2.04.2009

Thoughts from Forbes on How to Cope with the Recession

A recession may require some shifts in business strategies. And those shifts will be more successful if they include lean approaches.


That is what I come away with from a recent article on the Forbes website titled “Timely Tips for Recession-Racked Entrepreneurs.”


As with most articles from Forbes, the suggestions are timely and practical. Most have little if anything to do with lean. They address questions like “How can I get my customers to pay me?” and “How can I plan when I can’t project?”


Lean is not mentioned in the article. But some of the tips include advice that reflects lean thinking.

For example, one question addressed is “Should I go after lower-margin business just to keep the doors open?” Part of the answer is “Yes, but do it wisely. First step: Align operating expenses to the new product mix.”


That is advice that goes in the right direction, though it would be better expressed as “Align processes to the new product mix.” Do that, and the expenses will take care of themselves. Lean advocates have long been familiar with the fact that different product families may require different sets of processes.


Another bit of advice I like goes to the question “How do I negotiate with my vendors?” Forbes advises, “Never forget that your pain is your suppliers' pain, too. Seek out a key executive, and don't be ashamed to wave the white flag. ‘Too many small businesses think they have no negotiating power,’ says Nolen. ‘Communicate and treat them like a partner to find some common ground.’”


That is directly in line with the lean principle of respect for people, and the idea that supply chain partners should be treated as, well, partners, rather than adversaries.


The article is paired with a separate piece, “Creative Cost-Cutting Tactics for Small Biz.” One bit of advice in that article also speaks to respect for people is a suggestion to encourage entrepreneurship.


Consider turning your line workers into entrepreneurs. Say your firm writes software. Instead of lowering overhead by chopping heads, let each of the developers take charge of their own product while you take a stake in their efforts. In lieu of a salary, offer them partial support (in terms of marketing, product testing and health benefits) to build out their slice of the business and, with any luck, substantially increase their wealth. If all goes well, everyone wins.


That advice reflects the concept that employees are not just cogs in a machine, but thinking, creative people who can contribute to the success of a business – a concept that has always been part of lean.


What are your strategies for dealing with the recession?

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