How to win in the new economic order–the lean organization
The new economic order after the pandemic brings many new and exciting opportunities. But these opportunities wait for no one. The faster you act, the better!
But that is a challenge for most organizations: they lack speed, flexibility and agility. They miss the Manny Pacquiao power punch. I recall a meeting with the president of one of our clients in the Philippines, a large family business, and he said: “You know what, Tom, we have so many people doing the same or overlapping jobs. We even have people whose only function is to produce monthly reports no one ever reads.”
Running a business is like running a marathon. Your organization has to be lean. All the excess fat that you accumulate proportionally increases the time, energy and money you have to spend just to keep your organization operating. And that decreases the overall productivity and profitability of your entire business.
Execution is king
I repeat these three words to our clients in the Philippines so much that it has become a mantra in their boardrooms. In my column last week, I shared the secrets behind innovation, and why it is essential for the growth of a business to continuously produce great ideas. But the next step after a great idea is execution. Having too many people and too much clutter in your organization slows you down and keeps you from executing your ideas. The solving of challenges needs the same approach. You have to act fast because challenges only get bigger with time.
You may ask, “How many people are enough?” Most businesses should only have the number of people they need to operate at medium capacity. And even when they hit exceptional peaks in their business and everybody needs to do more work, they will still be able to cover the peaks.
Future-proof
The major advantage I have in owning a worldwide strategy and management consulting firm is that we know what is happening around the world. We see the trends, the patterns and can make meaningful comparisons. Most of the Philippine companies we have seen operate with three times as many people as would be needed in many other countries to produce the same or less output. This is true for most industries and businesses of all sizes: from the small convenience stores to supermarkets, from retail stores to malls, from manufacturing to real estate. Storing too much fat weighs you down and you become slow. Someone else out there is hungrier, leaner and more agile than you are. And those unforeseen enemies can beat you tomorrow.
In the new economic order coming out of the pandemic, speed, agility, adaptability and flexibility will be the decisive factors in the very uneven distribution of winners and losers.
The blank page approach
I recall one of our clients, an owner of a food industry business, talking about a great idea they had before their competitors. “What happened?” I asked. “Well”, he said, “We held a lot of meetings but just couldn’t get our act together. It took us too long to bring it to market, and our competitors were faster.” And this happened at one of the most respected businesses in the country!
When we sit down with owners of companies, the chief executive and the board to make their business lean and efficient, fast and agile, we take the blank page approach. Imagine you had to redesign your organization today and I would give you a blank page. Forget about all that accumulated fat, the “we have always done it this way” or whatever is holding you back. Just define the ideal outcomes you want your business to produce. Then outline what would be the minimum that is needed to produce those outcomes. Forget the past, forget the clutter in your mind.
“What happens to all the people we would have to let go then?” you may ask. Get rid of them!
If you absolutely cannot let people go, for whatever reason, then retrain and reassign them to work on the many new opportunities you can finally profit from with all the speed and time you gain from making your business lean and agile.
Your business works like a machine
Your business is there to produce outcomes and profits. Your role as a business owner or CEO is to make sure your machine produces exactly the results it is supposed to. Otherwise you have to tweak it.
Whenever we take businesses of all sizes through the blank page approach, there is an instant “Aha” effect on the face of business owners or boards. Why? At some point, most businesses have accumulated so much fat and become so entrenched in their old processes that they no longer see the simplest way to produce great results. This is a global phenomenon. At that point, the business serves the processes. But it should be the opposite: the processes should serve the business!
Death by meetings, powerpoints
Most business owners and boards I have worked with from Asia to the Middle East, from Europe to South America, waste their time on too many meetings. I still remember one of our clients, a CEO and owner, who committed to so many meetings that his only deep thinking time was on the golf course, but never at the office. We once counted 30 people in one of his meetings! I still remember his sad face—just back from a vacation—after three days of unproductive, non-stop meetings and thousands of powerpoint slides. When we talked to the executives reporting to him, they told us that they often spent a third of their time preparing and polishing the slides for the endless number of meetings than doing their actual work.
We collaborated to eliminate three quarters of all meetings, established a rule that no meeting could run longer than 30 minutes, and set rules on how meetings should be run. Finally, the CEO/owner had the deep thinking time he needed to make the really important strategic decisions, some of which he had put off for months, and the business became highly profitable.
Solutions and next steps
Sit down with your team and take the blank page approach. Ask yourself: is my organization set up in the most efficient and effective way to produce the results we want? If not, redesign it.
Do you have just enough people to operate at medium capacity? If not, cut the fat.
Determine the type of meetings essential to your role. Cut the rest.
Let people know politely that you will no longer be available for all other meetings. You will finally enjoy the deep thinking time you need to make the important strategic decisions and profit from the many new and unique opportunities the postpandemic new economic order brings.
Remember: challenges only grow bigger with time, and opportunities do not come to the ones who wait but to the ones who act.
See you next week! INQ
Tom Oliver is chair of The Tom Oliver Group, a global strategy and management consulting company. He is a trusted advisor to many of the world’s most influential family businesses, medium-sized businesses, market leaders and global conglomerates. Send inquiries, questions, comments or feedback to: [email protected].
