Time To Replicate Lessons From Recession

It will be helpful to look back and recollect learnings from the 2008 recession on doing more with less that can be replicated in the current stressful economic scenario.

hidden January 20, 2012 12:09:16 IST
Time To Replicate Lessons From Recession

Lately, we have seen generally negative sentiment validated by economic data that point to slowdown fears in India as a fallout of global macro-economic uncertainty and the governments steps to control inflation. It’s time to sit up and draw learnings from past experience.

The current situation brings back ominous memories of the 2008 recession which also impacted India’s economic growth. It will be helpful to look back and recollect learnings on doing more with less that can be replicated in the current stressful economic scenario.

Lessons From 2008 Recession

Everyone has their own set of lessons from 2008. A generalised view to say certain lessons will work for everyone is unfounded. Every organisation – based on their industry dynamics, culture, challenges will have to create new opportunities for efficiencies.

So, how did people respond to the crisis the last time? They undertook cost assessment exercises, identified scope to cut to size big ticket items. They started looking where they were incurring costs and how to reduce them. Some of the cost was renegotiated, needless assets were laid off. Sure, it would have been nice to have these luxuries, but when times are trying, it is important and smart to get things done while saving costs.

However, as economic conditions eased, did they go back to the original status of sub-optimal resource usage or did they continue on the lean path of resource rationalisation? If they chose the latter option then there may be very limited options available to further cut down what is already optimised.

If complacency once again drove companies towards the sub-optimal practices then there is an opportunity to repeat the cost saving practices, but then the management also has to acknowledge the fact that they have allowed the drag to happen. In a way it’s a sign of weak oversight.

Learnings For Retailers: Can They Be Re-Done?

In 2008-09 when things were really going down, retailers chose to slash their big costs where feasible - rentals, manpower and electricity. These were not related to IT, but IT helped create visibility.

Retailers rarely consider cutting down on manpower as it directly impacts the customer and hence, not a very viable alternative.

Electricity is the next item on the chopping board. Eco-friendly options such as LEDs can create an impact here, albeit with high capital investments; it saves long term costs. Optimising air conditioning is another option. Like it or not, the way air conditioning is configured in this country, there are hot and cold pockets. Using sensors to optimise the usage holds the key. We optimised the air conditioning and continue to invest in electricity savings.

IT can create a monitoring mechanism, sensors that trigger feedback and changes can be deployed in manual or an automated arrangement. Constant tuning of the air conditioning by balancing the AC temperature inside office building depending on the ambient temperature outside can definitely save money. I believe that cost benefit analysis is important before embarking on any initiative.

What 2011 Taught Us

Uncertainty is certain. One can’t sit and say, ‘I have done enough’. The strategic and the tactical have to be balanced. If one loses focus of the strategy then the organisation cannot steer in the right direction. At the same time, one has to ensure that tactically the enterprise is able to survive.

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