by Denise A. Harrison, Vice President
Rejuvenation linked with recession? How can that be? It certainly causes pain – but where does this rejuvenation come from? During the 17th century Dutch economy collapsed – the tulip bubble burst – this was when a tulip bulb could cost as much as a house. But rather than resulting in Holland’s demise, the crash ushered in the Golden Age where this tiny country became the wealthiest nation in Europe.
Why do turbulent times generate growth and rebirth? It is during tough times that management teams often make decisions which are difficult. Often these decisions should have been made earlier, but when times are good it is often difficult to make changes that are painful.
Recession – a Burning Platform
When times are good it is difficult to precipitate change in an organization, so you require a burning platform – a dramatic event – which forces your team to focus on transformational solutions which are not palatable when times are good. It is these transformational changes that allow your company to survive the recession and position it for future growth. So, how do you and your management team go about using the recession as a burning platform to develop a rejuvenation strategy? One technique is: take a clean sheet of paper.
Clean Sheet of Paper
Ask your team to think about what your company would look like if you were to start the business from scratch knowing what you know today. Have your team work in small groups and bring back their best thinking. During turbulent times, (this could be a recession, a regulatory change, a challenging competitor or any other market turbulence) you will find that the groups come up with insightful ideas if they are thinking about starting the company from scratch. Now, while there may be some things you cannot change, there will be many areas that need to be restructured in order to survive this recession, but also to be positioned to grow when the upturn comes.
One team embarked on this exercise and found that they needed to close a regional office – the customers had moved out of the region and the office probably should have been closed several years ago. Now, with a burning platform, the team was ready to make the decision. In addition, they found that multiple regional offices with a full complement of staff were no longer necessary. Two to three super-regional offices could support satellite offices. The super-regional offices were fully staffed while the satellite offices could work effectively with a small sales and support staff.
Another area targeted for improvement was inventory management. Times had changed and suppliers had moved offshore – the team needed to rethink the process for ordering inventory. They saw that, if they started the company from scratch, they would centralize the purchasing function – by doing this they would increase inventory turns 5 times.
You and your management team should use the recession as a burning platform to make the decisions that were avoided during prosperity. One way to think through what decisions make sense is to have your team think about what the company would look like if you started it from scratch. This will let the team think through what the organization should look like given what the business is like today – this will allow you to think through whether or not your legacy systems still make sense in today’s environment.
How is your team working through this economic downturn? We would like to see what steps you have taken: Please fill out the survey: http://www.zoomerang.com/Survey/?p=WEB2295VX5V2NW
Denise Harrison is Vice President of the Center for Simplified Strategic Planning, Inc. She can be reached at email@example.com.