Tools & Technologies

How to Manage Your Business in a Recession: "#6 Focus on Capital – How You're Getting It and Where You're Using It"

The January 19, 2009 edition of Fortune magazine features an article entitled “How to Manage Your Business in a Recession”, authored by Geoff Colvin (pp.66-71). Inside, Geoff lays out 10 ways to weather the current economic storm. He starts:

“Exciting as it is to be living through historic economic drama, you can’t just stand by and watch. You have to act–yet you have no script. So much of today’s turmoil is unprecedented that we can’t find much guidance by looking to the past. For managers across the global economy, as well as for Team Obama on its way to Washington, today’s great question is, What do we do now?”

Let’s take Geoff’s 10 principles, and analyze the implications for your collaboration strategy (see the links to all 10 principles). Let’s focus on #6, “Focus on Capital – How You’re Getting It and Where You’re Using It”.

6. Focus on Capital – How You’re Getting It and Where You’re Using It
In these tighter economic times, we need to optimize the expenditure of capital, and thus put more thought into how we will achieve a return on the capital we invest. Geoff says that “companies that are managed explicitly for capital efficiency are stronger now than they would be otherwise.” Let’s not spin the myth that the effective use of collaboration tools and platforms is all that’s needed to support such management, but they can play a role. Here’s a couple of ideas.

Re-Think Partnering Opportunities
Being careful with capital expenditures means making sure that you are investing in the right priorities, programs and initiatives. One way of thinking about this is to look at the main areas of capital investment across your business, and analyze whether you are undertaking activities that other firms are better able to do, because that is core work for them. Collaboration tools can provide a mechanism for doing this analysis:

  • Providing an idea collection forum where employees can suggest ways that the firm could work with other firms, rather than undertaking a specific activity internally.
  • Providing a secure due diligence space for investigating opportunities — facilitating the conversation and the secure sharing of documents.
  • Providing a space for managing the relationship with external parties — being clear on responsibilities, creating a secure area for communication, having a common set of agreed milestones, and sharing upcoming demand forecasts, etc.

For more on this idea, see strategy #2 in this series.

Non-Capitalized Collaboration Platforms
Another way to optimize capital expenditures — and this won’t be for everyone, based largely on the current state of your IT environment — is to re-think the need for inhouse collaboration tools vs using outsourced (“hosted” or “cloud”) collaboration tools. Building out a data center to provide collaboration tools, along with the attendant backup and security infrastructure to go with it, is a costly exercise. That capital expenditure may be better invested in other core business activities, with collaboration (and messaging) provided through an outsourced provider. In this category there are many — both direct replacements for standard inhouse variants (LotusLive for the IBM shops, Microsoft Online Services for the Microsoft shops), and those from alternative providers (Central Desktop, Basecamp, Atlassian Confluence Hosted, Brainloop, and many, many others).

In theory, hosted tools give you the flexibility to scale up and down very quickly by adding or removing blocks of users or blocks of storage capacity, as required. There are downsides to hosted services too, mainly around exit strategy, lock-in, and vendor viability. So make sure you do appropriate due diligence.

What Else?

What strategies of success are you embracing as the economic indicators spread fear and alarm?

Categories: Tools & Technologies