hpo Spotlight
Strengthening reslilience and ensuring performance
All companies are subject to economic fluctuations. However, they tend to find it easier to tackle the challenges of an upturn than to deal with the consequences of a downturn.
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Challenges with changes in the economy
When the economy changes, the central challenge for every company remains to maintain its performance. This means that the company's result and the preservation of the company's value are fundamentally in the foreground. Every upswing or downswing causes a deviation of the company from its optimal performance (operating point). The operating point is the point at which the relationship between output and input is at an optimal level. As soon as companies are outside a tolerance band of +/-10% above or below this operating point, it leads to a change in performance. In our projects we have found that a slight overload has a better effect on performance than a slight underload.
Consequences of an economic downturn
During an economic downturn, a company very often deviates from the optimal operating point. This means that deviations from the plan quickly occur, which usually have drastic consequences for the company's overall results. The main reason for this is relatively simple: companies are usually not designed to respond to volatility in a sustainable way. The reasons for not being designed for volatility are complex. It can mostly be equated with a "systemic failure". In the long run, companies that are good at dealing with volatility have an advantage. But this also means that a company has to question itself in its actions and be open to new ways of doing things. One way to prepare for economic fluctuations is strategic organisational design.
Strategic enterprise design as the ideal starting point
Strategic organisational design ensures that a company can achieve its full performance, both at the planned operating point (measurable point for optimal performance) and in the event of deviations from the planned operating point caused by fluctuations in the economy. In a strategically designed company, the system, i.e. employees and processes, can adapt more quickly to the new situation.
Strategic organisational design is holistic. It ensures that the following elements are aligned and positively influence performance:
- Value creation: If the service provided by the company is clearly aligned and differentiating, the entrepreneurial risk can be reduced.
- Core competencies: The development of own differentiating capabilities and the decision to make or buy (i.e. to produce or purchase services) guarantees a focus.
- Business processes: The processes defined to deliver value are aggregated, consolidated and aligned in a higher-level business process model.
- Cost structures: A flexible cost control system that quickly measures the change in the ratio of variable to fixed costs enables a rapid response in case of deviation.
- Agility: The permanent staffing of success-critical vessels (e.g. trend identification and assessment) as opposed to an annual survey ensures predictability and rapid reaction in the event of changes.
Overall, strategic organisational design makes companies more adaptable and resilient and ensures that they can perform at their best at all times.
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Who is hpo management consulting?
hpo stands for High Performance Organisations. As experts for strategy, business processes, organisation and transformation, we have been supporting nationally and globally active clients since 1995 in releasing performance potential and transforming strategies into measurable results. With our holistic and partnership-based enterprise desing approach, we reliably lead them to their goal: a consistently designed and sustainably effective High Performance Organisation - fit for the future and with a clear competitive advantage.
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