1. Rethink supply chain dependencies. There are limits to globalization. This has been a warning shot. We need to focus on supply chain resilience and establish a more robust network of strategic suppliers. Bottom line, manufacturers might consider reshoring or near-shoring critical parts and equipment. The reliance on an Asian supply base is not sustainable.

2. Embrace omni-channel strategies. Many manufacturers have already prepared their e-commerce strategies. Most, though, delegate this activity to their distributors. Get your website cart ready and get ready to activate the cart functionality. You cannot just rely on your distributors to conduct touchless interactions. Prepare to control your e-commerce future.

3. Think D2C model. Selling direct online and establishing a direct-to-consumer model are not the same as selling on an e-commerce platform.
A D2C business model is a radical change in marketing, supply chains, and other support activities. It should not be perceived as an opportunistic change to address a portion of the business through a website or a marketplace.

4. Launch usage-based and subscription-based business models. If you are selling equipment or solutions requiring customer’s capital expenditure (CapEx), accelerate the development of consumption-based pricing offers to ease the reliance on CapEx. Now is the time to take leadership in your market as long as your cash situation allows for it.

5. Refocus on profitable growth and cash flow. As the economy resets over the next quarter or two, refocus your strategy away from unsustainable growth and more on profitable growth. That means making priorities in allocating cash to attractive opportunities and focusing on differentiated innovation development.

6. Discontinue cash-draining activities. Right now, everyone is focusing on cash flow protection to pass this storm. It is an amazing opportunity to revisit cash-draining activities. It is a great time to discontinue pet projects and programs that distract the organization’s attention from core operations. By doing this, you can also reduce the amount of unnecessary complexity that might slow down the organizational bandwidth.

7. Revisit and reset business rules. This is a great time to reset your business rules and kill the high cost-drivers in your cost-to-serve analysis. Maybe you can change your delivery conditions. Or you could consider canceling allowances or legacy favors that were in place for many years. The focus here is to optimize costs and protect cash flow.

8. Scratch your asset plan and start over. This pandemic is challenging all the strategic assumptions, perhaps for the next 12 to 18 months. As CapEx budgets shrink, your short-term focus should be on critical maintenance needs and supporting short-term recovery. Your long-range asset investment plans are going to be challenged.

This crisis is not a demand crisis or an economic crisis. It is a surprising turn of events that could not be anticipated. It is a wake-up call for all manufacturing companies, and I believe it will change our mindset. We need to refocus our attention on cash and profitable growth. This test of our readiness level must challenge the status quo. Make the necessary preparation for the next crisis and avoid going back to the old routine.

Stephan M. Liozu, Ph.D. is chief value officer at Thales Group and founder of Value Innoruption Advisors, a consulting boutique specializing in value-based pricing, digital pricing, and industrial pricing. He is the author of nine pricing books and is a frequent keynote speaker at industrial and digital conferences.

Copyrighted 2020. Informa. 

Negative stimuli get our attention much more than positive stimuli—which makes evolutionary sense for survival. Nice things are enjoyable; bad things can be deadly, so focus on them. And given that, in the news media, attention equals money, we can see the commercial reason for a lack
of headlines such as “Millions not going to bed hungry tonight.”

Frequently, however, the bad-news bias gives us a highly inaccurate picture of the world. According to a 2013 survey, 67 percent of Americans think global poverty is on the rise, and 68 percent believe it is impossible to solve extreme poverty in the foreseeable future. While in fact, starvation-level
poverty has decreased by 80 percent since 1970, according to economists at Columbia University and the Massachusetts Institute of Technology.

The truth is that while there is plenty to worry about on any given day, the world is generally getting better.

Fresh, comprehensive evidence of progress comes in the new Legatum Prosperity Index, based on data from 167 countries— with 99.4 percent of the world’s population —on 300 social and economic indicators of well-being. Across those dimensions, from 2009 to 2019, 148 of the 167 countries have seen net progress—much of it dramatic, and especially so among the poorest countries in the world.

Not all countries are improving, unfortunately, but here again there are important learning opportunities. In the past decade, 19 countries have deteriorated. The greatest declines came in Venezuela, Syria and Yemen.

In general, the index reveals that when countries fail to progress in the modern world, it is not due to their region or any population-specific characteristics. No one is destined for poverty. The problem is generally war, tyranny and poor governance, which is supported by circumstances
facing countries mentioned here.

There is still a great deal of work to be done around the world, but the good news from the Prosperity Index should be much more salient in our thinking.

Bad news doesn’t just hold our attention; it also demobilizes us because,
particularly when it concerns people far away, it suggests that disaster is inevitable, when in fact it is not. Hope—the belief that something can be done, and we can do it —inspires action. Bad news, especially in world poverty, often stimulates hopelessness, hence inaction.

The world is not getting worse; it is getting indisputably better for most countries and most people. Billions of people are freer, healthier and more prosperous than they would ever have been in human history. We should be thankful for that this holiday season, and resolve to push even harder.

Source: Columnist Arthur C.
Brooks, Washington Post