Business

How to Become a Modern Leader in an Environment Where Cutting Costs Matters the Most

posted by Chris Valentine

Tasked with Cutting Costs as a business leader? Here's what to do

Some of the things the financial crisis of 2007/2008 taught organizations, was that they needed to optimize their performance, have stricter resource management, and have tighter control. Suddenly, money would only get spent if the results were guaranteed. Unfortunately, that is not how innovation happens. Luckily, this is now once again understood and more companies are looking into idea management software solutions to truly become competitive again.

Cutting costs and expecting the workforce to perform optimally are two polar opposite issues. Companies now understand that idea generation and innovation must be prioritized, even if that doesn’t necessarily lead to something. The fact is that it could lead to something, so it should not be seen as a luxury. Why do you think that many of the top companies put innovation at its core? While it is certainly true that they have the resources to do that, there is more to it as well.

Human and Social Capital and Excellent Leadership Are Key Strengths

The responsibility for putting solutions in place lies with management. They create performance metrics, so that they can track which decisions are made and what their impact is. What they don’t have to do, however, is be responsible for every step made towards that solution. That can be done by human capital, which is already in place.

Employees can and want to be part of the decision-making process. The time of top down management is gone, at long last. Rather, company cultures now should advocate inclusion. When that happens, profitability goes up as well.

What Is Social and Human Capital?

Human capital is everything that each staff member has been able to do over time. This means what they have learned, as well as their judgments, abilities, wisdom, and talent. Social capital, meanwhile, is the company culture: the shared understanding, norms, and values. Social capital is what creates collaboration and cooperation.

Social capital was traditionally limited due to space and time. Thanks to digitalization, however, these barriers are removed, which increases its value. However, it can only be effective if there is open leadership, in which digitalization is supported.

If a project has to be managed by a single person, it can easily take months to complete. Yet, if 12 people were to work together on it, it would just take a few weeks. That is social and human capital. The role of leadership is to foster a culture in which that is made possible, which can be done through idea management software.

How to Activate the Leader of Today

One of the key things that should be implemented, is to create performance metrics for decisions that were supported by employees. Their bonuses should be linked to this as well. To make this successful, idea management software should be put in place, and there should be a culture in which everybody is encouraged to use it. This requires a change in leadership approaches, but it is a necessary change.

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