Viagra for the profit-driven soul

As the economy's growth slows, I have begun to see news of layoffs and other belt-tightening announcements for the first time in a decade. NBC recently made headlines by citing slower advertising sales as a reason to eliminate between five to ten percent of its workforce. This revelation was made on the heels of announcements from other companies in the same space, such as the CNN News Group of the newly merged AOL Time Warner Company.

Although this is probably the fifth or sixth layoff-related news story I've seen in the past few weeks, this particular one took me by surprise because it acknowledged something I have been preaching for years. Bob Wright, NBC's Chief Executive, said in a company staff memo that NBC needs to look to new technology to help it cut costs. Wright further went on to state, "It is now clear that we must go beyond belt-tightening and take the additional step of reducing the size of our workforce. That is why we are looking very closely at every process and function to see how digitization can lead to improved quality and lower costs:'

Although I hate layoffs (I feel they are disastrous for morale), I saw a tremendous amount of insight in some of Wright's words, as he fully understands that technology investments can save a company a great deal of money. As you may know, I used to function as the programmer and MIS direc-- for for TMC, the parent company of this publication. As such, I was intimately involved in designing the database applications that took the place of the manual systems used for a full decade before we computerized our operations. I then spearheaded the company's advance into desktop pubfishing. In both cases, we recouped our investments in less than a year and began saving money immediately thereafter.

The last ten years, particularly the latter half of the decade, have been so enriched with growth that making our companies more productive and cutting expenses have not been our first priorities. While many Internet companies learned the hard way that they need to focus on profitability at the expense of everything else, the financial markets are forcing all of us to contend with the same reality.

I recently read on MSNBC.com that. many companies are issuing internal memos about cost cutting. Benefits such as insurance are being downgraded while perks like free coffee and meals are being eliminated. This same article cited the immediate drops in morale associated with such changes. As we all know, negative changes in morale can have a serious affect on profitability, and corporate America needs to be careful not to become pennywise and pound-foolish.

As a result, we are all faced with difficult decisions in the months ahead and I personally have a major fear that I would like to share. It is my concern that the last ten years has seen the rise of many young CEOs launching new technology companies. I have nothing against young CEOs, mind you. I am probably one of the younger publishers in the technology publishing market. My concern is that these young executives have not yet had the experience of managing their companies in the face of slowing economic conditions. It is very easy for any company to cut costs, but there are some cuts that are highly detrimental to a company's future. I have had the benefit of reporting on many companies' successes and failures over the past years and have tried to determine what has worked for various enterprises and what clearly has not.

I decided I would pull together a list of "dos and don'ts" that companies should use in a slowing economy to keep themselves more profitable. I would like to preface this list by saying that I think communications technology has been the greatest productivity booster we have seen in the last 15 years, with the exception of the PC. Can you imagine how much less productive the world would be without ACDs, voice mail, e-mail and cell phones? If you took away my wireless Palm VII as well, my productivity would likely drop by more than 75 percent. So with this in mind, I present you my list for your perusal.

* Don't cut from sales or marketing! This is the easiest place to cut from; however, it is the one place that will impact your company negatively within just a few quarters. Not only does this give a negative impression to your future customers, it sends the wrong internal message, as well.

* Do improve your customer service, regardless of how interactions are made between you and your customers. Steer both customers and employees to the Web whenever possible. This is the least expensive way of interacting with your clients. Allow your customers to chat, e-mail and call you so they always feel connected, and respond promptly.

* Engage in numerous, inexpensive Web surveys and ask your customers how you are doing. These surveys are cheap, and if you randomly give away a Palm computer to one participant as a bonus for responding to your survey, your customers will trip over each other to enter to win. Listen to your customers and respond accordingly.

* Get your workforce connected. Make sure that everyone who can benefit from a wireless hand-held computer, cell phone or home PC has one. We have a very hard-working group here at TMC and many of my TMC coworkers work at home until late at night on their home computers.

* Investigate Internet telephony. While phone rates have come down, IP telephony allows you to save even more money and take advantage of enhanced services that will make your whole company substantially more productive.

* Consider outsourcing. The upcoming ASP revolution will allow you to do more with less. Communications ASPs allow you to outsource every aspect of your interactions with customers.

* Solicit ideas for cost-cutting from your coworkers. Give rewards for the best ideas. Every company has many hidden ways of saving money that will not negatively affect morale.

* If you are confident that you are providing good CRM and your customers are indeed happy, ask them to refer your company to a friend. Give away something (perhaps 10 percent off their next order) to every customer who refers your company to others.

Evaluate your advertising and marketing programs and invest more money in the areas that provide the best payback. It is always easier to gain market share in a slowing economy than a rapidly accelerating one.

Although we are not in a recession as I write this (a recession implies negative growth, not slowed growth) and I am confident that the Federal Reserve's rumored-tobe-impending interest rate cuts will boost our economic outlook for the second half of this year, my list should help your company to painlessly cut costs and increase profitability. Although unemployment is still incredibly low, I hate to hear about layoffs, as they never help the morale of those inside the company or on the outside. Focus on boosting long-term profitability and hopefully in the next few months we will look back at the first few quarters of the year and remember this time as the recession that was avoided.