Five ways to thrive in the current economic environment

It's not as simple as cutting costs: Some advice the world's leading computer networking company is taking to heart...

Hilton Tarrant
04 December 2008 08:00

Peter Ford, emerging markets head of service provider at global giant Cisco's consultancy division sees five strategies that companies should adopt to see them through and grow out of the current downturn.

Ford works at Cisco's Internet Solutions Business Group, an in-house strategic consulting arm that provides advice to partners and clients. The consulting arm aims to help companies become more competitive through the deployment of technology; it focuses on trends and market transitions it sees to help guide strategic decisions.

It's one thing giving guidance, but another actually heeding it. Ford says that in the current economic climate, Cisco as an organisation is "incredibly focussed" on these five things (which he calls "five to thrive"). He points to other things that need to take a backseat, and have. CEO John Chambers has often spoken about the need for both "core" and "context" but, in tough times, Ford says there needs to be a "ruthless focus" on the core.

1. Save to invest
"This is different to just cost-cutting," Ford says. The temptation, he adds, is to simply strip out as many costs as you can and boost the bottom line. This is unsustainable, and while it may please shareholders this quarter or next, it's hardly going to help once all your costs are stripped down. Rather, Ford says companies should use those saved costs to invest. Companies should be "unlocking employee potential", especially with the now escalating (rather counter-intuitively) war for talent.

2. Retain and motivate
Companies need to retain and motivate their superstars. "Collaborative tools have a role to play," Ford says. Work has changed into something that's a lot more fluid, he says. If you make it easier for employees to work remotely or while mobile, you not only drive productivity but you save on transport costs (and time), which employees appreciate. Motivation goes further than "just salary. You need to look more broadly than that", he says.

3. Collaborate with partners
Historically, Ford says, partners have always been seen as external. Suppliers and other role players were never really involved in decision-making, even when it impacted them. "Now," he adds, "they play and need to play a much more active role in the ecosystem." Companies can work on high-levels of customisation of goods and services together with their partners, and also reduce costs. There could be synergies and innovation opportunities that neither party is aware of, if they continue to work in a traditional supplier/customer paradigm.

4. Be the first out the other side
It seems obvious, but what tends to happen in an uncertain economic climate or in a downturn is that companies "batten down the hatches" and focus only on surviving, says Ford. When the cycle turns, there's a significant lag before companies start expanding and really innovating. "Here's an opportunity to distance yourself from the competition," he says. Cisco, for example, has a red team and a green team internally. The red team is focused on being cautious and conservative in decision-making and operations, obviously necessary in a downturn. But, the green team is still active, looking aggressively for growth and expansion opportunities. When we turn the corner, you'll be agile and these kinds of decisions and strategies don't have to be started from scratch.

5. Transition to a borderless enterprise
Cisco has embedded the idea of collaboration in almost everything it does. Chambers has abandoned the idea of a command and control system at the company. By using collaboration, the company is able to focus on more than the three to five priorities it used to be able to. Now with boards and councils, it can manage 23-25 priorities effectively. The crux, he says, is that companies "have to believe" in collaboration starting at the top. Breaking down borders internally means more effective interactions with customers. Teams are structured around the needs of a customer - they only see one team. In that team, there'd be a sales function, a support function, an admin function, instead of the customer being passed around between "departments" like a hot potato.

* Hilton Tarrant contributes weekly to "Broadband" a column on Moneyweb covering the ICT sector in South Africa. He chatted to Peter Ford during Cisco Live! at the Sandton Convention Centre on Wednesday...