CEOs Done With Cost Cutting

from the now-focused-on-cost-raising?? dept

A new study from IBM is being used to suggest that the economy is coming back. They asked a bunch of CEOs what they're focusing on now and discovered that after years of focusing on "cost cutting", CEOs are done with that. Now they're focusing on revenue generation. While the article talks about what this might mean for the economy, I find it more interesting to think about what it says about CEOs (or whoever put through this study). It seems to reinforce the silly single-minded approach to running a business, where you can only focus on one side of the cost-benefit equation at a time. In the boom years, companies only focused on revenue generation, ignoring the cost side. Since the bubble burst, it's all about controlling the cost side, without any concept of how cutting costs harms revenue generation. Now, the pendulum is apparently swinging back. At what point do CEOs realize there's more than one side to look at, and start viewing both sides together and making more informed and balanced decisions?
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  • identicon
    Anonymous Coward, 24 Feb 2004 @ 1:13pm

    No Subject Given

    I guess after years of cost cutting, there's nothing left to cut.

    Now the stupid suits have finally figured that you needed to keep some developers and marketing people to have a product to sell!

    reply to this | link to this | view in chronology ]

  • identicon
    DV Henkel-Wallace, 24 Feb 2004 @ 3:07pm

    Not necessarily brain-damaged!

    I find it more interesting to think about what it says about CEOs (or whoever put through this study). It seems to reinforce the silly single-minded approach to running a business, where you can only focus on one side of the cost-benefit equation at a time.
    Actually, it's not necessarily as stupid as you think.
    First of all, your company could be in trouble, so you don't have time to grow the business before it runs out of cash. So you have to get your burn rate below the income rate and hope that you keep the business running in the mean time.
    Secondly, and this is the worse one, the markets may have "fashion" and may penalize you for certain kinds of investment. So yes, although you're always pedalling and steering at the same time, you may need to emphasize one or the other in order to 1> get all employees on the same page and 2> get the market to understand what you're doing.
    And while we may say that the best businesses should just ignore the markets and run themselves the "best" way possible, if you need more capital with which to grow you can't ignore market fashions.
    There are other reasons too, but these are the big top 2.

    reply to this | link to this | view in chronology ]


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