November 1998

Communication as a way to improve your business – Investments in the last quarter of 1998

Communication as a way to improve your business

Communication is the foundation of not only a successfull company but also of our whole society. Without the development of oral and written forms of communication there would be no progress. To run a company also requires several communications skills. Ideas have to be told around, products have to be invented, investors have to be attracted, staff have to be instructed and buyers have to be convinced. All those activities of a company require communication skills.

The definition of communication is in our understanding not only the well known and used oral and written part, but also the interaction of the several departments in a company. Or as you like between people, organisations and entities in the society. The people in a department, division or unit should cooperate but also these parts should cooperate in the company, organisation or even the society. Only if the communication between all and every parts are functioning correctly there can be gained a production improvement of substantial size.

We will describe some conditions and measurements to improve the communictation in a organisation which should deliver a better working climate and above all an improved balance sheet.

Conditions of better Communication

To improve the communications in an organisation there are some basic pre-conditions. The people involved should talk about the same subject, must have an equal educational background and preferably there should be some sympathy, especially at low, unit/group level, it would make things easier.

The pattern of communications should on the other hand not be limited to a part of the group, department and organisation. A free flow of ideas, information and the like should be stimulated to increase the group feeling, to make people think and to generate several alternatives. Everything what is presented should be treated with the same respect and interest as if it was proposed by the CEO. If the proposals are not suitable tell why they are not suitable. If however something really interesting comes up, the idea should be rewarded not just by money but also with honours towards the person who brought forward the idea. This social reward will be more impressive and lasting than just an addition to the paycheck.

Toward improved communicative relations

Communications can be further improved by the use of a common available data storage and retrieval system, regular and pre-meeting information exchange, the correct meeting preparation and a case objected approach of the meeting.

The creation of a common understanding is necessary to look at the current developmental status and what is possible. The whole process of a product should therefore be arranged according the KISS rules, Keep It Simple and Stupid. This will eliminate difficult production processes, products nobody really understands because they are to difficult to use and it minimizes the probability to make a mistake.

The communication in the company should be improved by the introduction of an intranet. This will improve the internal communication and at the same time all messages and information transfers can immidiately be stored in the central data storage to further usage by other employees in the company/project. A kind of open communication system eliminates difficult hierarchy schemes which only disrupts the flow of information. Communications should improve the cooperation in a company. Information should be available to all concerning parties. Only if those conditions are met, the information can be used to do something like to improve a business process.

As an example, improved communications improves the development time of a given product. For example product A is in its R+D phase. A file is giving the exact status of the product. The product will be evaluated, a report about its status is send to all concerned. A standard reply form has to be used to simplify answering and processing of the remarks. Standard reply forms avoids long irrelevant stories and forces the replier to be to the point and only to submit relevant information. All recommendations are collected in the file of product A and in a general data base for use on other programmes. All members of the development team can use this information to improve the product. This can be done as many times as it is necessary, Product – Questions – Recommendations – Evaluation – Questions – Recommendations – Improvement. This cycle in the R+D phase will eliminate a number of meetings which have no other goal than improvement of the product. Another advantage of this kind of communication is that it allows the company to use all resources available in the company not only the ones which are at one site. Intranets do not care about distance and do not use valuable time on ineffective meetings.

The number of meetings which are necessary can be minimized to just the important ones which are about product selection, decision and other managerial tasks. But the meetings can become more effective. Every meeting needs to be prepared, if you have to read the files during the meeting, taking decisions will be more time consuming and difficult. The data storage of all information and the pre-meeting intranet exchanges allows all participants to know what is happening and what is demanded. An identical background can be shaped by the availability of a data base and the preparation before a meeting. The meeting can then be case object oriented and decisions can be made and executed at a higher speed and with more impact.

The communication system does not need to be limited to the company but can be extended to suppliers and customers. The use of advanced data transfer and storage systems allows the owner of the system to set parameters who is allowed to see what information. This makes it possible to allow outsiders to support or be involved into your company/R+D. The suppliers can activily participate in the development of a product. This will improve the quality and ease of production of the product and it will bind the supplier to the product. The customers can influence the product development by infusing intelligence about the wishes and demands of the customers. The attractivity of a product increases if it features the things which are wanted or even needed by the customers.

Conclusion

Communications in all its difference forms will be important to the success of a company. It is the essence of a company, the superior management/application of communications will promote the invention of new products, streamline the production process, increases sales and not to forget will improve the relations with your shareholders.

The implementation of the correct ways of communication can be achieved by the improvement of the relations between employees, the several departments in a company and with the external sources like suppliers and customers. The use of advanced data storage and transmission systems. The use of standardized processes, checklists, information exchanges and consistent preparation of the work assigned towards each employee. This will improve the operations in a company but additionally the climate will also be improved substantially. And everybody likes it to work somewhere where he feels comfortable.

Investments in the last quarter of 1998

The last couple of months proved to be very volatile. The economic troubles of the Asian region spread over the world. The Russian economy collapsed, South American currencies became under pressure, the economies became extremely negative and that all finally led to a massive correction on the European and US stockmarkets. Especially the international financial listings lost over 50 % of their value. The majority of the other stocks also experienced some losses but they were small compared to the financial stocks.

The outlook for the next months is very complicated. The economic problems will not be evaporated on the short term. Some Asian economies will see some improvement like Thailand, Singapore and South Korea. Japan and the Philipinnes have a chance to see some improvement. If the Japanese government plans, including the support of financial institutions are implemented and accepted, then Japan will see some growth in 1999. The situation in Malaysia is more complicated. If the Malaysian experiment, to close the financial transactions market with the world, does not have a positive result the economy will be in the same bad position as the economy of Indonesia. The Indonesian economy will not show any positive developments in 1999. There first need to be a lot changes, economical and political, to be implemented before growth will restart.

There are a number of opportunities in Asia, if you are willing to take a risk. There seems to be some kind of bottom reached in Singapore, Thailand, South Korea and the less hit countries like China, Hong Kong and Taiwan. The economic forecasts are also better then before and the stock prices are now at a level were some buying could be profitable if your horizon is at least12 till 18 months. The chances on the short term a more difficult to estimate, only a small number of stocks will be promising on the short term. The whole Asian crises situation is dependent on two factors. The Japanese recovery plans and are the changes in the Asian countries enough to stimulate growth and attract foreign investors.

The situation in Russia is more troublesome. As long as the Russian government is not willing to eliminate the phantom economy, the large state enterprises which do business through barter with a minimum of cash and at unrealistic prices, there is no chance of recovery. The Russian economy should be founded on companies which work according the profit system. Only healthy companies can deliver tax income and guarantee work to the people which will mean growth to the Russian economy.

The South American economies will remain under pressure as long as the Asian crises is not solved, the national budgets are not brought in line and the short term debt is not restructured. The future of the South American markets will remain depressed in the next months. If the Asian economies will show some improvements South America will become more interesting. But this will not be before the third and fourth quarter of 1999.

The U.S. and European economies will be the only places were growth is possible. The economies will show some growth but at slower pace than before. The economic fundamentals remain in order for the U.S. and Europe. The inflation and the interest rates are low, the internal demand continues to be promising and the unemployment is in many countries lower then before. The outlook is very promising especially after the third quarter of 1999. The millennium bug (Y2K) might be a little disrupting at some places but it will not inhibit growth substantially or for a long time.

There are a number of opportunities in the U.S. and Europe. They will be centred around companies who have none or just a little exposure to Asia and South America. The differences between the good and the bad will be fully clear if the quarter results will be published. Some will be disappointing but for a number of companies things do not look that bad. The companies with a healthy cash flow and a high return on capital ratio will be the best performers for the coming months.

There are essentially two groups of stocks which will probably show some above average growth. The companies which have done good during the several crises, they are however rather expensive. Like the telecommunication companies, the large pharmaceutical and some of the tech companies. The tech sector is very differentiated, IBM, Dell, Apple, Oracle, Microsoft, AOL and other internetcompanies are outperforming the market. Where as a number of others have done below expectations.       The other group are the companies which have been beaten badly by the recent corrections. The most promising companies are those who are in business sectors which have implemented a number of changes and who are needed and promising. Like the semiconductor and oil service sector.