Can Companies No Longer "Grow"? Strategies and Optimization in an Era of Contraction #213

We are no longer in an era where expansion strategies, such as planning for uniform increases over the previous year's sales results, are a given.

The global population is heading toward a long-term decline,
and Japan is one of the countries facing population decline the fastest in the world.
The speed of this decline is remarkable compared to other nations.

Population decline is no longer an "exceptional problem," but a prerequisite for all decision-making.

In an era where population decline directly means market contraction,
growth strategies based on the conventional assumption of expansion are no longer viable.

■ Smart Shrink—Maximizing Value While Contracting

This is why attention is being focused on the concept of"Smart Shrink".

It is about enhancing people's well-being (a good physical, mental, and social state) even as the population declines.
It is a mindset that shifts the focus from scale to quality.

This concept applies directly to corporate management as well.
In an environment where simple sales expansion is difficult, the question ishow to maintain and maximize profits commensurate with scale.

In the past, "increasing sales" was equated with "growth."
However, in today's era, chasing sales alone will not secure profits.

What is important is the maximization of profit rather than sales.
Profit expansion is possible depending on the quality of sales and strategy.
A financial strategy that enhances value, rather than relying solely on cost-cutting, is necessary.

■ Surviving with a USP

The first key to increasing profits is theUSP (Unique Selling Proposition).

A USP is a value that overlaps"a company's uniqueness = strengths that others cannot imitate"and"customer needs = value that the market truly demands".

Refining the intersection of these two allows for avoiding price competition, increasing unit sales prices, and suppressing pressure to lower prices.

This is an era where companies without a reason to be chosen will be weeded out by the market.

■ Productivity Improvement Cannot Wait

Population decline also leads directly to labor shortages.
Therefore, productivity improvement is an essential condition.

The first means that comes to mind is mechanization and digitalization.
However, not everything can be replaced.

What only humans can do is creativity, judgment, and empathy, and it is important to concentrate on these areas.

■ Enhancing Human Value and Excess Assets

In an era of declining population, what matters is not the number of people, but the value per person.
Build an organization that enhances performance capabilities and can produce high results even with a small number of people.
If that can be done, it is possible to raise salary levels.

Contraction is not a negative, but an opportunity for resource reallocation.

Another issue is excess assets, such as equipment that is no longer used, or factories and offices that are excessively large, which were accumulated during expansion strategies.

The need for these should decrease with robotization, digitalization, and work-style reform.
Fixed assets with particularly low utilization value for companies will likely become a burden.

■ Toward "Optimization" Instead of Expansion

What is required of companies from now on is optimization, not expansion; quality, not quantity.
Being big is not the value.
Being appropriate is the value of the future.

Deciding how much is necessary and what should be let go will determine the future of companies that survive in this era of contraction.