Recession is ripe with opportunities

Everywhere we turn, there's advice on "How to manage in a crisis" or "New rules for surviving the crunch." The other day I heard a discussion on PBS involving business writers trying to agree on a title for what the economy is going through. And there was no consensus (imagine that, from business writers).

Craig Barrett, recently retired CEO of Intel, told Newsweek (2/9/09) readers, "There is a general rule in business life: market share is won or lost during transitions. You cannot save your way out of a recession; you can only invest your way out."

No one is denying that cutting costs is essential for surviving 2009, but we as lean disciples practice a different philosophical approach. We look for ways to eliminate waste and improve productivity as we stay focused on getting better. Coca-Cola CEO Muhtar Kent told the Wall Street Journal (1/28/09), "I've been through this movie in smaller versions a number of times in the past... Times like these are not an excuse to sit back and ride out the storm." And during a recent global sustainability conference at which I spoke, Coca-Cola Supply Chain Vice President Rick Frazier told me his company was aggressively leveraging its "lean & green" efforts during this time of uncertainty.

University of Pennsylvania Wharton School of Business Professor Mauro F. Guillen told BusinessWeek (1/8/09), "A recession creates winners and losers just like a boom."

Let's choose to be winners.

Wanted: Leaders with wartime experience

Many of my business contacts "get it" and are focused on keeping people. They're avoiding or limiting layoffs by relying on four-day work weeks, unpaid vacations, and voluntary or enforced furloughs. Others are implementing flexible work schedules, wage freezes, or cuts to 401(k) and pension contributions. These steps are controlling costs but, more importantly, these companies are retaining the value of their human resources.

Consider this strategy, which pays returns twice: lean companies bring back previously outsourced work, thus retaining skilled team members and removing non-value-added transportation and outsourcing administrative costs.

Certainly, some lean companies are using these times to reduce staff and make their organizations "leaner," which of course isn't what lean is about. Companies that value and understand lean may be letting go of some positions, but they're hiring as well as they move toward building a better lean operation and mustering forces to take advantage of future opportunities. That's continuous improvement with a long-term view.

As Diane Swonk, chief economist at Mesirow Financial, said in Newsweek (2/9/09), "So many CEOs are so focused on defense that they may be missing real opportunities. If you only play defense, you will not be on the right side as the economy bottoms, let alone turns. For us, there was an opportunity to attract talent and clients as our Wall Street counterparts imploded. The new blood is helping to buoy profits today and will put us in a whole new position on the other side of the crisis."

Reduce wisely and emphasize talent

Recently, The McKinsey Quarterly (10/08) advised, "By emphasizing talent in cost-cutting efforts, employers can intelligently strengthen the value proposition they offer current and potential employees and position themselves strongly for growth when economic conditions improve." Makes sense, doesn't it?

Now is a great opportunity for firms to redesign jobs to engage employees while protecting and emphasizing training and development programs. Adding responsibility and autonomy promote employee satisfaction, and providing the skills necessary for performing redesigned jobs increases long-term productivity.

Restructure the lean way

It is key for company leaders to remember that when managing in an economic crisis, the lean effort can't become the turnaround; it must work in parallel with efforts to manage cash and reduce costs.

A Feb. 9, 2009 article in the Harvard Business School's Working Knowledge e-newsletter caught my eye. The article, Uncompromising Leadership in Tough Times, featured the insights of Harvard Professor Michael Beer who has studied the successes of high-commitment, high-performance (HCHP) leaders in tough times. Beer found, "They shared the view that a firm has a larger purpose than simply profit and increasing stock price though they were all laser-focused on profitability, which they saw as essential for achieving their firms' larger purpose: add value to employees, customers, community, and society – not just shareholders. The leaders shared a multi-stakeholder view of their companies' larger purpose."

The legendary inventor, Thomas Alva Edison, said, "There is a better way for everything. Find it." Let us heed Edison's advice. Let us find a better way. It will require everyone from the C-suite to the shop floor to think and work differently. That's what lean is all about. And there has never been a more important time than right now for lean to truly take hold at companies of all sizes and types.

About the author Adam Zak is founder and president of Adam Zak Executive Search. His firm helps companies committed to long-term lean operations connect with lean executive talent.