BCG - The Boston Consulting Group

As the global downturn deepens, companies in almost all industries have seen a sharp decline in revenues. Companies must find new ways to quickly cut costs and generate much-needed cash without hurting future viability. The key is to take action on a number of fronts in a top-down effort driven by senior management. However, striking the right balance between cutting fat and preserving muscle is a significant challenge, especially as the cuts deepen. As intelligent, focused effort led by top management can deliver results in weeks instead of months, without damaging the core business.

Franklin D. Roosevelt’s ambitious agenda during his first 100 days as U.S. president is well known. Once again, Roosevelt's first 100 days is in the public’s consciousness as Barack Obama assumes the presidency of the United States and the whole world faces the worst financial crisis since the Great Depression. The severity of the downturn is pressuring CEOs everywhere to act decisively and immediately. Just how much can or should be accomplished in three or even six months is debatable. Leadership in a recession isn’t only about cutting costs. Having lunch in the cafeteria instead of in your office and hugging your "stars" are just as crucial.

If your pricing strategy is more than a few months old, it's already obsolete. The current downturn is affecting the primary drivers of pricing: consumers' willingness to spend, competitors' prices, and company economics. But downturns don't have to be all bad news. They can be an opportunity to capture market share and secure long-term competitive advantage. Pricing is a critical and powerful lever in this effort.

Many companies are concerned about their ability to generate the funds needed for growth. But there is one potentially powerful source of cash that is often overlooked: working capital. By increasing the productivity of their working capital, companies can increase cash flow and sharply reduce their dependence on outside funding. By fundamentally rethinking and streamlining key processes across the value chain, companies can achieve as much as 30 to 40 percent reductions in working capital—and cost savings of 5 to 10 percent at the same time.

The word lean has become part of the business lexicon. For years, players in the manufacturing industry, particularly automakers, have been using lean techniques to eliminate waste and inefficiencies from their processes. The most successful companies have come to view operations as a strategic asset to be leveraged rather than a source of costs to be managed.

Information about seemingly everything is exploding in digital form. Inexpensive to search and relatively easy to manipulate, the digital format is creating manifold opportunities for companies to more easily leverage the information that they have, and that others don’t, for competitive advantage. The information asymmetries that result will increasingly shape markets and decide who wins, who loses, and even who gets to play.

The next billion are the large untapped base of consumers in emerging economies who sit below the group currently served by existing mobile operators. If they constituted a nation, the next billion would be the world's tenth largest economy. They represent a huge potential source of growth for mobile operators, but only if they create business models to profitably serve them.

Corporations need to develop new ways to manage their talent in order to cope with three big trends: the need for employees to feel in control of their destiny; the upcoming retirement of the baby boom generation; and globalization. Specifically, companies need to measure the HR dimension of these trends, open new recruiting markets through marketing, and initiate new HR programs to recruit and retain talented individuals.

The problem of financial exclusion—individuals' limited access to, or use of, formal banking services—looms large. Governments and microfinance institutions have made some headway in alleviating exclusion, but banks have lacked a commercial impetus to do so, stifling the development of solutions that have the reach required to confront this problem. By embracing innovation, however, banks can upend the economics of reaching consumers long considered unserviceable, opening up opportunities for profitable expansion in the world’s most rapidly growing economies.

Most retailers are capable of delivering a 4 to 6 percent improvement in EBITDA in just a few months. Revenue-enhancing initiatives are quickest to produce results, but some cost levers can also prove successful almost immediately. The real trick comes with enabling change without disrupting the organization. That calls for being realistic about what the organization can do with the resources it can get. The authors present examples from their client files of fast and effective profit-improvement programs.