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The chief executives from Power Plate North America, Acision, and CenterBeam on:

6 Strategies for Trimming Costs in a Tough Market

Mark de Gorter President, Power Plate North America

A. Kevin Francis Chief Executive Officer, CenterBeam

Jorgen Nilsson Chief Executive Officer, Acision

For nearly any organization, trimming costs can be a tricky proposition. For one thing, what’s a “cost” versus an “invest-ment”? The line isn’t as clear as you might think, especially

for companies that are trying to grow or innovate new offerings. On the other hand, there are times when it’s imperative to trim the fat from budgets. This ExecBlueprint describes approaches compa-nies should take to ensure good fiscal health in today’s recovering economy. First, the authors recommend, you need to assess your company’s financial and competitive strengths. During these tight times, strong companies should actually try to acquire weak com-panies or enter new markets, while weak companies will need to consider shedding non-core initiatives or consolidating divisions. Employees can offer unique perspectives on where you’re wasting resources. Some areas, like marketing, should be spared to differen-tiate your company from those which are cutting deeper. And, don’t cut the company holiday party either, because the value of bringing people together to celebrate can be priceless. n

Action Points

I. Business Concerns in Today’s EconomyWhile the general U.S. business climate has definitely improved over the past two years, many companies are still feeling pressure to contain costs and keep their growth goals modest. Consequently, some pressing concerns are: What business assumptions are safe bets? How can companies keep a competitive edge in a reduced-investment environment?

II. The Bottom LineTo assess the big picture of your company’s progress during this tenuous time, you will need to examine some granular details, such as how much your core (versus total) business is growing, and how you compare to the competition in five key areas: costs, product positioning, technology, leadership, and collaboration with regulatory agencies.

III. Must-Have Strategies for Thriving in a Slow EconomyBefore you take any steps, you need to honestly benchmark your organization on two key attributes, its financial and competitive strengths. Then, tailor your approach. Strong companies should be aiming to introduce new products; weak companies should be cutting costs — and all companies should be focusing on their core competencies.

IV. The Golden Rules for Motivating Employees During Tough Economic TimesAn engaged workforce is always valuable, but in a bad economy it’s especially important. Let your employees speak up about where you can save money — and share any non-confidential news you can that will provide reassurance and quell the rumor mill. Finally, if layoffs are necessary, treat the affected people with honesty and dignity.

V. Essential Take-AwaysCompanies looking to cut costs should first identify waste by tracking accountability, consulting with customers and employees, and monitoring vendor performance. Then, they should cut back on non-core areas and/or combine product categories. To maintain brand viability in the market, one area that the axe should spare is marketing.

Contents

About the Authors . . . . . . . . . . . . . . . . . . . . . p.2

Mark de Gorter . . . . . . . . . . . . . . . . . . . . . . . . p.3

A. Kevin Francis . . . . . . . . . . . . . . . . . . . . . . . p.7

Jorgen Nilsson . . . . . . . . . . . . . . . . . . . . . . . . p.9

Ideas to Build Upon & Action Points . . . p.12

© Books24x7, 2012 About the Authors ExecBlueprints 2

About the AuthorsMark de Gorter President, Power Plate North America

A. Kevin FrancisChief Executive Officer, CenterBeam

Jorgen NilssonChief Executive Officer, Acision

Mark de Gorter is best known for his creative, results-driven approach to leading organiza-

tions in both top- and bottom-line per-formance. His career spans nearly three decades in the sports, fitness, and leisure industries, and is characterized by a broad business background and success in senior management, marketing, sales, and business development roles.

Mr. de Gorter is currently president of Power Plate North America, the industry leader in health and wellness

products featuring Whole Body Vibration technology. At Power Plate, his respon-sibilities include running the company’s business operations in the U.S., Canada, and Latin America. Concurrently, he serves as chief marketing officer for the global organization.

In addition to Power Plate, he has held positions in the advertising, product marketing and services marketing areas at J.Walter Thompson Worldwide, Bally Total Fitness, L.A. Gear, NTN/Buzztime, and Velocity Sports Performance. In

addition, he was president/chief operat-ing officer for a division of a publicly traded company, where he led its reposi-tioning (through change management and growth initiatives) to improve busi-ness performance, ultimately raising market capitalization from $18 million to $83 million during his tenure.

A. Kevin Francis, LL.D., joined CenterBeam as president and chief executive officer in 2002.

Since then, he has significantly improved operations and sales. Dr. Francis imple-mented a total quality process through-out the company that has resulted in increasing customer satisfaction to 99 percent. He scaled CenterBeam’s opera-tions, opening a technology operations center in New Brunswick, Canada, to serve CenterBeam’s quickly growing ros-ter of customers. He also re-invented the industry-standard terms of the multi-year outsourcing contract to one simple, month-to-month agreement: Total Satisfaction Guarantee.

Prior to CenterBeam, Dr. Francis was president, chief executive officer and director of Accelio Corporation, a lead-ing global provider of Web-enabled busi-ness process solutions. Under his leadership, Accelio earned fiscal 2001 revenues of more than $100 million (Canadian), created a distribution net-work spanning the world, and reached 8.5 million users. The company was suc-cessfully acquired by Adobe Systems in 2002.

Before joining Accelio, Francis held a variety of positions with Xerox including chairman, president, and CEO of Xerox Canada, a $1.6 billion (Canadian) organization.

Dr. Francis also serves as chairman of the Advisory Board of Cape Breton University’s Centre for Sustainability in Energy and the Environment, and as a member of the CEO Council for the Entrepreneurs’ Foundation.

In 2005 he was named New Brunswick’s Industry Leader of the Year at Canada’s Knowledge Industry Recognition and Achievement (KIRA) gala. Recently, he was named the Best Turnaround Executive at the 2006 International Stevie Business Awards.

As chief executive at Acision, the global leader in mobile messag-ing, Jorgen Nilsson is responsible

for the day-to-day leadership and man-agement of the company, driving innova-tion and profitable growth while capitalizing on market opportunities in mobile, enterprise, and social/digital media messaging.

As a telecom and IT industry veteran, Mr. Nilsson has more than 30 years’ experience in senior executive roles at leading blue-chip companies including Ericsson and Compaq.

Prior to joining Acision as COO, he worked for over 10 years at Ericsson

where his most recent position was executive vice president and general manager of Vodafone’s Global Customer Unit. In this role, Mr. Nilsson was responsible for the management of Vodafone Group’s 21 operators, as well as driving economies of scale across Ericsson’s global sales, marketing, tech-nology, and operational teams. He was also part of Ericsson Group’s Extended Executive Team. Other roles at Ericsson included head of sales and marketing for North America, where he initiated all product introductions to telecom opera-tors in the region.

Before Ericsson, Mr. Nilsson spent over 10 years at Compaq, where he held various global sales, marketing, and operational roles, capturing valuable insights into business models of local and global enterprises and managing success-ful partner and channel programs. In addition to this, he held several manage-rial roles at Telia, part of the TeliaSonera Group and a leading telecommunications provider in Sweden.

☛ Read Mark’s insights on Page 3

☛ Read Kevin’s insights on Page 7

☛ Read Jorgen’s insights on Page 9

© Books24x7, 2012 Mark de Gorter ExecBlueprints 3

Mark de Gorter President, Power Plate North America

Succeeding and Growing Despite Tough TimesThe health club industry has weath-ered the recent economic storm better than many other industries. In fact, this is the third economic recession in the past two decades during which our industry has escaped major hardship and proven that fitness is a successful and enduring business endeavor. Today, industry players are well positioned to help improve the health and well-being of individuals, families, and communities around the world.

According to the IHRSA Stature of the Fitness Industry global report for 2011, industry revenues reached $71 billion in 2010, up $4 billion from 2009. Memberships soared to an estimated 128 million members, and the overall number of clubs grew by over 5,000 units to 133,500 in 2010.

In the U.S., health club member-ship reached 50.2 million in 2010 — the last full year it has been mea-sured — which represented an impressive 10.8 percent increase over 2009! While one year does not constitute a trend, it is certainly a positive sign that 2010 saw real membership growth in America after four years of stagnancy. Clubs are continuing to fight to get back to where they were before the “Great Recession,” which, by most accounts, ended in mid-2009. Our greatest challenge continues to be

managing through the recession and finding new ways to generate profits that will reach pre-recession levels. One silver lining from the recession has been that many club operators have been able to take advantage of the softer real estate market to expand or lock in favor-able long-term leases. Modest revenue growth, coupled with a continued strong emphasis on expense management, has improved club profitability.

Treating “Costs” as “Investments” and Focusing on the “Defendable Core”As a company, we do not look at expenses as “costs”; we consider them investments in the growth of our business. We are an organiza-tion with a strong growth trajec-tory, so cutting investment has not been our primary focus; rather, optimizing our available resources as investments has taken the fore-front in our planning.

However, the biggest challenge most leaders face when their orga-nization is growing is when and how to say “no” to the myriad of initiatives available. At Power Plate, we found ourselves in pre-cisely that position at the time I assumed the role of president in late 2009. Because we have a prod-uct with a wide range of benefits — fitness, health, rehabilitation,

Mark de GorterPresident

Power Plate North America

“If the vitality and passion on display at the industry’s recent premier annual gathering is any indication of the state of the global health club industry — and we believe it is — we can expect continued growth and positive financial results in the coming year.”

• Responsibilities include running business operations and serving as CMO for the global organization

• Previously held numerous marketing roles at J. Walter Thompson Worldwide, Bally Total Fitness, L.A. Gear, etc.

• B.S., Business Administration (Marketing concentration), California State University, Northridge

• Post-graduate work, Institute of Advanced Advertising Studies at USC through the American Association of Advertising Agencies

Mr. de Gorter can be e-mailed at mark.degorter@execblueprints.com

Benchmarking your organization on just two key attributes — financial and competitive strengths — can help chart a roadmap to identify if your company is poised for growth, or in need of reducing investments in the form of operating expenses.

Mark de Gorter

President Power Plate North America

© Books24x7, 2012 Mark de Gorter ExecBlueprints 4

Mark de Gorter President, Power Plate North America (continued)

and sports, just to name a few — our available market segments are broad. In addition, covering the North American market from a geographic standpoint can also be daunting. Prior to my joining, the company attempted to cover a broad range of market segments while at the same time serving the entire North American market. They simply could not successfully manage it all.

So my approach was to diag-nose the situation, and work to match the strategy to the situa-tion to optimize our investment of precious resources — both from a human and financial capital stand-point. We elected to cut back to our “defendable core” — those segments that represented our best business opportunities based on consumer, distribution partners, and established business. This allowed us to channel all of our sales, marketing, and training horsepower into an acute business area of focus, which not only opti-mized our investment, but also eventually maximized our resources.

Once we established a strong foothold in this “defendable core,” we were able to grow in concentric circles outward to adjacent vertical markets in an effective and calcu-lated manner. This is the position we find ourselves in today — a strong core business that grew 56 percent over last year, with solid inroads into new markets that provide significant growth oppor-tunities going forward.

Assessing and Addressing Company “Fitness” LevelThe recent “Great Recession,” characterized by massive layoffs,

declining revenue, and obliterated enterprise values, had many com-panies pulling back to weather the storm. That may have been the

right move for some, and the abso-lute wrong move for others, and that still holds true today. It simply depends on your company’s

Best Practices for Prioritizing Investments During Challenging Times

Evaluate company on basis of two key attributes• Financial strength: Is it able to function without immediate and external financial support?• Competitive strength: How does it compare to competitors in: 1. Costs? 2. Product/brand positioning? 3. Technology/capabilities? 4. Leadership/management? 5. Ability to influence/collaborate with regulatory authorities?

Assign corporate “fitness level”• “World Class” — Characterized by both financial and competitive strength• “Physically Fit” —Companies that are financially strong but competitively weak• “Out of Shape” — Companies with a strong competitive position but weak finances• “Morbidly Deconditioned” — Those that are weak both financially and competitively

Choose the appropriate action• “World class” or “physically fit” companies should choose from the following initiatives: — Pursue acquisitions — Introduce new products — Enter new markets — Build talent pool • “Out of shape” or “morbidly deconditioned”: — Consider “hunker down” approach, but try not to cut in the following areas: 1. Marketing budget 2. Employee engagement initiatives, including communication and company events

© Books24x7, 2012 Mark de Gorter ExecBlueprints 5

Mark de Gorter President, Power Plate North America (continued)

level of “Corporate Conditional Fitness.”

There are many perspectives one can use to dimensionalize their company during these challenging times as a means of determining if, when, and where to reduce expenses, with the most common being revenue, profit, growth rate, headcount, and cash. However, benchmarking your organization on just two key attributes — finan-cial and competitive strengths — can help chart a roadmap to identify if your company is poised for growth, or needs to reduce investments in the form of operating expenses.

In a recent study conducted by Booz & Company, respondents were asked to assess their financial and competitive strengths — spe-cifically, if they were able to carry on without immediate and external financial support and whether they were better or worse than their key competitors on five dimensions (costs, product/brand positioning, technology/capabilities, leadership/management, and the ability to influence/collaborate with regula-tory authorities).

Based on the answers, there are four states of a company’s health. As someone in the fitness industry, I will call them “Corporate Condi-tional Fitness” and I will apply fitness metaphors to each:

“World Class” — Characterized by both financial and competitive strength

“Physically Fit” —Those that are financially strong but competi-tively weak

“Out of Shape” — Companies with a strong competitive position but weak finances

“Morbidly Deconditioned” — Those that are weak both financially and competitively.

Putting all other variables aside, and evaluating companies across just these four scenarios provides clear strategic courses of action, depending on the level of “fitness.”

While this is what companies should be doing, this is not always what they in fact are doing. For example, conventional wisdom would suggest that companies that are “out of shape” or “morbidly deconditioned,” i.e., financially challenged, would be taking steps to improve near-term cash and pre-serving working capital by either cutting costs, disposing of assets, or seeking outside funding. Surpris-ingly, according to the Booz & Company study, only 25 to 43 per-cent of companies in the bottom two segments are taking steps in these areas, and in some cases, no more aggressively than before the crisis hit almost five years ago.

The same disconnect seems to be taking place relative to growth for the more fit companies, i.e., those identified as “world class” and “physically fit” based on the financial/competitive strength cri-teria. For example, one would think that for the “physically fit” group (those with cash but a weak competitive position), strong efforts to shore up their competitive strengths by acquiring financially weak companies in their space with a strong competitive position would be the order of the day, espe-cially in what is generally regarded as a buyer’s market relative to M&As. Unfortunately, the study showed just the opposite. Accord-ing to the study, only 21 percent of both the “world class” and “phys-ically fit” organizations are pursuing an M&A strategy relative to growth.

That is not, by the way, the route being taken by what are widely considered the “most admired” companies.

So how should companies be viewing opportunities as they approach restructuring their strate-gies during a downturn when it may become necessary to address a cut-back in investment of resources? First, get an accurate read on the environment and your organization’s position within it. Dimensionalizing

As Fortune magazine reported, the most admired companies are consistently more likely to be expanding their investments in resources than are their less admired peers. This fact is supported by global brands like Coca-Cola, whose CEO stated for the report, “We continue to make sure that our brands stay healthy so that we exit the tunnel with more market share than when we went in.”

Mark de Gorter

President Power Plate North America

© Books24x7, 2012 Mark de Gorter ExecBlueprints 6

Mark de Gorter President, Power Plate North America (continued)

your company and the competition on the two attributes mentioned here is a starting point. Next, choose the appropriate actions. If you are in the “world class” or “physically fit” strata, pursuing acquisitions, intro-ducing new products, entering new markets, or building your talent pool should top the list. The key is iden-tifying a limited collection of initiatives that can be executed within the context of both internal and external circumstances, with the potential to make gains immediately.

If your company is in the bottom two tiers — “out of shape” or “morbidly deconditioned” — the “hunkering down” approach might be best, which could include a reduction in your resource investments.

Trimming ExpensesIf trimming your investments in expenses becomes necessary, the first place I look is for areas that can be combined so that entire initiatives are not necessarily aban-doned. This could mean combining product categories or business units under a single leadership team, which allows you to streamline all the functions underneath without necessarily interrupting the flow of business. Recently, Hewlett Packard’s new CEO, Meg Whitman, did just that when she announced that the PC unit would be com-bined with the printer business

under one senior leader. This allowed HP to reduce expenses without “throwing the baby out with the bathwater,” and may per-haps even uncover synergies as single teams work to leverage what were previously different business units.

If that cannot be done, the next step is to cut back to the “defend-able core” as described earlier, so that all the company’s efforts and energies can be focused on the most important areas of the business.

Key Caveats to Reducing Investments During Tough TimesHowever, there are two caveats to reducing your investments during tough times. First, over the course of recessions during the last 30 years, it has been shown that deep slashes in marketing expenditures should be avoided if at all possible, even with struggling companies. Your customers need to know you are still a viable brand, and you don’t want to fall prey to the “out of sight, out of mind” sce-nario. Another reason to keep your foot on the marketing pedal is that with your less enlightened com-petitor whacking his or her market-ing spend, the airwaves become less cluttered, and your company mes-sage gains a greater share of voice. A greater share of voice means you stand out — even if your spending

does not increase. A crisis does not have to mean paralysis. In fact, there are no greater opportunities to be seen, to be heard, and to grow.

Next is the importance of employee morale. Even when reducing your investments, it is critical that your employees remain engaged and fully apprised of both the current situation and your plans as the leader to guide the organization through. Constant communication to the team — to the extent that you can communi-cate non-confidential issues — is vitally important to give them the sense of understanding when they come to work every day. In the absence of good, regular commu-nication, people tend to fill in the blanks, and rarely do they see things in a positive light. This can be poison to the organization and the leader’s attempts to move the company into a successful position. Keep communicating, with honesty.

Finally, at all costs, do not cancel the company holiday party. Do not fall prey to underestimating the importance of a platform to pull people together to celebrate cama-raderie — even if the current situation is not ideal, you will need them at your side as you pull through. n

© Books24x7, 2012 A. Kevin Francis ExecBlueprints 7

A. Kevin FrancisChief Executive Officer, CenterBeam

Cost CuttingEvery company drives its business plans from a series of assumptions. When those assumptions fail, it often leads to the need to reduce costs. There can be failures in growth assumptions, competitive landscape assumptions, investment assumptions, and the economy — to name but a few. It is usually the failure of those assumptions that ultimately creates a financial expo-sure for the organization that requires the organization to seri-ously examine whether it is going to be forced to reduce its costs across a variety of areas.

We hedge our cost infrastructure by building a culture of continuous improvement within our organiza-tion. There is a methodology that was used successfully years ago by Digital Corporation in Boston called A-∆-T. It allows you to mea-sure any of your processes in financial terms, whether it is your billing process, marketing process, manufacturing process, collection process, etc. The method measures the steps in a process, the elapsed time of the process, and the labor involved in the process. This then lets you calculate the actual cost of the process. This is the “A” step.

You then compare this to a best practice in the industry or a best theoretical cost you could stretch for. This is the “T”.

You then subtract the two to create the “∆”.

This amount really represents the cost overruns of your current way of doing things and you and your team can target improvement opportunity goals from that point. In fact, one could easily ask, “What is your A-∆-T?”

This methodology is something that I think has to be driven within any organization. Any organization can locate improvement opportuni-ties on an everyday basis and my experience has been that you can unleash your people’s ability to identify them on a continuous basis.

Driving a Values-Based CultureYou must be able to drive a values-based culture that says it is safe to speak up; it is safe to identify where there are opportunities for improve-ment and to suggest areas where there is a bloated infrastructure. It should be safe to identify that the planning assumptions are seriously at risk.

A. Kevin FrancisChief Executive Officer

CenterBeam

“It is crucial to drive an environment where people feel that continuous improvement is an everyday way of living within the organization.”

• Led company since 2002

• Previously president, CEO, and director, Accelio Corporation (acquired by Adobe Systems in 2002)

• Former chairman, president, and CEO of Xerox Canada

• B.Sc., St. Francis Xavier University; B.Ed, St. Mary’s University

• Honorary Doctorate (D. Comm), Commerce, St. Mary’s University

• Honorary Doctorate of Laws (LL.D.), St. Francis Xavier University

Mr. Francis can be e-mailed at kevin.francis@execblueprints.com

If you can empower your frontline employees they will tell you where the cost improvement opportunities are within your company.

A. Kevin Francis,

Chief Executive Officer CenterBeam

Lessons Learned

One of the lessons that I learned over my 40 years in business is to avoid exces-sive layoffs within the organization. In other words, I try to avoid having layers of infrastructure costs. I have also learned the importance of building a culture that empowers employees to pull the fire alarm when they see inappropriate costs. I want the frontline employees to have a voice and to speak up at any time to any member of the senior management team, including myself as CEO. I think it has made a huge difference.

I have also learned the importance of celebrating cost cutting as a way of life and as a routine way of ensuring the daily continuous improvement of our orga-nization. By doing this the organization can remain nimble, flexible, and scalable.

© Books24x7, 2012 A. Kevin Francis ExecBlueprints 8

A. Kevin FrancisChief Executive Officer, CenterBeam (continued)

One way to structure this is to rethink the traditional organiza-tional pyramid. I like the view of the upside-down pyramid manage-ment structure where my role as the CEO puts me on the bottom. The people that are the most important are at the top: customers and then the frontline employees. If you can empower your frontline employees they will tell you where the cost improvement opportunities are within your company.

Rewarding EmployeesWe use what we call the President’s Circle to recognize the top 10 per-cent of the organization on a semi-annual and annual basis. They are employees who have distinguished themselves by making a significant difference in either improving the process or driving significant cost

improvements within the organiza-tion. We also recognize employees who have distinguished themselves from a customer-satisfaction perspective.

We also have “Make the Differ-ence” awards that instantly provide recognition of an individual for a job well done.

So suddenly you begin to har-monize four things: the continuous improvement of your costs, the evaluation of your assumptions, the ability to manage change in a dynamic way, and the recognition that reinforces the importance of being able to drive that continuous improvement.

Managing LayoffsIf your assumptions prove to be wrong and you must reduce costs, layoffs may be inevitable. I have

encountered this situation in all three organizations that I have led, and I have learned that there are four things you must do. First, you must be incredibly honest; second, you must remain incredibly fair; third, you must act with dignity; and fourth, you must act quickly.

I would say, after being in busi-ness for 40 years, my conclusion is to cut once, cut deep, and cut fast. Those individuals that are losing their jobs must be treated with dig-nity and fairness, and those employees that remain must also be nurtured because it is difficult to watch co-workers pack up their desks and leave. It is a traumatic event when it happens. The CEO’s role is to mitigate the downside for people. n

Measures processes in financial terms:

Billing

Marketing

Manufacturing

Collections

Etc.

A = Actual Cost in terms of: • Steps • Elapsed time • Labor

T = Theoretical Cost in terms of: • Industry best practice

= Cost overruns on which to target improvement opportunity goals

Using A- -T to Build a Culture of Continuous Improvement

A – T =

© Books24x7, 2012 Jorgen Nilsson ExecBlueprints 9

Jorgen NilssonChief Executive Officer, Acision

Relative Health of the Messaging Portion of the Telecom Industry in Today’s EconomyWe think that the market size for messaging is based on any mobile operator’s capability to help cus-tomers (consumers and enterprises) realize the true potential of the messaging service through better definition and perceived value. What I mean is that most of what we are doing is actually creating additional revenue-generating ser-vices for operators because we enable them to offer stronger value propositions to their different cus-tomer segments. We work best helping a company’s (Enterprise/Brand) marketing agency develop and execute a strategy for mobile engagement that achieves the objec-tive of increasing awareness and follows commercial value.

However, I think everyone is impacted by the current market conditions and economic climate. The priority for vendors like us is

to make sure our business engage-ments do not become too complex. We used to actually re-sell many partner products alongside our own but, owing to market condi-tions, we began selling less so that we could focus on our company’s products.

I think the market will improve and we need to prepare for addi-tional opportunities to provide more services, meaning that we need to do more on the mobile mes-saging side, such as mobile advertising, mobile social network-ing, and simple services for the mobile device. This trend will actu-ally give us an opportunity to evolve text messaging from just a pure social network into a service featuring added services.

As families gain more engage-ment with brands and enterprises they will rely more on mobile capabilities to engage and interact. Today most advertising is still actually on the TV, in magazines, and newspapers. Soon, I think you

will probably see that the big brands will try to create their own social networking tools so that they can be more relevant and capitalize on this trend. I think that they will try to tell more sto-ries about why they are doing a promotion or sponsorship as well as what they stand for and what they want to achieve. Based on this information, they will endeavor to

Jorgen NilssonChief Executive Officer

Acision

“In our industry, we have to take ownership and help our mobile operators (who are our direct customers) drive propositions that provide value to their consumers, and demonstrate the revenue that can be made and the ways they can accomplish this.”

• Responsible for day-to-day leadership and capitalizing on market opportunities

• 30-plus years of experience in senior executive roles at blue-chip companies

• Previously executive VP and general manager, Vodafone’s Global Customer Unit

• Managed successful partner and channel programs at Compaq

Mr. Nilsson can be e-mailed at jorgen.nilsson@execblueprints.com

We always try to first define what constitutes a “role model” leader or manager for a particular department and then change the team and reduce layers based on those that fit the role.

Jorgen Nilsson

Chief Executive Officer Acision

Innovative Growth Areas for the Messaging Industry

Customers are already taking advantage of mobile banking, but they will be able to do more and more. A user can be notified if there is fraudulent activity on their bank account or receive a notification if there is suspicious activity in their house when they’re away. We recently saw a messaging tool that messaged farmers if sheep were being intimidated by predators — based on the reaction of the sheep. There will be more apps for functions, such reminding people of appointments, paying for parking, or receiving warnings that a parking meter is running out and a new ticket is required.

© Books24x7, 2012 Jorgen Nilsson ExecBlueprints 10

Jorgen NilssonChief Executive Officer, Acision (continued)

create social communities via messaging as another way to com-municate with customers. The future possibilities that can gener-ate a lot of excitement are endless.

Streamlining Operations and Reducing CostsFirst, we have definitely had to look at what we should stop doing. We decided to go back to being a messaging company, which meant we stopped some of our lines of business that were no longer rele-vant. We also examined our weak entities and facilities throughout the world and looked at how to improve these. Finally, we bench-marked our business with competitors.

Based on experience, a global organization’s tendency is to always

ask for more resources or money to achieve a goal, compared to what a product-development organiza-tion would normally require. R&D organizations generally understand what they want to output, and how much the input is going to cost to achieve that. However, in a global organization such as ours that also has a service organization, you tend to have many management layers where you may encounter low accountability. (Sometimes you actually get more accountability in a service organization with fewer managers.) Another important fac-tor is to make sure that we benchmark ourselves against other service companies and also ask cus-tomers for feedback on what they feel we can do more effectively.

We always try to first define what constitutes a “role model”

leader or manager for a particular department and then change the team and reduce layers based on who fits the role. In the process, we question everyone’s role and what we need each individual to deliver and achieve. It is actually interest-ing how much you can achieve. We also track accountability from end to end, i.e., our operations out to the customers and customer relations.

Impact of Cost-Cutting Practices on Outsourcing DecisionsIn assessing the impact of our cost-cutting measures, we also exam-ined our current outsourcing practices and learned that our out-sourcing partner for global service deployment underestimated our

Key Steps in Streamlining Operations1. Look at what to stop doing; focus on key elements of the business.

2. Examine weak entities and facilities and determine how they can be improved.

3. Benchmark the business against competitors.

4. Ask customers for feedback on what can be done more effectively.

5. Examine current outsourcing practices and determine whether they can be streamlined.

6. Identify key producers, evaluate all roles, and reduce management layers.

© Books24x7, 2012 Jorgen Nilsson ExecBlueprints 11

Jorgen NilssonChief Executive Officer, Acision (continued)

requirements. Our operating model was misinterpreted in some parts of the world, as was our time-to-market approach that we require to support our business globally. Because we lacked the requisite flexibility to simplify and drive our business forward, we agreed to build a new deployment model and gain back control.

Of course, the lessons learned from this ensured that our new global deployment model was sup-ported by requisite competencies across different parts of the world. From this success, our staff gained an understanding of how our own in-house operating models should

emulate those of our vendors. Along the way, key lessons were learned on how to reduce costs and improve customer satisfaction. In the context of our in-house IS/IT needs we are moving forward with cloud offerings from vendors that make business sense, as always.

Motivating Employees to Work Efficiently and Reduce CostsOur most important initiative was to develop a program that high-lighted the key value for our com-pany in line with the direction we were taking it. We then asked

which people would be key to motivate the wider team in difficult times and execute efficiency plans.

It is then essential to communi-cate clearly and openly to staff the fundamentals of what needs to be achieved so that they totally under-stand the reasons behind change. In any communication process, we try to articulate what success will look like after we are done. Our key objective is to treat people with respect and be open minded. Always articulate to your people what’s in it for them — and why — as you move forward. n

© Books24x7, 2012 Ideas to Build Upon & Action Points ExecBlueprints 12

Ideas to Build Upon & Action Points I. Business Concerns in Today’s EconomyFor many industries, the recent “Great Recession” was characterized by declining revenues and reduced enterprise values, which required sometimes drastic cost-cutting measures to weather the storm. Now, during this slow recovery, many companies are finding they still must proceed cautiously in order to restore fiscal health. Dilemmas CEOs are currently facing include:

• How can profits be restored to pre-recession levels?

• How can growth be reasonably managed, i.e., how can company leaders determine which initiatives should be prioritized, versus which should be passed over?

• How can costs be kept under control?

• How can company staff be motivated to support a culture of continuous improvement, especially if layoffs or cutbacks have recently occurred?

• How can the company remain innovative in its response to market and technological developments?

II. The Bottom LineOf course, your company’s continued existence — and (at least modest) profitability — is one big indicator that your leadership is proving somewhat effective in this post-recession environment. More refined measures for assessing progress recommended by the authors include:

• Growth in numbers of new customers

• Growth in core — versus ancillary — areas of the business

• Progress, relative to the competition, in the following areas:

• Costs

• Product/brand positioning

• Technology/capabilities

• Leadership/management

• Ability to influence/collaborate with regulatory authorities

• Employee productivity and engagement levels

III. Must-Have Strategies for Thriving in a Slow EconomyAlthough it may sound counter-intuitive, sometimes companies need to invest more, not less, in their future growth — even when business conditions are less than ideal. Or, they may need to take more proactive steps to get back on their feet, rather than passively letting opportunities pass them by because they are feeling too weak to pounce. The point is that, in all environments, business practices and goals need to fit a company’s financial and competitive strengths. If considered in that context, various approaches that have proven effective during lean times are:

All companies:

• Focusing resources on the company’s “defendable core,” i.e., its best business opportunities or core competency areas

• Taking advantage of softer real estate markets to lock in favorable long-term leases

Stronger companies:

• Introducing new products that meet ever-evolving market trends

• Entering new markets

• Building the talent pool

• Acquiring financially weak companies that have a strong competitive position in a related market

Weaker companies:

• Cutting costs

• Disposing of assets

• Seeking outside funding

IV. The Golden Rules for Motivating Employees During Tough Economic TimesWhen it comes to identifying areas where you can save money, your company’s employees hold a treasure trove of valuable information. Moreover, an engaged workforce that feels valued is a more productive workforce. Even when times are tight, you can maintain — and even improve — morale by:

• Engaging in continuous, honest communication about the state of the company and current goals — especially when people may feel anxious

• Recognizing the top 10 percent who have made a palpable difference on a regular (e.g., semi-annual) basis

• Hosting company social events (e.g., the holiday party) that provide opportunities to celebrate camaraderie

• Conducting any necessary layoffs quickly, and treating the affected employees (including the retained employees) with honesty, fairness, and dignity

• Nurturing a values-based culture where people feel empowered to suggest areas for improvement

V. Essential Take-AwaysIn many companies, cost cutting is part of a culture of continuous improvement, and they frequently employ models such as A-∆-T to measure processes in financial terms and identify areas where cost overruns are occurring. Still others focus more on optimizing available resources so that costs don’t grow. Six effective strategies for trimming costs identified by the authors are:

• Combine related product categories or business units under a single leadership team to streamline functions instead of abandoning initiatives.

• Cut back to the “defendable core,” i.e., the most important, still-relevant areas of the business.

• Seek feedback from customers and employees on areas that can be handled more efficiently.

• Track accountability from end to end, i.e., from operations through customer relations, and be prepared to eliminate the “bloat” that can occur from too many layers.

• Continue to monitor the costs of your outsourced services against those you would incur if you performed them in-house, and adjust as needed.

• Maintain your brand’s visibility and stature in the marketplace by avoiding the temptation to cut marketing budgets. n

© Books24x7, 2012 Ideas to Build Upon & Action Points ExecBlueprints 13

Ideas to Build Upon & Action Points (continued)

ExecBlueprints is a subscription-based offering from Books24x7, a SkillSoft Company. For more information on subscribing, please visit www.books24x7.com.

10 Key Questions and discussion Points

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In the past two years, how has your company streamlined operations and reduced costs? Why did you focus on these areas in particular? How has the company benefited?

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When seeking to cut company costs, what areas or departments are you most likely to consider first? Where can you most often potentially save?

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What are your best practices for trimming costs without weakening operations? In what ways are they similar to your industry’s best practices? In what ways are they different?

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How do you motivate employees to work as efficiently as possible and reduce overall costs? How do you maintain morale when employees are asked to do more with less?

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In the next 12 months, how do you plan to trim costs in order to maximize success in a challenging economy? What do you hope to accomplish? How did you identify these areas?

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What are the top three indicators that it is time to significantly re-evaluate budgets and expenditures to preserve the financial health of the organization? Why are these important warning signs?

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If downsizing is required to reduce costs, how do you handle layoffs? What are your criteria for determining which staff members will be laid off?

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In the next 12 months, what are the greatest budgetary or operating challenges you expect to face? How do you plan to address them? How do these challenges compare to previous years?

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What benchmarks do you use to monitor your company’s financial health in a tough market? What is measured? How often?

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