The bail out package is tactically a fix for the banking woes. But it also should serve as a strategic wake up call that the days of highly leveraged businesses are over, and a new era of "credit thin" business has begun. The enormous amount of leverage that businesses small, medium, and large could depend on from the banking community to grow is no longer available. And it went away really fast. Yes, the lending process will return, but it will only do so in a modest form compared to the way it was just a short time ago. The cost of financing will now be high, because banks simply don't have the markets anymore to support the lending levels they once did.
Companies that make the necessary business adjustments and transition to the new era are the ones that will survive. So what can you do for our business? Assuming that top priority now has to be remaining cash flow positive, look in new places for efficiency gains within the company that will allow you to operate in the new era. One of the hidden areas may be in the product or service development processes.
There is a great imbalance in many companies today between the enormous efficiencies of outbound marketing and sales, and the ability to serve the opportunities uncovered. The internet revolutionized outbound marketing. Public relations, marketing communications, and target marketing directly to your customer can now be done at a fraction of the cost compared to just a few short years ago. Internet marketing uncovers selling opportunities all the time. But the infrastructure for creating the products and services needed to deliver on these new opportunities has not evolved as quickly. A gap has formed which results in lost sales. Resolving this gap is a potential source for new found profits. The transformation of the product or service development process can affect both the revenue and the cost side of profitability , making it an attractive place to start the transition.
A revenue growth strategy that allows companies to aggregate targeted customer needs, rather than a one-size-fits-all product or service for a broader market, means that the opportunities uncovered by the internet marketing can be can be captured with a high sales success rate. High margin opportunities can be a larger part of the mix. As the opportunities aggregate, the product or service as a whole will contribute more margins.
From the cost perspective, the process has to manage several, if not many, product or service derivatives. While derivative development has been unpopular of late, and seemingly counter to the mantra of focusing on core competencies, the reality of target marketing is that the customers increasingly expect to get exactly what they want. Almost want they want is a lost sale. At some level then, a product or service derivative strategy must be formed. In order to do this, a product or service management process must integrate engineering, sales, marketing, and support services much more tightly so that reaction to rapidly changing market requirements can be managed effectively and efficiently. This calls for a departure from the "survey the market-build the product or service- and sell to customer" approach which no longer works. The process has to become more "find a customer-have the base product ready- make the changes to fit the exact needs rapidly- and deliver". This is much more a customer driven process.
Changing both revenue and cost side strategies, using product or service development process as a the cornerstone, can have a multiplicative effect on profits. This is why making the investments now to realize these gains is perhaps number one agenda topic for all businesses as the new era begins.