In good times when business is expanding, it's easy for managers to not pay much attention to long-term strategy. As a result, when a downturn comes, any cuts that you make may end up cutting your ability to rebuild your capabilities later, says Robert Kaplan in Take Strategy to the Front Lines. Separate what you spend on operations from what you spend on building strategic capability to position yourself for growth long-term.
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"During a slowdown you have to look much more closely at all the spending programs and all the capacity you have put in and hold onto only those that you want to sustain into the future," Kaplan says. "That's where strategy helps you focus."
Know what type of company you are and what type of company you want to be to make more strategic cuts that will help in the long- and short-term.
Identify what the strategic capabilities you have are and what parts of your business support them. And then make sure you protect those assets when cuts are necessary – whether those assets are personnel or capital equipment.
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