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Action Points
I. Business Concerns in Todays Economy

The chief executives from Power Plate North America, Acision,


and CenterBeam on:

While the general U.S. business climate has definitely


improved over the past two years, many companies are
still feeling pressure to contain costs and keep their
growth goals modest. Consequently, some pressing
concerns are: What business assumptions are safe bets?
How can companies keep a competitive edge
in a reduced-investment environment?

6 Strategies for
Trimming Costs in
a Tough Market

II. The Bottom Line

To assess the big picture of your companys progress


during this tenuous time, you will need to examine some
granular details, such as how much your core (versus
total) business is growing, and how you compare to the
competition in five key areas: costs, product positioning,
technology, leadership, and collaboration with regulatory
agencies.

III. Must-Have Strategies for Thriving in a Slow


Economy

Mark de Gorter
President, Power Plate North America

Before you take any steps, you need to honestly


benchmark your organization on two key attributes, its
financial and competitive strengths. Then, tailor your
approach. Strong companies should be aiming to
introduce new products; weak companies should be
cutting costs and all companies should be focusing
on their core competencies.

A. Kevin Francis
Chief Executive Officer, CenterBeam

IV. The Golden Rules for Motivating Employees


During Tough Economic Times
An engaged workforce is always valuable, but in a bad
economy its especially important. Let your employees
speak up about where you can save money and share
any non-confidential news you can that will provide
reassurance and quell the rumor mill. Finally, if layoffs
are necessary, treat the affected people with honesty
and dignity.

V. Essential Take-Aways

Companies looking to cut costs should first identify waste


by tracking accountability, consulting with customers and
employees, and monitoring vendor performance. Then,
they should cut back on non-core areas and/or combine
product categories. To maintain brand viability in the
market, one area that the axe should spare is marketing.

Contents
About the Authors. . . . . . . . . . . . . . . . . . . . . . p.2
Mark de Gorter. . . . . . . . . . . . . . . . . . . . . . . . . p.3
A. Kevin Francis. . . . . . . . . . . . . . . . . . . . . . . . p.7
Jorgen Nilsson . . . . . . . . . . . . . . . . . . . . . . . . . p.9
Ideas to Build Upon & Action Points. . . p.12

Jorgen Nilsson
Chief Executive Officer, Acision

or nearly any organization, trimming costs can be a tricky


proposition. For one thing, whats a cost versus an investment? The line isnt as clear as you might think, especially
for companies that are trying to grow or innovate new offerings.
On the other hand, there are times when its imperative to trim the
fat from budgets. This ExecBlueprint describes approaches companies should take to ensure good fiscal health in todays recovering
economy. First, the authors recommend, you need to assess your
companys financial and competitive strengths. During these tight
times, strong companies should actually try to acquire weak companies or enter new markets, while weak companies will need to
consider shedding non-core initiatives or consolidating divisions.
Employees can offer unique perspectives on where youre wasting
resources. Some areas, like marketing, should be spared to differentiate your company from those which are cutting deeper. And, dont
cut the company holiday party either, because the value of bringing
people together to celebrate can be priceless. n

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a Referenceware collection from Books24x7, provides concise, easy to absorb, practical information to help organizations address pressing strategic issues. For more information about ExecBlueprints, please visit www.execblueprints.com.

About the Authors


Mark de Gorter

President, Power Plate North America

ark de Gorter is best known


for his creative, results-driven
approach to leading organizations in both top- and bottom-line performance. His career spans nearly three
decades in the sports, fitness, and leisure
industries, and is characterized by a
broad business background and success
in senior management, marketing, sales,
and business development roles.
Mr. de Gorter is currently president
of Power Plate North America, the
industry leader in health and wellness

products featuring Whole Body Vibration


technology. At Power Plate, his responsibilities include running the companys
business operations in the U.S., Canada,
and Latin America. Concurrently, he
serves as chief marketing officer for
the global organization.
In addition to Power Plate, he has
held positions in the advertising, product
marketing and services marketing areas
at J.Walter Thompson Worldwide, Bally
Total Fitness, L.A. Gear, NTN/Buzztime,
and Velocity Sports Performance. In

addition, he was president/chief operating officer for a division of a publicly


traded company, where he led its repositioning (through change management
and growth initiatives) to improve business performance, ultimately raising
market capitalization from $18 million
to $83 million during his tenure.

Read Marks insights on Page 3

A. Kevin Francis

A.

Chief Executive Officer, CenterBeam

Kevin Francis, LL.D., joined


CenterBeam as president and
chief executive officer in 2002.
Since then, he has significantly improved
operations and sales. Dr. Francis implemented a total quality process throughout the company that has resulted in
increasing customer satisfaction to 99
percent. He scaled CenterBeams operations, opening a technology operations
center in New Brunswick, Canada, to
serve CenterBeams quickly growing roster of customers. He also re-invented the
industry-standard terms of the multi-year
outsourcing contract to one simple,
month-to-month agreement: Total
Satisfaction Guarantee.

Prior to CenterBeam, Dr. Francis was


president, chief executive officer and
director of Accelio Corporation, a leading global provider of Web-enabled business process solutions. Under his
leadership, Accelio earned fiscal 2001
revenues of more than $100 million
(Canadian), created a distribution network spanning the world, and reached
8.5 million users. The company was successfully acquired by Adobe Systems in
2002.
Before joining Accelio, Francis held a
variety of positions with Xerox including
chairman, president, and CEO of Xerox
Canada, a $1.6 billion (Canadian)
organization.

Dr. Francis also serves as chairman of


the Advisory Board of Cape Breton
Universitys Centre for Sustainability in
Energy and the Environment, and as a
member of the CEO Council for the
Entrepreneurs Foundation.
In 2005 he was named New
Brunswicks Industry Leader of the Year
at Canadas Knowledge Industry
Recognition and Achievement (KIRA)
gala. Recently, he was named the Best
Turnaround Executive at the 2006
International Stevie Business Awards.

Read Kevins insights on Page 7

Jorgen Nilsson

Chief Executive Officer, Acision

s chief executive at Acision, the


global leader in mobile messaging, Jorgen Nilsson is responsible
for the day-to-day leadership and management of the company, driving innovation and profitable growth while
capitalizing on market opportunities in
mobile, enterprise, and social/digital
media messaging.
As a telecom and IT industry veteran,
Mr. Nilsson has more than 30 years
experience in senior executive roles at
leading blue-chip companies including
Ericsson and Compaq.
Prior to joining Acision as COO, he
worked for over 10 years at Ericsson

Books24x7, 2012

where his most recent position was


executive vice president and general
manager of Vodafones Global Customer
Unit. In this role, Mr. Nilsson was
responsible for the management of
Vodafone Groups 21 operators, as well
as driving economies of scale across
Ericssons global sales, marketing, technology, and operational teams. He was
also part of Ericsson Groups Extended
Executive Team. Other roles at Ericsson
included head of sales and marketing for
North America, where he initiated all
product introductions to telecom operators in the region.

Before Ericsson, Mr. Nilsson spent


over 10 years at Compaq, where he held
various global sales, marketing, and
operational roles, capturing valuable
insights into business models of local and
global enterprises and managing successful partner and channel programs. In
addition to this, he held several managerial roles at Telia, part of the TeliaSonera
Group and a leading telecommunications
provider in Sweden.

Read Jorgens insights on Page 9

About the Authors ExecBlueprints 2

Mark de Gorter
President, Power Plate North America

Succeeding and Growing


Despite Tough Times
The health club industry has weathered the recent economic storm
better than many other industries.
In fact, this is the third economic
recession in the past two decades
during which our industry has
escaped major hardship and proven
that fitness is a successful and
enduring business endeavor. Today,
industry players are well positioned
to help improve the health and
well-being of individuals, families,
and communities around the world.
According to the IHRSA Stature
of the Fitness Industry global report
for 2011, industry revenues reached
$71 billion in 2010, up$4 billion
from 2009. Memberships soared to
an estimated 128 million members,
and the overall number of clubs
grew by over 5,000 units to
133,500 in 2010.
In the U.S., health club membership reached 50.2 million in 2010
the last full year it has been measured which represented an
impressive 10.8 percent increase
over 2009! While one year does not
constitute a trend, it is certainly a
positive sign that 2010 saw real
membership growth in America
after four years of stagnancy. Clubs
are continuing to fight to get back
to where they were before the
Great Recession, which, by most
accounts, ended in mid-2009. Our
greatest challenge continues to be

managing through the recession


and finding new ways to generate
profits that will reach pre-recession
levels. One silver lining from the
recession has been that many club
operators have been able to take
advantage of the softer real estate
market to expand or lock in favorable long-term leases. Modest
revenue growth, coupled with a
continued strong emphasis on
expense management, has improved
club profitability.

Treating Costs as
Investments and Focusing
on the Defendable Core
As a company, we do not look at
expenses as costs; we consider
them investments in the growth of
our business. We are an organization with a strong growth trajectory, so cutting investment has not
been our primary focus; rather,
optimizing our available resources
as investments has taken the forefront in our planning.
However, the biggest challenge
most leaders face when their organization is growing is when and
how to say no to the myriad of
initiatives available. At Power
Plate, we found ourselves in precisely that position at the time I
assumed the role of president in
late 2009. Because we have a product with a wide range of benefits
fitness, health, rehabilitation,

Mark de Gorter
President
Power Plate North America

If the vitality and passion on display


at the industrys recent premier annual
gathering is any indication of the state
of the global health club industry
and we believe it is we can expect
continued growth and positive financial
results in the coming year.
Responsibilities include running
business operations and serving as
CMO for the global organization
Previously held numerous marketing
roles at J. Walter Thompson
Worldwide, Bally Total Fitness, L.A.
Gear, etc.
B.S., Business Administration
(Marketing concentration), California
State University, Northridge
Post-graduate work, Institute of
Advanced Advertising Studies
at USC through the American
Association of Advertising Agencies
Mr. de Gorter can be e-mailed at
mark.degorter@execblueprints.com

Benchmarking your organization on just two key attributes financial


and competitive strengths can help chart a roadmap to identify if your
company is poised for growth, or in need of reducing investments in the
form of operating expenses.
Mark de Gorter
President
Power Plate North America
Books24x7, 2012

Mark de Gorter ExecBlueprints 3

Mark de Gorter

(continued)

President, Power Plate North America

and sports, just to name a few


our available market segments are
broad. In addition, covering the
North American market from a
geographic standpoint can also be
daunting. Prior to my joining, the
company attempted to cover a
broad range of market segments
while at the same time serving the
entire North American market.
They simply could not successfully
manage it all.
So my approach was to diagnose the situation, and work to
match the strategy to the situation to optimize our investment of
precious resources both from a
human and financial capital standpoint. We elected to cut back to
our defendable core those
segments that represented our best
business opportunities based on
consumer, distribution partners,
and established business. This
allowed us to channel all of our
sales, marketing, and training
horsepower into an acute business
area of focus, which not only optimized our investment, but also
eventually
maximized
our
resources.
Once we established a strong
foothold in this defendable core,
we were able to grow in concentric
circles outward to adjacent vertical
markets in an effective and calculated manner. This is the position
we find ourselves in today a
strong core business that grew 56
percent over last year, with solid
inroads into new markets that
provide significant growth opportunities going forward.

Assessing and Addressing


Company Fitness Level
The recent Great Recession,
characterized by massive layoffs,
Books24x7, 2012

Best Practices for Prioritizing Investments


During Challenging Times
Evaluate company on basis of two key attributes
Financial strength: Is it able to function without immediate and external
financial support?
Competitive strength: How does it compare to competitors in:
1. Costs?
2. Product/brand positioning?
3. Technology/capabilities?
4. Leadership/management?
5. Ability to influence/collaborate with regulatory authorities?
Assign corporate fitness level
World Class Characterized by both financial and competitive strength
Physically Fit Companies that are financially strong but competitively weak
Out of Shape Companies with a strong competitive position but
weak finances
Morbidly Deconditioned Those that are weak both financially and
competitively
Choose the appropriate action
World class or physically fit companies should choose from the following
initiatives:
Pursue acquisitions
Introduce new products
Enter new markets
Build talent pool
Out of shape or morbidly deconditioned:
Consider hunker down approach, but try not to cut in the following
areas:
1. Marketing budget
2. Employee engagement initiatives, including communication and
company events
declining revenue, and obliterated
enterprise values, had many companies pulling back to weather the
storm. That may have been the

right move for some, and the absolute wrong move for others,
and that still holds true today. It
simply depends on your companys
Mark de Gorter ExecBlueprints 4

Mark de Gorter

(continued)

President, Power Plate North America

level of Corporate Conditional


Fitness.
There are many perspectives one
can use to dimensionalize their
company during these challenging
times as a means of determining if,
when, and where to reduce
expenses, with the most common
being revenue, profit, growth rate,
headcount, and cash. However,
benchmarking your organization
on just two key attributes financial and competitive strengths can
help chart a roadmap to identify if
your company is poised for growth,
or needs to reduce investments in
the form of operating expenses.
In a recent study conducted by
Booz & Company, respondents
were asked to assess their financial
and competitive strengths specifically, if they were able to carry
on without immediate and external
financial support and whether they
were better or worse than their key
competitors on five dimensions
(costs, product/brand positioning,
technology/capabilities, leadership/
management, and the ability to
influence/collaborate with regulatory authorities).
Based on the answers, there are
four states of a companys health.
As someone in the fitness industry,
I will call them Corporate Conditional Fitness and I will apply
fitness metaphors to each:

World Class Characterized


by both financial and competitive
strength
Physically Fit Those that
are financially strong but competitively weak
Out of Shape Companies
with a strong competitive position
but weak finances
Morbidly Deconditioned
Those that are weak both financially
and competitively.
Putting all other variables aside,
and evaluating companies across
just these four scenarios provides
clear strategic courses of action,
depending on the level of fitness.
While this is what companies
should be doing, this is not always
what they in fact are doing. For
example, conventional wisdom
would suggest that companies that
are out of shape or morbidly
deconditioned, i.e., financially
challenged, would be taking steps
to improve near-term cash and preserving working capital by either
cutting costs, disposing of assets, or
seeking outside funding. Surprisingly, according to the Booz &
Company study, only 25 to 43 percent of companies in the bottom
two segments are taking steps in
these areas, and in some cases, no
more aggressively than before the
crisis hit almost five years ago.

The same disconnect seems to be


taking place relative to growth for
the more fit companies, i.e., those
identified as world class and
physically fit based on the
financial/competitive strength criteria. For example, one would
think that for the physically fit
group (those with cash but a weak
competitive position), strong efforts
to shore up their competitive
strengths by acquiring financially
weak companies in their space with
a strong competitive position
would be the order of the day, especially in what is generally regarded
as a buyers market relative to
M&As. Unfortunately, the study
showed just the opposite. According to the study, only 21 percent of
both the world class and physically fit organizations are
pursuing an M&A strategy relative
to growth.
That is not, by the way, the route
being taken by what are widely
considered the most admired
companies.
So how should companies be
viewing opportunities as they
approach restructuring their strategies during a downturn when it may
become necessary to address a cutback in investment of resources?
First, get an accurate read on the
environment and your organizations
position within it. Dimensionalizing

As Fortune magazine reported, the most admired companies are consistently


more likely to be expanding their investments in resources than are their
less admired peers. This fact is supported by global brands like Coca-Cola,
whose CEO stated for the report, We continue to make sure that our
brands stay healthy so that we exit the tunnel with more market share than
when we went in.
Mark de Gorter
President
Power Plate North America
Books24x7, 2012

Mark de Gorter ExecBlueprints 5

Mark de Gorter

(continued)

President, Power Plate North America

your company and the competition


on the two attributes mentioned here
is a starting point. Next, choose the
appropriate actions. If you are in
the world class or physically fit
strata, pursuing acquisitions, introducing new products, entering new
markets, or building your talent pool
should top the list. The key is identifying a limited collection of
initiatives that can be executed within
the context of both internal and
external circumstances, with the
potential to make gains immediately.
If your company is in the bottom
two tiers out of shape or
morbidly deconditioned the
hunkering down approach might
be best, which could include
a reduction in your resource
investments.

Trimming Expenses
If trimming your investments in
expenses becomes necessary, the
first place I look is for areas that
can be combined so that entire
initiatives are not necessarily abandoned. This could mean combining
product categories or business units
under a single leadership team,
which allows you to streamline all
the functions underneath without
necessarily interrupting the flow of
business.
Recently,
Hewlett
Packards new CEO, Meg Whitman,
did just that when she announced
that the PC unit would be combined with the printer business

Books24x7, 2012

under one senior leader. This


allowed HP to reduce expenses
without throwing the baby out
with the bathwater, and may perhaps even uncover synergies as
single teams work to leverage what
were previously different business
units.
If that cannot be done, the next
step is to cut back to the defendable core as described earlier, so
that all the companys efforts and
energies can be focused on the most
important areas of the business.

Key Caveats to Reducing


Investments During Tough
Times
However, there are two caveats to
reducing your investments during
tough times. First, over the course
of recessions during the last 30
years, it has been shown that deep
slashes in marketing expenditures
should be avoided if at all possible,
even with struggling companies.
Your customers need to know you
are still a viable brand, and
you dont want to fall prey to the
out of sight, out of mind scenario. Another reason to keep your
foot on the marketing pedal is that
with your less enlightened competitor whacking his or her marketing spend, the airwaves become less
cluttered, and your company message gains a greater share of voice.
A greater share of voice means you
stand out even if your spending

does not increase. A crisis does not


have to mean paralysis. In fact,
there are no greater opportunities
to be seen, to be heard, and to
grow.
Next is the importance of
employee morale. Even when
reducing your investments, it is
critical that your employees remain
engaged and fully apprised of both
the current situation and your
plans as the leader to guide the
organization through. Constant
communication to the team to
the extent that you can communicate non-confidential issues is
vitally important to give them the
sense of understanding when they
come to work every day. In the
absence of good, regular communication, people tend to fill in the
blanks, and rarely do they see
things in a positive light. This can
be poison to the organization and
the leaders attempts to move the
company into a successful position.
Keep communicating, with honesty.
Finally, at all costs, do not cancel
the company holiday party. Do not
fall prey to underestimating the
importance of a platform to pull
people together to celebrate camaraderie even if the current
situation is not ideal, you will need
them at your side as you pull
through. n

Mark de Gorter ExecBlueprints 6

A. Kevin Francis
Chief Executive Officer, CenterBeam

Cost Cutting
Every company drives its business
plans from a series of assumptions.
When those assumptions fail, it
often leads to the need to reduce
costs. There can be failures in
growth assumptions, competitive
landscape assumptions, investment
assumptions, and the economy
to name but a few. It is usually the
failure of those assumptions that
ultimately creates a financial exposure for the organization that
requires the organization to seriously examine whether it is going
to be forced to reduce its costs
across a variety of areas.
We hedge our cost infrastructure
by building a culture of continuous
improvement within our organization. There is a methodology that
was used successfully years ago by
Digital Corporation in Boston
called A--T. It allows you to measure any of your processes in
financial terms, whether it is your
billing process, marketing process,
manufacturing process, collection
process, etc. The method measures
the steps in a process, the elapsed
time of the process, and the labor
involved in the process. This then
lets you calculate the actual cost of
the process. This is the A step.

If you can empower


your frontline
employees they will
tell you where the
cost improvement
opportunities are
within your company.
A. Kevin Francis,
Chief Executive Officer
CenterBeam

You then compare this to a best


practice in the industry or a best
theoretical cost you could stretch
for. This is the T.
You then subtract the two to
create the .
This amount really represents
the cost overruns of your current
way of doing things and you and
your team can target improvement
opportunity goals from that point.
In fact, one could easily ask, What
is your A--T?
This methodology is something
that I think has to be driven within
any organization. Any organization
can locate improvement opportunities on an everyday basis and my
experience has been that you can
unleash your peoples ability to
identify them on a continuous
basis.

Lessons Learned
One of the lessons that I learned over my 40 years in business is to avoid excessive layoffs within the organization. In other words, I try to avoid having layers of
infrastructure costs. I have also learned the importance of building a culture that
empowers employees to pull the fire alarm when they see inappropriate costs. I
want the frontline employees to have a voice and to speak up at any time to any
member of the senior management team, including myself as CEO. I think it has
made a huge difference.
I have also learned the importance of celebrating cost cutting as a way of life
and as a routine way of ensuring the daily continuous improvement of our organization. By doing this the organization can remain nimble, flexible, and scalable.
Books24x7, 2012

A. Kevin Francis
Chief Executive Officer
CenterBeam

It is crucial to drive an environment


where people feel that continuous
improvement is an everyday way of
living within the organization.
Led company since 2002
Previously president, CEO, and
director, Accelio Corporation
(acquired by Adobe Systems in
2002)
Former chairman, president, and
CEO of Xerox Canada
B.Sc., St. Francis Xavier University;
B.Ed, St. Marys University
Honorary Doctorate (D. Comm),
Commerce, St. Marys University
Honorary Doctorate of Laws (LL.D.),
St. Francis Xavier University
Mr. Francis can be e-mailed at
kevin.francis@execblueprints.com

Driving a Values-Based
Culture
You must be able to drive a valuesbased culture that says it is safe to
speak up; it is safe to identify where
there are opportunities for improvement and to suggest areas where
there is a bloated infrastructure. It
should be safe to identify that the
planning assumptions are seriously
at risk.

A. Kevin Francis ExecBlueprints 7

A. Kevin Francis

(continued)

Chief Executive Officer, CenterBeam

Using A- -T to Build a Culture


of Continuous Improvement
Measures processes in financial terms:
Billing

A = Actual Cost in terms of:


Steps
Elapsed time
Labor

Marketing
Manufacturing

T = Theoretical Cost in terms of:


Industry best practice

Collections
Etc.

One way to structure this is to


rethink the traditional organizational pyramid. I like the view of
the upside-down pyramid management structure where my role as the
CEO puts me on the bottom. The
people that are the most important
are at the top: customers and then
the frontline employees. If you can
empower your frontline employees
they will tell you where the cost
improvement opportunities are
within your company.

Rewarding Employees
We use what we call the Presidents
Circle to recognize the top 10 percent of the organization on a semiannual and annual basis. They are
employees who have distinguished
themselves by making a significant
difference in either improving the
process or driving significant cost
Books24x7, 2012

AT=

= Cost overruns on which to target


improvement opportunity goals

improvements within the organization. We also recognize employees


who have distinguished themselves
from a customer-satisfaction
perspective.
We also have Make the Difference awards that instantly provide
recognition of an individual for a
job well done.
So suddenly you begin to harmonize four things: the continuous
improvement of your costs, the
evaluation of your assumptions,
the ability to manage change in a
dynamic way, and the recognition
that reinforces the importance of
being able to drive that continuous
improvement.

Managing Layoffs

encountered this situation in all


three organizations that I have led,
and I have learned that there are
four things you must do. First, you
must be incredibly honest; second,
you must remain incredibly fair;
third, you must act with dignity;
and fourth, you must act quickly.
I would say, after being in business for 40 years, my conclusion is
to cut once, cut deep, and cut fast.
Those individuals that are losing
their jobs must be treated with dignity and fairness, and those
employees that remain must also be
nurtured because it is difficult to
watch co-workers pack up their
desks and leave. It is a traumatic
event when it happens. The CEOs
role is to mitigate the downside for
people. n

If your assumptions prove to be


wrong and you must reduce costs,
layoffs may be inevitable. I have
A. Kevin Francis ExecBlueprints 8

Jorgen Nilsson
Chief Executive Officer, Acision

We always try to first define what constitutes a


role model leader or manager for a particular
department and then change the team and reduce
layers based on those that fit the role.
Jorgen Nilsson
Chief Executive Officer
Acision

Relative Health of the


Messaging Portion of the
Telecom Industry in Todays
Economy
We think that the market size for
messaging is based on any mobile
operators capability to help customers (consumers and enterprises)
realize the true potential of the
messaging service through better
definition and perceived value.
What I mean is that most of what
we are doing is actually creating
additional revenue-generating services for operators because we
enable them to offer stronger value
propositions to their different customer segments. We work best
helping a companys (Enterprise/
Brand) marketing agency develop
and execute a strategy for mobile
engagement that achieves the objective of increasing awareness and
follows commercial value.
However, I think everyone is
impacted by the current market
conditions and economic climate.
The priority for vendors like us is

to make sure our business engagements do not become too complex.


We used to actually re-sell many
partner products alongside our
own but, owing to market conditions, we began selling less so that
we could focus on our companys
products.
I think the market will improve
and we need to prepare for additional opportunities to provide
more services, meaning that we
need to do more on the mobile messaging side, such as mobile
advertising, mobile social networking, and simple services for the
mobile device. This trend will actually give us an opportunity to
evolve text messaging from just a
pure social network into a service
featuring added services.
As families gain more engagement with brands and enterprises
they will rely more on mobile
capabilities to engage and interact.
Today most advertising is still
actually on the TV, in magazines,
and newspapers. Soon, I think you

Innovative Growth Areas for the Messaging Industry


Customers are already taking advantage of mobile banking, but they will be able
to do more and more. A user can be notified if there is fraudulent activity on their
bank account or receive a notification if there is suspicious activity in their house
when theyre away. We recently saw a messaging tool that messaged farmers if
sheep were being intimidated by predators based on the reaction of the sheep.
There will be more apps for functions, such reminding people of appointments,
paying for parking, or receiving warnings that a parking meter is running out and
a new ticket is required.
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Jorgen Nilsson
Chief Executive Officer
Acision

In our industry, we have to take


ownership and help our mobile
operators (who are our direct
customers) drive propositions that
provide value to their consumers,
and demonstrate the revenue that
can be made and the ways they can
accomplish this.
Responsible for day-to-day
leadership and capitalizing on market
opportunities
30-plus years of experience in
senior executive roles at blue-chip
companies
Previously executive VP and
general manager, Vodafones Global
Customer Unit
Managed successful partner and
channel programs at Compaq
Mr. Nilsson can be e-mailed at
jorgen.nilsson@execblueprints.com

will probably see that the big


brands will try to create their own
social networking tools so that
they can be more relevant and
capitalize on this trend. I think
that they will try to tell more stories about why they are doing a
promotion or sponsorship as well
as what they stand for and what
they want to achieve. Based on this
information, they will endeavor to
Jorgen Nilsson ExecBlueprints 9

Jorgen Nilsson

(continued)

Chief Executive Officer, Acision

Key Steps in Streamlining Operations


1. Look at what to stop doing; focus on key elements of the business.
2. Examine weak entities and facilities and determine how they can be improved.
3. Benchmark the business against competitors.
4. Ask customers for feedback on what can be done more effectively.
5. Examine current outsourcing practices and determine whether they can be streamlined.
6. Identify key producers, evaluate all roles, and reduce management layers.
create social communities via
messaging as another way to communicate with customers. The
future possibilities that can generate a lot of excitement are endless.

Streamlining Operations
and Reducing Costs
First, we have definitely had to
look at what we should stop doing.
We decided to go back to being a
messaging company, which meant
we stopped some of our lines of
business that were no longer relevant. We also examined our weak
entities and facilities throughout
the world and looked at how to
improve these. Finally, we benchmarked our business with
competitors.
Based on experience, a global
organizations tendency is to always
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ask for more resources or money to


achieve a goal, compared to what
a product-development organization would normally require. R&D
organizations generally understand
what they want to output, and how
much the input is going to cost to
achieve that. However, in a global
organization such as ours that also
has a service organization, you tend
to have many management layers
where you may encounter low
accountability. (Sometimes you
actually get more accountability in
a service organization with fewer
managers.) Another important factor is to make sure that we
benchmark ourselves against other
service companies and also ask customers for feedback on what they
feel we can do more effectively.
We always try to first define
what constitutes a role model

leader or manager for a particular


department and then change the
team and reduce layers based on
who fits the role. In the process, we
question everyones role and what
we need each individual to deliver
and achieve. It is actually interesting how much you can achieve. We
also track accountability from end
to end, i.e., our operations out
to the customers and customer
relations.

Impact of Cost-Cutting
Practices on Outsourcing
Decisions
In assessing the impact of our costcutting measures, we also examined our current outsourcing
practices and learned that our outsourcing partner for global service
deployment underestimated our
Jorgen Nilsson ExecBlueprints 10

Jorgen Nilsson

(continued)

Chief Executive Officer, Acision

requirements. Our operating model


was misinterpreted in some parts
of the world, as was our time-tomarket approach that we require
to support our business globally.
Because we lacked the requisite
flexibility to simplify and drive our
business forward, we agreed to
build a new deployment model and
gain back control.
Of course, the lessons learned
from this ensured that our new
global deployment model was supported by requisite competencies
across different parts of the world.
From this success, our staff gained
an understanding of how our own
in-house operating models should

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emulate those of our vendors.


Along the way, key lessons were
learned on how to reduce costs and
improve customer satisfaction. In
the context of our in-house IS/IT
needs we are moving forward with
cloud offerings from vendors that
make business sense, as always.

Motivating Employees to
Work Efficiently and Reduce
Costs
Our most important initiative was
to develop a program that highlighted the key value for our company in line with the direction we
were taking it. We then asked

which people would be key to


motivate the wider team in difficult
times and execute efficiency plans.
It is then essential to communicate clearly and openly to staff the
fundamentals of what needs to be
achieved so that they totally understand the reasons behind change.
In any communication process, we
try to articulate what success will
look like after we are done. Our
key objective is to treat people with
respect and be open minded.
Always articulate to your people
whats in it for them and why
as you move forward. n

Jorgen Nilsson ExecBlueprints 11

Ideas to Build Upon & Action Points


I. Business Concerns in Todays
Economy

III. Must-Have Strategies for


Thriving in a Slow Economy

For many industries, the recent Great


Recession was characterized by declining
revenues and reduced enterprise values,
which required sometimes drastic costcutting measures to weather the storm.
Now, during this slow recovery, many
companies are finding they still must
proceed cautiously in order to restore fiscal
health. Dilemmas CEOs are currently
facing include:

Although it may sound counter-intuitive,


sometimes companies need to invest more,
not less, in their future growth even
when business conditions are less than
ideal. Or, they may need to take more
proactive steps to get back on their feet,
rather than passively letting opportunities
pass them by because they are feeling too
weak to pounce. The point is that, in all
environments, business practices and goals
need to fit a companys financial and
competitive strengths. If considered in that
context, various approaches that have
proven effective during lean times are:

How can profits be restored to prerecession levels?


How can growth be reasonably
managed, i.e., how can company
leaders determine which initiatives
should be prioritized, versus
which should be passed over?

All companies:

Engaging in continuous, honest


communication about the state of the
company and current goals
especially when people may feel
anxious
Recognizing the top 10 percent who
have made a palpable difference on a
regular (e.g., semi-annual) basis
Hosting company social events (e.g.,
the holiday party) that provide
opportunities to celebrate camaraderie
Conducting any necessary layoffs
quickly, and treating the affected
employees (including the
retained employees) with honesty,
fairness, and dignity

Focusing resources on the companys


defendable core, i.e., its best
business opportunities or core
competency areas

Nurturing a values-based culture


where people feel empowered to
suggest areas for improvement

How can company staff be motivated


to support a culture of continuous
improvement, especially if layoffs or
cutbacks have recently occurred?

Taking advantage of softer real estate


markets to lock in favorable longterm leases

V. Essential Take-Aways

How can the company remain


innovative in its response to market
and technological developments?

Introducing new products that meet


ever-evolving market trends

How can costs be kept under control?

Stronger companies:

Entering new markets

II. The Bottom Line


Of course, your companys continued
existence and (at least modest)
profitability is one big indicator that
your leadership is proving somewhat
effective in this post-recession environment.
More refined measures for assessing
progress recommended by the authors
include:
Growth in numbers of new customers
Growth in core versus ancillary
areas of the business
Progress, relative to the competition,
in the following areas:
Costs
Product/brand positioning
Technology/capabilities
Leadership/management
Ability to influence/collaborate with
regulatory authorities
Employee productivity and
engagement levels

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Building the talent pool


Acquiring financially weak companies
that have a strong competitive
position in a related market
Weaker companies:
Cutting costs

In many companies, cost cutting is part of a


culture of continuous improvement, and they
frequently employ models such as A--T to
measure processes in financial terms and
identify areas where cost overruns are
occurring. Still others focus more on
optimizing available resources so that costs
dont grow. Six effective strategies for
trimming costs identified by the authors are:
Combine related product categories or
business units under a single leadership
team to streamline functions instead of
abandoning initiatives.
Cut back to the defendable core,
i.e., the most important, still-relevant
areas of the business.

Disposing of assets
Seeking outside funding

IV. The Golden Rules for


Motivating Employees During
Tough Economic Times
When it comes to identifying areas where
you can save money, your companys
employees hold a treasure trove of valuable
information. Moreover, an engaged
workforce that feels valued is a more
productive workforce. Even when times are
tight, you can maintain and even
improve morale by:

Seek feedback from customers and


employees on areas that can be
handled more efficiently.
Track accountability from end to end,
i.e., from operations through
customer relations, and be prepared
to eliminate the bloat that can
occur from too many layers.
Continue to monitor the costs of your
outsourced services against those you
would incur if you performed them
in-house, and adjust as needed.
Maintain your brands visibility and
stature in the marketplace by avoiding
the temptation to cut marketing
budgets. n

Ideas to Build Upon & Action Points ExecBlueprints 12

Ideas to Build Upon & Action Points

(continued)

?
10 Key Questions and Discussion Points
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How healthy is your industry at present, particularly in the context of a challenging


economy? How are market conditions currently affecting your company?

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In the past two years, how has your company streamlined operations and reduced
costs? Why did you focus on these areas in particular? How has the company
benefited?

10

What benchmarks do you use to monitor your companys financial health in a tough
market? What is measured? How often?

When seeking to cut company costs, what areas or departments are you most likely to
consider first? Where can you most often potentially save?
What are your best practices for trimming costs without weakening operations? In what
ways are they similar to your industrys best practices? In what ways are they different?
How do you motivate employees to work as efficiently as possible and reduce overall
costs? How do you maintain morale when employees are asked to do more with less?
In the next 12 months, how do you plan to trim costs in order to maximize success in a
challenging economy? What do you hope to accomplish? How did you identify these
areas?
What are the top three indicators that it is time to significantly re-evaluate budgets and
expenditures to preserve the financial health of the organization? Why are these
important warning signs?
If downsizing is required to reduce costs, how do you handle layoffs? What are your
criteria for determining which staff members will be laid off?
In the next 12 months, what are the greatest budgetary or operating challenges you
expect to face? How do you plan to address them? How do these challenges compare
to previous years?

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Ideas to Build Upon & Action Points ExecBlueprints 13