When tough times come, too many CEOs knee jerk themselves into cost-cutting mode. Big mistake, write two Booz & Co. consultants.
What’s needed instead is a smart, targeted investment strategy, say Cesare Mainardi and Paul Leinwand in a recent Booz report. By making an intelligent study of strengths and opportunities, management can prepare for the future.
Doing so need not involve raising more money. Funds already available can be shifted around. “They can position your company for advantage through the rest of the downturn, and beyond,” they write.
A few examples of how companies have managed:
- Toyota Motors continually invests in its production system.
- Procter & Gamble never skimps on research and marketing.
- Wal-Mart never gives up on improving its supply chain capabilities.
What’s needed, the authors write, is the confidence for management to focus on the best areas for growth. Rather than spreading money across the board, which can lead to big, across-the-board losses, the smart play is to make targeted investments, the authors say.
