How enterprises can best deal with inflationary disruption
In this final piece in the Ripple series, EkaLore provides a few action items for enterprises and other organizations to thrive in troubled times.
The tale of TVs are simplified to cartoons of enterprise transitions. Enterprises are reacting to choices presented by macro-economic monetary, fiscal, and global policies. Prior actions for enterprise agility, resilience, and sustainability are now subject to immediate testing. Actions to be done today are to answer:
1) Are enterprise assumptions affected by changes in global supply levels of semiconductor and electronic components in your enterprise product and service productions?
2) What immediate cost controls (labor, services, supplies) must be executed?
3) What investment changes and non-cash spending must change?
To avoid “paralysis by analysis” enterprise must take action by:
A) Gathering highly specific knowledge about business model features and metrics to determine the effects of external changes. Example: avoid the untold chaos of canceling critical electronics components and semiconductor chips in the automotive and aircraft industries.
B) Changing priorities from market and mind share to cashflow and income even in lines of business being transformed already (shift from cable to streaming).
C) Re-judge ongoing investment and exploratory projects where ROI used to be a desirable 8-12% and now needs a higher level of return (15-30%) in shorter time periods (3-4 years from project inception instead of 5-10 years).
D) Look for opportunities to use the misfortune of others to make your fortunes better. (like the need for higher energy imports in the EU)
E) Re-evaluate projects that went from temporary to permanent overhead. (AI and big data projects with increment delivery and continuous deployment with no end to cost levels)
These actions can be done in weeks and subsequent steps taken immediately:
I) Reduce capital and overhead spend in accordance with a shift from share to cash flow and margins (some capital spend will be extended in time and some overhead spend will be terminated quickly)
II) Emplace processes to drive alignment of costs and supply with orders and results as unpredictable changes force new plans (automobile manufacturers have stockpiled critical metals prior to supply shocks)
III) Act now to conserve relationship equity with suppliers and drive good deals (pharma manufacturers supported spend in suppliers to rapidly produce COVID vaccines and treatments)
IV) Spend resources and domain knowledge to gain improvements in stakeholder relationships (like helping channel partners and customer product uptake)
V) Don’t ignore opportunities to pick up customers (share and incremental share) and margin opportunities (like selling content bundling)
VI) Convert customer pain to your gain (supplying deployment or changes via staff while the customer is staff spend limited)
VII) Convert widespread impacts to your gain (for floods donate sandbags and sell pumps and generators)
Enterprises can make significant gains in share and long-term results with actions that help in short and long-term times.
EkaLore advises enterprises and other organizations on how to address strategic and tactical issues.
You can schedule time with us at www.ekalore.com/contact
Read our previous (and next posts) in the Ripple series at www.ekalore.com/ripple-effect
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