Dear Friends:
Firstly, I would ask that after you have read this article, you refer to THE GLOBAL FUTURIST [Article Posted 19 December, 2008]. Also, there is a brief article posted to THE NATIONAL NETWORKER - RELATIONSHIP CAPITAL TOOLKIT [Article posted 26 December, 2008], that will be of great interest in terms of the global recession which confronts us all.
Secondly, there is a fascinating article in the New York Times which describes what a number of employers in the United States are doing in order to avoid laying off their workers; they are cutting back on hours, benefits, pensions, paid vacations, and more -- some manufacturing companies are going to a four-day work week and unpaid furloughs. Automakers are staying closed for an extra two to three weeks after the start of the New Year in order to conserve scarce cash. This same tactic is being contemplated or is already being employed (a sad pun) in other G-8 Nations -- the United States just happen to be the trendsetter. The article can be accessed at:
http://www.nytimes.com/2008/12/22/business/22layoffs.html?8au&emc=au .
Thirdly, there is some interesting food for thought here, which is what this article is truly about. The two ways in which profits are made and preserved is through increasing revenues and decreasing unproductive costs. Decreasing all costs will ultimately lead to the demise of any enterprise. The costs which are unproductive should be the ones targeted for decrease or elimination. The issue is determining what, exactly, "unproductive" means.
Generally speaking, most businesspersons regard costs that are either: 1) not mandated by law; 2) not required for the hands-on production of a product or service; or 3) not required for the direct marketing and sales of a product or service, as unproductive. Care must be taken not to cut costs which are associated with marketing and sales, but which are not simply variable ones, such as sales commissions. This is a time where publicity, press releases, public relations and other "costs" are more necessary than ever for sustenance. Yet businesses are foolishly cutting back on these costs as well as on all of the costs associated with middle management, excess real estate costs, and extravagances. Just because the return on an investment in publicity, press releases and public relations is lagged or defered, does not make it it an unproductive cost. In fact, a failure to invest in these areas is a short-term savings which is terminal in the long-term.
In an economic crisis of this magnitude, businesses need to re-position themselves as unique service providers and thought leaders. They need to open up more markets through heightened exposure. Be very, very careful in choosing which costs to cut. Do not permit the desperation of immediacy lure you into obliterating your future.
Seeds must be planted and cared for in order to reap a harvest. The harvest is the future. Without planting the seeds and caring for them, we will eventually starve.
Faithfully,
Douglas Castle
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