Volume 3, Issue 6 June 14, 2001

article-one:
Fighting Business Bulimia

"The decline is in paper values, not in tangible goods and services...America is now in the eighth year of prosperity as commercially defined. The former great periods of prosperity in America averaged eleven years. On this basis, we now have three more years to go before the tailspin."

-- Stuart Chase (American economist and author),
New York Herald Tribune, November 1, 1929.

Today's business climate is unfortunately causing many of us to focus on costs rather than on making money. Forget the fact that much of this has been caused by poor planning and foolish reactions to trendy business strategies - layoffs and budget cuts are here, and must be dealt with. What is most disheartening is that many companies are simply replacing bad decision-making and narrow-mindedness with more of the same.

Don't get me wrong, many are also wisely making investments for their future, pumping up R&D to catch the next set of S-curves, and upgrading their infrastructure to remain operationally relevant. On the flip side, however, layoff fever, at times, seems more a factor of peer pressure than shareholder angst. If your competitor threw half their engineers off a bridge, would you?

I have $20 in my pocket for the person who can produce a news clipping of a large company boldly refusing to cut staffing levels, reasoning that the value they have invested within people has not been given sufficient time to generate a return. Maybe this seems overly sensitive, but I was around in the early 90s, which was a much worse period than today, except back then we seemed to have more patience.

Back on subject, faced with unbendable corporate mandate, what can you do to be smart about managing your budget? Rather than simply slashing big ticket items, here are some things to consider when searching for treasure and keep you from unearthing fool's gold:

Watch the Clock

Time is money. Be sure to understand how any cuts or savings strategies will affect cycle-time. In the June issue of Product Development Best Practices Report, Don Reinertsen explains how outsourcing development only during times of great need (known as "peak shaving") can cost much more in the long run than engaging this partner on a more continuous basis. This is an example of how a discrete savings can look good on paper, but can be damaging in reality.

Seek out "Hidden Costs" and "Decision Byproducts"

Know Your Waste

Be Lean, Not Mean

Don't Overdo It

Today it seems like many companies have taken the abundance of positive energy from the previous surging economy (in the form of spending and hiring booms), and simply converted it into negative energy (in the form of layoffs and budget cuts). Avoid the "group think" that is currently going down "on the street," keep your wits about you, and just be plain sensible.

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article-two:
Walk, Talk, Repeat

Link: http://gbr.pepperdine.edu/011/recursive.html

From Pepperdine University's "Graziadio Business Report" comes an interesting article written by Professor Bruce Hanson entitled "Repetition Leads to Innovation." This article first defines the differences between "discursive" and "recursive" conversation and how the latter plays a subtle, yet influential role in a company's ability to self-regulate internal knowledge management.

Much is made today about the capture and reuse of a company's "knowledge assets," the amorphous substance with which all value is created. But, as this article points out, some things are best done when not attempted on purpose. Professor Hanson does an excellent job, in a meta-method, of describing through anecdotes the value of the prevalence of war stories in Procter & Gamble's post-project review meetings and how they informally keep company experience alive in decision making.

This reminded me of how many tribal cultures maintain oral traditions of story telling or chanting or song to pass history and knowledge on to new generations. It seems logical, from a sociological perspective, to believe that what Hanson calls "recursive" conversation could be a modern corporate equivalent to such primitive record-keeping. A worthwhile read.