WSJ: Lean Companies Ready to Cut

October 24th, 2011   •   no comments   

Now is the best time.

When I started my career in the productivity improvement world almost two decades ago, that was the last line of our sales pitch.  I was trained on it and I wasn’t even a sales guy (in the end, we were all in sales though).  I didn’t believe it then because I thought it was a sales tactic. What I know now is that now is truly the best time.

It was reported today in the Wall Street Journal in an article titled “Lean Companies Ready to Cut” that companies already running lean are restructuring and reconsidering plans to open up new facilities in anticipation of not what is, but rather what could be.  This, in the face of “robust” profits. And, it could spook the market, or worse, create a self-fulfilling prophecy. Nonetheless, now is the best time — just like two years ago was the best time and six months ago was the best time.

Entropy is a strange thing and it typically ensues soon after regaining order. Entropy is loosely defined as the ‘tendency for things to unravel over time’. Organizations of every size experience it. “We just completed a strategy planning session two years ago,” they say to which I respond: “How often do you use it and are your departmental an employee goals tied to it?” I get blank stares back. “We just trimmed our budgets and implemented a quality program,” they tell me. Then our folks see books of procedures gathering dust on the shelves, observe production problems and uncover special projects spinning their wheels.

It takes an objective, third-party to define a company’s go-forward strategy, identify true organizational value and implement cuts that make sense — and where under- or mis-allocated resources are shifted in the organization to where they DO add value, not where they are unnecessarily removed from the payrolls.

In the Journal article, Deane Dray, an analyst at Citigroup Global Markets was quoted as saying about the precautionary cuts: “In many ways, this is part of the negative feedback loop… Once you start head-count reductions and plant closures, you are adding to the unemployment, you are adding to the anxiety in the market.”

Voluminant takes an entrepreneurial approach to helping companies succeed in the commercial sector where our  restructuring and realignment effort takes a rational, reasoned approach motivated by success, rather than by responding directly in-line with fearful market predictions.

By making the right moves, success and rapid-growth is not only possible in a slow-growth economy, it is highly likely — with little fear and relatively little cost-outlay.  And, now is the right time because it’s always the right time to implement a common sense growth strategy focused on what it takes to succeed.