Recession Strategy: Attack Processes

Ad spending is hitting the skids. Layoffs are accruing across sectors — today’s bloodletting is at Sony, which is eliminating 8,000 jobs worldwide.

How do companies maintain competitive advantage in a contracting economy?

Consider overhauling some outmoded business processes, said Howie Bass, partner for assurance and advisory business services in Ernst & Young’s media and entertainment practice. With revenue potentially in decline, Bass told me, "it’s an opportunity to challenge the fundamental cost structure of the business."

He identified two general areas of opportunity to cut costs and/or improve efficiencies:

1. Revenue generation: The way some media companies handle contracts and billing hasn’t changed in 30 years, according to Bass. The order-to-cash process may not be standardized, automated or centralized, which can result in discrepancies and billing errors. "You’ve got to be easier to do business with," Bass said. "There are a lot of people that can deliver a demo like ‘women 18 to 34.’"

2. Consolidate financial operations: Some brands within media firms operate as "little businesses within big businesses," Bass said, with their own CFOs, accounting staffs, accounts-payable departments, and in some cases, HR departments. "Do you really need that at a business-unit level?" he asked rhetorically.

To be sure, Bass is in the business of selling process-optimization services. But his point, a valid one, is that media firms will need to figure out ways to adjust for potential single-digit negative growth. "Ad revenues are going to be down — there’s no doubt," he said.