[Rebooting Your Business Model]

What You Can Learn From the Downturn to Build a Better Future?

Managers across industries are realizing that cost reduction alone is not enough
to navigate through current economic crisis. To survive and succeed in this
downturn and beyond, the corporate leadership must reexamine their deep-
rooted beliefs and implement long lasting measures that would fundamentally
change the way they operate their businesses. This white paper will discuss
what can be learned from the current crisis to reboot your business model and
build a better future.

Is there is a Need to Reexamine Our Business Models?

A long period of exhilarating growth followed by an unexpected downturn has

caught the CEOs off guard. The way they had to change their strategies from
those of growth and expansion to cost control and efficiency has been a tough
lesson they are still trying hard to comprehend. One way you can survive the
current crisis is to sit tight until the storm passes and wait for the good times to
return.

Another way is to deeply understand the hard lessons learned during the crisis
and apply them in a focused way to initiate structural improvements to the
business model to make it more flexible, reliable and resilient for a better
future. As the effects of the current crisis are likely to last for a long time,
CEOs should focus on long lasting and transformational initiatives rather than
restricting themselves to reactive measures like cost reduction.

Review Your Business Model

Think beyond cost-cutting and initiate a strategic overhaul of your business
model. Here are three strategic areas which give you a perspective to focus in
this exercise.

What Are We Doing? Involve all the key players in the organization to begin
a strategic review of company’s portfolio of products and services. Rationalize
your offerings and analyze the served markets and targeted customers to deeply
understand what it costs to serve them.

How Are We Doing? Redefine your business and organizational models. How
can they be made more flexible and resilient? Focus on the corporate
 managementt models and
m a activities. Review w the top m managemennt’s strategiic
leeadership quality,
q howw it exercisees controls,, manages resource alllocation annd
leeverages the organizattion’s key ccapabilities.. Redefine yyour busineess units annd
thheir accoun
ntability. In the light oof the difficculties faced during thhe downturnn,
exxplore whaat you can do
d to consolidate businness back-ooffice work and develoop
shhared servicces.

How Well Can We Do

H D It? Is thhere a strattegy that foocuses on performancce
assessment and long termt operattional perfoormance immprovementt to identiffy
annd exploit opportunitiies? How to change policies,
p proocesses andd technologgy
foor better? What
W proceesses can bbe automateed and whhat have to be manuall?
H
How can thee procuremment processses be optim
mized? How w can the service levels
annd costs be aligned?

Restru
ucture You
ur Busineess Modell
Here are thrree broad areas
H a wheree all your business acctivities falll into. Theey
foorm the bod
dy of any business
b moodel. By deeply undersstanding their functionns
y can iden
you ntify areas which
w can ffurther be im
mproved.

Corpo
orate Leadeership Businness Units Support Services
S

• Exercises contro ol • Managees products • They focuss on

over all business
activ
vities
• Provides strateggic
leadeership
• Manaages the
comp pany's resouurces
and their
t allocattion
• Desig gns corporaate
policcy to regulatte
businness activitiies
• Buildds key
capab bilities to exxploit
markket opportunnities
and servvices
• Developps manpoweer
and otheer operationnal
capacitiees
• Improvees operation nal
efficienccy
• Focusess on custommer
value crreation
delivering cost-
c
effective seervices toi
support corrporate
leadership as well as
other businness units
• Form relatiionships
between intternal
clients and service
providers
• Handle outtsourcing
relationshipps

Corporate Leadership Restruccturing. What

C W are the roles plaayed by thhe
coorporate leeadership? Define theem clearly in the ligght of channged markeet
coonditions. What
W is thee best organnizational sttructure suiited to fulfilll these rolees
efffectively? How shou uld the deecision-makking rights be awardded betweeen
coorporate center and buusiness unitss to optimizze the businness value created?
c
 Business Un
B nits Restruucturing. How
H should the businesss units be organized to
t
m
make them best
b equippped to handdle the mark ket challengges? What can be donne
to
o align the business unnits to alignn them withh the corpoorate strateg
gy? How caan
th
he business units be made
m more accountable
a e? How cann the busineess processees
be optimizedd to create the
t best posssible valuee?

Support Seervices Resstructuringg. Are the services prrovided by the suppoort

S
syystems sup pport and complemen
c t the busin
ness activitties? How can they be b
optimized? What
W part of o the servicces should be
b centralizzed and deccentralized to
t
im
mprove theeir efficienncy and efffectiveness?? How cann they be made morre
business-driv ven? What services caan be outsourced? What can be shhared? Whaat
iss the best way
w to align n outsourceed services and vendoor relations?? How manny
people are needed
n to perform
p all the businesss activitiess? What aree the gaps in
i
skkills and caapabilities and
a how to bridge
b them
m? How maany layers of o control arre
optimal?

Areas to
t Focus in
i Your Business
B M
Model
Downturn orr boom tim
D me, there is always
a scoppe to improove what yoou have beeen
doing. Beloww are various areas youy can work on to improve yo our businesss
performancee. Restructuuring these areas will fundamenta
f ally change the way yoou
do business and adds flexibility
f a resiliennce. The foollowing arreas of focuus
and
broadly falll into grroups – Performancce Improvvement En nablers annd
P
Performancee Improvemment Activitties.

Performancee Improvem
P ment Enabblers address the waay you appproach youur
business activities. Chaanging themm requires changing
c yoour behavio
ors, attitudees
annd thinkingg patterns in some fuundamentall way and this requirres sustaineed
hout changiing these eenablers no change brrought by performancce
efffort. With
im
mprovemennt activities is likely to last long.

Strategyy Enablers Operrating Modeel

• Corpporate leadeership and • Rev viewing buusiness moddel strategy

manaagement
• Channge manageement strateegy
• Talennt managemment model
• Perfoormance maanagement
practtices
• Crisiis managemment approacch
• Stakeeholder mannagement
• Coorporate straategy
• Porrtfolio revieew to devellop
cappability-drivven strategyy
• Meergers & acqquisitions,
parrtnerships, aalliances
• Inddustry envirronment and d
commpetitor dyynamics
 Performancee improvement activvities broaadly focuss on reduucing costts,
P
mproving balance sheeets, protectiing revenuee and sustainning growthh.
im

Coost Reductioon Balaance Sheet Revenue & Growth

Activities Imprrovement Initiattives
• Suppply base • Reducinng working • Portfolio annalysis
restruucturing capital • Product and service
• Laboor cost • Selling of non- optimizatioon
manaagement strrategy performming assets • Rethinkingg pricing
• Optim mizing your • Divestmments strategy
netw
work • Risk maanagement • Enhancing sales
• Imprroving busin ness strategyy performancce
proceesses and • Investorr managemeent • Improving marketing
operaations throuugh strategyy efficiency and
a
best practices,
p R
R&D, • Fundingg and capitaal effectiuvenness
IT, ettc. management • Gaining coonsumer
• Overrhead cost insights & market
reducction research
• New produuct &
service devvelopment

Conclu
usion
The current downturn is
T i an opporrtunity to thhink beyond cost reduuction and tot
foocus on initiating struuctural impprovementss on a veryy fundamen ntal level to
t
reeboot yourr business model. W Working onn improvinng the effficiency annd
efffectivenesss of the organization with a lonng term straategy is thee best lessoon
hat can be learnt from the current crisis.
th

Avoid beingg overly optimistic

A o a
and assess your situaation impaartially. Anny
reestructuring
g involves changing thhe behaviooral patternss of the woorkforce annd
tw
weaking organization
o nal culturee. Its succcess is llargely dependant on o
coommitmentt and leaderrship of thee top level managemen
m nt. Radical solutions
s arre
coommon in times
t like th
hese and m
managementt must have the heart too apply themm
annd willingnness to take quick actioon.

Crises affecct all the stakeholdeers in a business.

C b D
Developing stakeholdeer
m
management t plans to handle
h issuees affectingg customerss, employeees, supplierrs,
in
nvestors annd others is necessary.. Effective program sttructures thhat make thhe
organizationn lean and mean
m require intelligent change m managemennt and crosss-
fuunctional co
oordinationn. By conveerting this crisis
c into an
a opportunnity, you caan
suurvive as well
w as succeeed in the current mark ket environm
ment and beyond.