Surviving Tariff Panic: 5 Crisis Cost-Cutting Strategies That Strengthen Your Business

Hey. So today we are going to talk about something that we are calling tariff panic, also known as panic cost-cutting. And it is making me think of a couple of things. One is the first line of the poem, which I couldn't remember, but you identified as if by Rudyard Kipling.

And was my father's favorite poem.

And it was just his 101st birthday. If you could keep your head when all about you are losing theirs. And, you know, in the end, it's then you've become a man, my son, but many other ifs in between. But it is pretty hard to keep your head about you right now. I mean, we're fielding a lot of calls. We're talking to a lot of people who really are in in panic mode because of what's going on with tariffs and all the uncertainty that that brings. So, as you said, that's perfectly normal. It is exactly its human nature. I mean, there's reasons to panic. But as you also said, I'll just say what you said, and you can just sit there and nod for the rest of the...

No, I'll just keep saying, good point, excellent point. Oh, how insightful.

No, so this one was, don't let a good crisis go to waste. But we have found... certainly in the past, a financial crisis of 2008. And after 9-11 and other times with some similar lack of certainty that the gut reaction is to just sort of pull in and cut costs, shut things down, but not to do it in a way that we think is healthy. Would you like to talk about some of the ways we see that it's done?

Yes. As you said. So these are all kind of slash and burn things, which executives, it's not that they want to do these things or that the board wants them to. They're trying to deal with the fact that the house is on fire and, you know, doing their best to get through the day and ahead of the curve. So, you know, you cut advertising, you cut staff. kind of across the board or wherever you think you can without changing the work. You know, contracts that are up for renewal, you don't renew or you defer, you defer maintenance. And so there's a lot of these, you don't make investments or you defer those investments that actually would pay off quickly, but you don't necessarily kill the ones that are halfway through. Even though we all know some costs are some costs, there's a human dynamic that kind of makes you stick with it, if you can, if you can. So a lot of this cost cutting are things that no one really wants to do, but they feel they need to do. And then when the crisis is over, they look back and they regret that they felt that they had to do that. And then they start putting those things back as if...

I would argue, just for the same point that you just made about, you know, what you're halfway into a project, you stick with it, that most people won't look back and regret. They should look back and regret, but they don't. They think, well, we just did what we had to do to survive in the moment.

Well, and I would argue, because that's what I do, I would reflect. thoughtfully on your comment and say, it depends where you are in the organization. I completely agree with you. The board, the executive C-suite, the executive team is we did what we had to. The people down here doing the work are, you know, man, this really, this really hurt us. And now we've got to rebuild because those were not. were not good cuts to do.

Yeah, absolutely. I guess our advice would be in the vein of don't let a good crisis go to waste. There are many smart things that companies can do to very quickly sort of batten down the hatches and give themselves some runway for the uncertain times ahead. And that is not to just do a blanket layoff. Sure, it feels good in the moment. It's quick. Well, I shouldn't say it feels good. Layoffs generally do not feel good to anyone. But they're particularly horrible when you don't change the work. So take the time now. It's not a lot of time. This can be done over a course of a couple of months, a few months, to figure out what you like to call the no regrets ways to cut costs. So simplify your processes. Talk. Talk to the people who are in your company and ask them what gets in the way of doing their job.

And it's not like talk to them to take on board things they say to you that you will then problem solve with. It's actually engage them because everybody knows during these kinds of crises that, you know, their company is in trouble. They want to help. They want the place to survive. You know, we worked for a bank that hired us at the height of the uncertainty of the 2008 financial crisis. And banks were getting slaughtered. And most banks were just doing the kind of, you know, what we talked about, the panic, cross-cutting. But these folks engaged their whole organization in a couple of months, found tens of millions of dollars. And the people in the organization felt good about it. being the ones to come up with the solutions and then do the solutions because they were helping the place stay afloat. And the reason it's no regrets is because a lot of the stuff that happens before the crisis and then after the crisis stays the same. The crisis doesn't change everything. And so there are a lot of things that you can change that were smart. You don't regret doing it. As opposed to saying, oh, we're going to close down these 15 branches. Well, we could have really retooled those branches. But, you know, instead we sold them or we got out of them because we didn't know what was going to happen. Well, that's right. If there's that much uncertainty.

That's a terrible example because branches should almost all be closed right now.

Okay.

Who the heck is into a branch anymore?

Okay. Okay. How about if you're Apple and you have Apple stores with the highest profit for any retail? That used to be the case. I don't know if it still is. But the idea being most executive teams sadly do not realize how much there is to do that's no regret and a big, big number. gives them runway and alleviates the need that's currently forcing people's hands to do things that they wish they didn't have to do until there was more certainty. Once there's more certainty, maybe closing those plants down makes sense or whatever it is.

Yeah. And in the meantime, they cut training budgets and they cut, well, I think I already said they cut customer service. they but yeah and And R&D. And they will say that they don't want to do this, that this is, you know, they know that this hurts them long term and that they hope it's only a short-term thing. But they don't even need to do it short-term for the most part.

Yep. And that's where letting a good crisis go to waste. You know, I know you recall when I once met the CEO of Verizon, I'd say about two years after 9-11, maybe. I don't remember the exact date. and we were having dinner with a group of people. And he was waxing quite passionately and eloquently about the fact that to recreate all the telephony in New York City after 9-11, they changed all kinds of things in a sensible, smart way. Simplified work, shortened decision-making processes, delegated power, all sorts of great things. And that it allowed them to get done a lot. very quickly. But so then I said, so has that remained now as part of your culture and the way you run the business? And without any embarrassment or anything, he just said, no, no, no, no. We've gone back to the playbook.

Yeah.

Kind of crazy. But at least they use the crisis initially to actually do many good things.

Yeah. And of course, after that, everyone was banding together. So it was probably even easier to take advantage of that horrific event.

Absolutely.

But you do, you know, there's everybody now sort of understands that there's a sense of urgency around things. Now. We, of course, don't know what's going to happen with tariffs. Maybe they'll be gone tomorrow. Who knows? But, you know, take advantage of this sense of urgency so that you can get as much done as possible, where in normal times, people might feel like, yeah, why do we have to do this? We're, you know, things are good. Things are fine. We don't really, we're not motivated. We're working hard and we don't want to deal with this other stuff. Now you will get people's attention in a way. that you don't in good times.

Yeah. And in addition to urgency, use this time of uncertainty because, you know, Warren Buffett has this thing about during an economic crisis, it's like the tide going out and you discover who's wearing a bathing suit and who isn't. You know, this exposes a lot of things where certainty is important because you no longer have it. You have a plant here or plant somewhere else. But it also will help reveal many things that are going to stay no matter what. And those bubbles of certainty, even though they may be small, are very large in number. And those things can be grappled with.

Bubbles of certainty.

Bubbles of certainty. Are you going to burst my bubble? Should that work? All right. Wow.

Okay, so those who have been watching may have seen that I had a dog on my shoulder for a while, not literally, but in the image. And she is now at my feet saying, please take me out, please, please. So I guess I will do that.

Okay.

Take advantage of her sense of urgency.

Yes, and certainty.

Certainty, and I don't know about bubbles, but.

Yeah,

okay. Okay. All righty. Bye.

Thanks for listening. To learn how Harvest Earnings helps large companies overcome the bad practices, visit our website, harvestearnings.com, or email us at info at harvestearnings.com.

Also, please subscribe wherever you get your podcasts. And if you're feeling generous, leave us a rating and a review. It really helps others discover the show. Until next time, I'm Terri:  .

And I'm Jeremy: . And now it's time for us to get back to work. Bye.

Welcome to the Elephant in the Boardroom, where we talk about the business practices we love. Love to hate, that is.

These are the practices that frustrate employees, anger customers, and hurt shareholders.

I'm Terri:  .

And I'm Jeremy: .

And we are the co-CEOs of Harvest Earnings. We challenge conventional wisdom, share our stories, and give you advice you can use at work and even sometimes at home.

It's time to banish those elephants in the boardroom.

Hey. So today we are going to talk about something that we are calling tariff panic, also known as panic cost-cutting. And it is making me think of a couple of things. One is the first line of the poem, which I couldn't remember, but you identified as if by Rudyard Kipling.

And was my father's favorite poem.

And it was just his 101st birthday. If you could keep your head when all about you are losing theirs. And, you know, in the end, it's then you've become a man, my son, but many other ifs in between. But it is pretty hard to keep your head about you right now. I mean, we're fielding a lot of calls. We're talking to a lot of people who really are in in panic mode because of what's going on with tariffs and all the uncertainty that that brings. So, as you said, that's perfectly normal. It is exactly its human nature. I mean, there's reasons to panic. But as you also said, I'll just say what you said, and you can just sit there and nod for the rest of the...

No, I'll just keep saying, good point, excellent point. Oh, how insightful.

No, so this one was, don't let a good crisis go to waste. But we have found... certainly in the past, a financial crisis of 2008. And after 9-11 and other times with some similar lack of certainty that the gut reaction is to just sort of pull in and cut costs, shut things down, but not to do it in a way that we think is healthy. Would you like to talk about some of the ways we see that it's done?

Yes. As you said. So these are all kind of slash and burn things, which executives, it's not that they want to do these things or that the board wants them to. They're trying to deal with the fact that the house is on fire and, you know, doing their best to get through the day and ahead of the curve. So, you know, you cut advertising, you cut staff. kind of across the board or wherever you think you can without changing the work. You know, contracts that are up for renewal, you don't renew or you defer, you defer maintenance. And so there's a lot of these, you don't make investments or you defer those investments that actually would pay off quickly, but you don't necessarily kill the ones that are halfway through. Even though we all know some costs are some costs, there's a human dynamic that kind of makes you stick with it, if you can, if you can. So a lot of this cost cutting are things that no one really wants to do, but they feel they need to do. And then when the crisis is over, they look back and they regret that they felt that they had to do that. And then they start putting those things back as if...

I would argue, just for the same point that you just made about, you know, what you're halfway into a project, you stick with it, that most people won't look back and regret. They should look back and regret, but they don't. They think, well, we just did what we had to do to survive in the moment.

Well, and I would argue, because that's what I do, I would reflect. thoughtfully on your comment and say, it depends where you are in the organization. I completely agree with you. The board, the executive C-suite, the executive team is we did what we had to. The people down here doing the work are, you know, man, this really, this really hurt us. And now we've got to rebuild because those were not. were not good cuts to do.

Yeah, absolutely. I guess our advice would be in the vein of don't let a good crisis go to waste. There are many smart things that companies can do to very quickly sort of batten down the hatches and give themselves some runway for the uncertain times ahead. And that is not to just do a blanket layoff. Sure, it feels good in the moment. It's quick. Well, I shouldn't say it feels good. Layoffs generally do not feel good to anyone. But they're particularly horrible when you don't change the work. So take the time now. It's not a lot of time. This can be done over a course of a couple of months, a few months, to figure out what you like to call the no regrets ways to cut costs. So simplify your processes. Talk. Talk to the people who are in your company and ask them what gets in the way of doing their job.

And it's not like talk to them to take on board things they say to you that you will then problem solve with. It's actually engage them because everybody knows during these kinds of crises that, you know, their company is in trouble. They want to help. They want the place to survive. You know, we worked for a bank that hired us at the height of the uncertainty of the 2008 financial crisis. And banks were getting slaughtered. And most banks were just doing the kind of, you know, what we talked about, the panic, cross-cutting. But these folks engaged their whole organization in a couple of months, found tens of millions of dollars. And the people in the organization felt good about it. being the ones to come up with the solutions and then do the solutions because they were helping the place stay afloat. And the reason it's no regrets is because a lot of the stuff that happens before the crisis and then after the crisis stays the same. The crisis doesn't change everything. And so there are a lot of things that you can change that were smart. You don't regret doing it. As opposed to saying, oh, we're going to close down these 15 branches. Well, we could have really retooled those branches. But, you know, instead we sold them or we got out of them because we didn't know what was going to happen. Well, that's right. If there's that much uncertainty.

That's a terrible example because branches should almost all be closed right now.

Okay.

Who the heck is into a branch anymore?

Okay. Okay. How about if you're Apple and you have Apple stores with the highest profit for any retail? That used to be the case. I don't know if it still is. But the idea being most executive teams sadly do not realize how much there is to do that's no regret and a big, big number. gives them runway and alleviates the need that's currently forcing people's hands to do things that they wish they didn't have to do until there was more certainty. Once there's more certainty, maybe closing those plants down makes sense or whatever it is.

Yeah. And in the meantime, they cut training budgets and they cut, well, I think I already said they cut customer service. they but yeah and And R&D. And they will say that they don't want to do this, that this is, you know, they know that this hurts them long term and that they hope it's only a short-term thing. But they don't even need to do it short-term for the most part.

Yep. And that's where letting a good crisis go to waste. You know, I know you recall when I once met the CEO of Verizon, I'd say about two years after 9-11, maybe. I don't remember the exact date. and we were having dinner with a group of people. And he was waxing quite passionately and eloquently about the fact that to recreate all the telephony in New York City after 9-11, they changed all kinds of things in a sensible, smart way. Simplified work, shortened decision-making processes, delegated power, all sorts of great things. And that it allowed them to get done a lot. very quickly. But so then I said, so has that remained now as part of your culture and the way you run the business? And without any embarrassment or anything, he just said, no, no, no, no. We've gone back to the playbook.

Yeah.

Kind of crazy. But at least they use the crisis initially to actually do many good things.

Yeah. And of course, after that, everyone was banding together. So it was probably even easier to take advantage of that horrific event.

Absolutely.

But you do, you know, there's everybody now sort of understands that there's a sense of urgency around things. Now. We, of course, don't know what's going to happen with tariffs. Maybe they'll be gone tomorrow. Who knows? But, you know, take advantage of this sense of urgency so that you can get as much done as possible, where in normal times, people might feel like, yeah, why do we have to do this? We're, you know, things are good. Things are fine. We don't really, we're not motivated. We're working hard and we don't want to deal with this other stuff. Now you will get people's attention in a way. that you don't in good times.

Yeah. And in addition to urgency, use this time of uncertainty because, you know, Warren Buffett has this thing about during an economic crisis, it's like the tide going out and you discover who's wearing a bathing suit and who isn't. You know, this exposes a lot of things where certainty is important because you no longer have it. You have a plant here or plant somewhere else. But it also will help reveal many things that are going to stay no matter what. And those bubbles of certainty, even though they may be small, are very large in number. And those things can be grappled with.

Bubbles of certainty.

Bubbles of certainty. Are you going to burst my bubble? Should that work? All right. Wow.

Okay, so those who have been watching may have seen that I had a dog on my shoulder for a while, not literally, but in the image. And she is now at my feet saying, please take me out, please, please. So I guess I will do that.

Okay.

Take advantage of her sense of urgency.

Yes, and certainty.

Certainty, and I don't know about bubbles, but.

Yeah,

okay. Okay. All righty. Bye.

Thanks for listening. To learn how Harvest Earnings helps large companies overcome the bad practices, visit our website, harvestearnings.com, or email us at info at harvestearnings.com.

Also, please subscribe wherever you get your podcasts. And if you're feeling generous, leave us a rating and a review. It really helps others discover the show. Until next time, I'm Terri:  .

And I'm Jeremy: . And now it's time for us to get back to work. Bye.