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If your costs are likely to increase by 20% or more over the next three years, have a multi-pronged approach and take bold actions. Stress test a simplified P&L and balancesheet for your company under different volume changes (include interest, taxes and capex—not just EBITDA). to make more costs variable).
Manage your business “on the basis of cash, not on the basis of accounting,” Charan said, reminding his audience that Jeff Bezos built Amazon into a multi-billion-dollar company partly by putting cash on the throne of his operating philosophy. We’re not going to final costs — just gross margin, and gross margin that is inflation-adjusted.
If you basically say, we’re going to set out and commit ourselves to achieving this march for 25 consecutive years, you manage yourself differently than if it’s just reacting to the environment. They always assume everything will go bad and manage accordingly. What’s going to happen with the geopolitical situation?”
The success of an activist strategy is contingent upon placing a management team in an extremely reactive, frenzied and compromising position. Because by the time the activist has engaged senior management, they have already performed extensive due diligence on the company and have a detailed strategy they intend to pursue.
In a rapidly changing industry ecosystem, heavy investments in hard infrastructure can burden balancesheets and limit flexibility. The vendors for telecom network management were paid only for the capacity utilized by Bharti Airtel, not for the equipment. Bharti is the largest telecommunications services provider in India.
Nikon, the legendary Japanese camera maker, provides a textbook study in how smart managers can work with strategic investors to transform a struggling business. It also called for streamlining headquarters and cutting executive management’s compensation. Heini Wehrle/BIA/Minden Pictures/Getty Images.
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