructure Technology

      Chapter 9. Policies and Procedures

      Four Leadership Responsibilities

      Chapter 10. Metrics

      Thinking in Bigger Boxes

      Business Model Evaluation

      Sears, the Balanced Scorecard, and Rightsizing

      Chapter 11. Partners

      You Are Not Alone

      How Might This Work?

      Chapter 12. Putting It All Together

      Good Medicine and Proactive Rightsizing

      Silo Decisions and the Ripple Effect

      Matrix Thinking

      Rightsizing and the Sense Response Cycle — Final Thoughts

      Resources

      Also Available

      Copyright Page

      Introduction

      In the last decade of the twentieth century, business leaders started to use the term rightsizing. At first, it was a kinder, gentler substitute for downsizing. Why? Maybe because it didn’t sound so mean and hardhearted (although employees knew perfectly well what managers meant by it).

      Maybe business thinkers in the 1990s really thought that the right size of any business was smaller than whatever existed at the time. In any case, it’s unfortunate that the concept of rightsizing businesses was hijacked this way. It’s time to put the concept back in its right place in our strategic tool box. Maximum success comes when a business is the right size.

      Think about it for a moment. If a business is too big it wastes resources. If a business is too small it wastes opportunities. Like Goldilocks, what we want is a business that is just the right size. We need to redefine rightsizing as making your business the right size to optimize your business potential and execution. It’s something you should address as part of your regular strategic planning work.

      As you look at all aspects of rightsizing, you will, sooner or later, say, But that’s so obvious! If you catch yourself saying that, ask yourself this: If it’s so obvious, why aren’t more businesses the right size?

      Chapter 1

      The Secret of Success

      More often than not, a business finds itself suddenly confronted with the imperative to rightsize because it has not been paying attention to the larger world. Management either find themselves surprised by an extended down market, going into a crash downsizing effort to get costs under control; or they realize they are late to the game and try to ramp up in too short a time.

      Rightsizing should be done on a proactive basis as part of your regular strategic planning efforts. You are literally trying to answer the question of What’s the right size for this company as we move toward our planning horizon? Once that conversation is underway it must continue on to the decisions that have to be made to change the size of your business.

      The Structure of Success: Simple, But Hard

      The secret to business success is simple: Match realistic intention and organizational execution — know whom you need as customers and give them what they want. To do this you’ll need to accomplish four things:

      Define goals that, when achieved, will result in profit.

      Prepare plans to achieve the goals.

      Make sure you have the capabilities needed to execute the plans.

      Make sure you have enough of each of the needed capabilities.

      Figure 1. The Structure of Success

      Figure 1. The Structure of Success

      Simple, right? Then why is it so hard to build and maintain a rightsized business? Well, think about these four factors in light of your own business.

      Goals: Do you know how realistic your goals are in light of the customers you have (and, more important, need)? Were Kodak’s goals for its film business realistic in the early part of the twenty-first century?

      Plans: Do you have specific plans for the societal and industry changes that will determine the future of your business? Were magazines and newspapers really planning for a digital future?

      Capabilities: Do you have the knowledge, skills, and other resources needed for the future of your business? What don’t you have that you should? Does Microsoft have the capabilities it needs to compete with Google?

      Capacity: What shortages will impact you? Where do you have excess resources? What will happen to RR Donnelley’s printing plants when the Yellow Pages disappears?

      How should you go about answering these questions? Many people tell you to think outside of the box; I simply want you to think in bigger boxes. You should do this because the future of your business can usually be seen in the context of the bigger boxes surrounding you.

      The Context for Success

      As of Fall 2011, Apple is changing at least three industries simultaneously: the music distribution industry, the telephone industry, and the personal computer industry. You’d probably love to be in the position of changing/leading your industry, but that’s not realistic for the vast majority of businesses. Most of us have to respond to changes in our industry that are out of our control.

      The challenge of responding to industry evolution in encapsulated in the phase attributed to Joseph Schumpeter, the Austrian American economist who studied innovation in the 1930s and 1940s — creative destruction. Simply put, industries evolve because of constantly changing needs, wants, and capabilities. They do so in an amoral sense — creative destruction is neither good nor bad; it just happens. Some companies take advantage of the opportunities created by this evolution. At the same time, the change destroys opportunities that other companies, unfortunately, were based upon.

      Semiconductors, for example, created opportunities for Fairchild and Intel, but made RCA and Sylvania irrelevant. The Internet has created wonderful opportunities for Google and Facebook, but has nearly destroyed the newspaper industry. The rise in oil prices has been good for Toyota, but seemingly caught GM by surprise. And social media is turning the advertising industry on its head.

      In order to respond to these changes in a timely and accurate manner you need to consider the context for most change in the business world. You need to consider the bigger boxes of your industry, the economy, and society.

      Figure 2. The Context for Success

      Figure 2. The Context for Success

      All of the bigger boxes have the potential to trigger waves of creative destruction and will gently or not-so-gently bring about the need for you to rightsize your business. The desire to buy McMansions in the 1990s triggered an upsizing at many homebuilding companies. Unfortunately, the Great Recession of 2008 triggered a drastic downsizing for the same companies. The advent of MP3 technology brought Sony low and raised Apple high. The fall of the Berlin wall triggered a series of events that caused the downsizing of many defense companies, but the terror attacks of 9/11 reversed the tide.

      Most of the changes affecting your business come from the bigger boxes. If you stay aware of changes in society, the economy, and your industry you have a chance at proactively rightsizing your business. If you ignore the winds of change you will always be reacting — a bit too late.

      A Process to Guide Your Thinking

      If creative destruction is real — and it is — the rightsizing challenge is to sense the signals of change coming from the bigger boxes and to respond to these signals in an appropriate and timely manner. Furthermore, unless you are getting ready to retire soon, you will have to do this again and again. With that in mind, consider a simple cycle to use as you think about the need to rightsize your business and the foundation that underpins this need.

      The cycle shown in Figure 3 is the sense-response cycle (SRC).

      Figure 3. The Sense-Response Cycle

      Figure 3. The Sense-Response Cycle

      The cycle is based on the vision, values, and goals that you have for your business. They are your foundation, and you and your team need common understanding and plenty of discussion about this foundation

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