UK bosses are being urged to scrap brute-force cutbacks across the board to combat the economic slowdown and instead make “smart cuts” to free up budgets and invest in customer insights, technology and talent to exploit market opportunities that will open up as competitors wield the axe.
According Forrester’s CEO Guide To Navigating A Turbulent 2023, cutting costs often means cutting staff as well as reducing budgets and investment in ongoing operations and product projects.
Having learned from prior recessions to respond quickly when a downturn rears its head, panicked executives impose cuts across the board, asking the business to save 5% or 10% overall.
However, this approach guarantees that cuts are as likely to hurt as help, as they will be independent of the organisation’s long-term strategy — particularly in a talent-constrained environment — and undercut employees’ faith in leadership.
Instead, businesses should investment heavily in customer insights and engagement, including data analytics, experience research platforms and post-sale experience messaging; technologies that improve customer experience and reduce costs, including the cloud and robotic process automation; and talent and productivity, including acquisition and coaching.
In fact, Forrester believes businesses must put talent at the centre of their long-term strategy. When considering cuts, firms should identify the individual contributions and skills that will take their company into the future; invest in a talent intelligence programme that tracks workers’ skills and performance capacities beyond static job descriptions or faulty performance reviews.
Meanwhile, firms should also choose the right customers to obsess over. Resources are precious in this particularly fraught economic downturn, meaning it is just as important to decide which customers not to serve as it is to obsess over who to serve now and in the future.
Underperforming markets lead to underused operations, neglected technical debt, and the waste of valuable resources that could be aligned to better opportunities, Forrester argues.
Another key focus should be on elevating workforce and customer analytics talent and tools to highlight what really makes the organisation tick.
When competitors announce plans for cutbacks, firms should publicly express sympathy but privately look at every person laid off as a possible new hire, think of every product that competitors scrap as an open door for offerings, and see every partnership walked back as an opening in the ecosystem.
The report concludes: “It’s decision time: Will you read and follow the headlines or will you strike out on your own and carve an insights-driven path that your competitors will later wish they had imitated? Avoid becoming distracted by arguments over whether and when a recession is coming or whether your planned cuts, if any, are in line with those of other firms. And avoid the trap of thinking that if you just do what worked in the Great Recession of 2008, you’ll somehow survive. This downturn is different.”
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