Financial Management - All Posts - Ze'ev Ronen - Business Excellence

I don’t know about your specific company, but usually the first step is layoffs. Most often, labor costs aren’t the biggest expense, but it always seems simplest, fastest, and easiest to fire employees - and if and when sales are back up, recruit new ones. Furthermore, we know there is always latent redundancy, so we assume any reduction in the workforce will lead to greater efficiency.

It might seem odd, but some businesses and people benefited from the global effects of the pandemic. For example, let's say you're a manufacturer of a niche product like facemasks, and suddenly it becomes the most sought after product worldwide, sold for exorbitant prices. It can seem as if luck fell out of the sky, into your lap. What will you do?

Ei'lam and I analyzed the company's operations, and for all other fields managed to create a profit generating work-plan with reasonable effort. Contrastingly, it seemed impossible to create such a work-plan for the import and distribution side of the business.

In my last article I discussed strategies for businesses during the Coronavirus crisis: the gazelle and the hedgehog strategies. When the gazelle senses danger it raises its head, looks around, and runs forward. At times it will change direction, but will always continue moving and keep its head up. 

We can be sanguine about the Coronavirus or be concerned or frightened – but we can't ignore the dramatic effect this crisis has on the global economy. In this article I don’t intend to give instructions like those issued by the government, about crowds and the like. I write about the business aspect, with all the issues you should deal with.

At the time Moshe was the CEO of Eyal Optics, and I was just starting as the CEO of Shamir Optical Industries. Shamir Optical and Eyal Optics had a complex relationship. On the one hand Eyal were our clients. We supplied them with glass molds for manufacturing plastic multifocal lenses, and they owed us a lot of money. One the other hand, Eyal were our "home lab".

We're nearing the end of 2019, have you prepared a work-plan (and budget) for 2020? Maybe you have a three-year or five-year plan? If the answer is no – this is the last chance to do so. And maybe you think work plans aren't necessary?

Many companies I have encountered search for ways to save "in the spotlight", meaning areas where it is easy to see and to attribute to a particular focal point in pricing – for example, purchasing, defective product, work costs or logistics. And an action whose objective is to strengthen employee bonds falls under Welfare and is usually considered a luxury, ending up being the first thing to cut.

If we address the 20% of principal products manufactured (see example later on), we can attain a significant improvement in results (eg. profits). In this way, we can concentrate our efforts and resources and be decisive and efficient.

Sometimes it seems to me that CEO's are afraid to confront management members who are not maintaining objectives. Instead of demanding a plan of action to attain the objective, the CEO herself explains to herself why they haven't attained their sales, production or other objectives.

The guiding principle behind our work leads a company to improvement and does not provide it with advice.  We work this way for several reasons: Firstly, we, as people, don't like to receive advice, and therefore, improvements in work methods that are obtained as external knowledge and not as a product of internal work, shall encounter opposition or will not be implemented in the long term.

Many companies wish to improve their performance and seek strategic advice as well as marketing or organizational development strategies, and when they receive advice, opposition emerges throughout the organization and ultimately this advice remains untouched in a book.

Thirteen important management principles to build a growing company and generate profit: A lecture in Prof. Dov Zohar’s seminar for MBA course at The Technion, Israel Institute of Technology.