Perhaps the economic crisis may bring something positive from it ….
The current economy crisis will prompt companies to streamline, invest in training (hopefully) enhance product quality and potentially diversify.
Strong companies will come out stronger and very likely in a better position to compete with offshore products.
Does this undesirable phenomenon a cause for an improve effect?
Please share your thoughts
Tags: economic crisis, economy crisis, offshore products, product quality, undesirable phenomenon
October 22nd, 2008 at 9:02 am
In my view it depends on the severity and duration of the recession involved.
Darwin introduced the phrase “the survival of the fittest”. However the meaning of the word “fit” in the context of his science, meant “suited”, rather than supreme in some absolute sense. He had identified the process set in train though the survival of those that were best suited to the prevailing conditions. I think he probably also used the word, knowing its ambiguity, to sidestep the ire of those who found being related to other species distasteful and blasphemous!
If we exercise we become fitter. But for what? If circumstances change too rapidly before we have evolved to change in sympathy, we will die. If we exercise too hard we will die. Only if the changes are within the capacity of the organism or organisation to change, and the exercise is within our capacity to grow will the result be positive.
When economies collapse the fittest are the bandits!
sincerely
Robin
http://www.phoenixchange.com
October 22nd, 2008 at 6:32 pm
I would love to believe you are right, but I see the opposite happening. More typical responses of stop spending on anything, stop all training, etc. are what I see happening.
There has been evidence that the economics of the past decade were not sustainable, but how many companies did any contingency planning?
October 22nd, 2008 at 6:33 pm
I can agree that economics of the past decade were not sustainable, and that many companies did contingency planning. Many of those companies didnt think it would happen to them (How many companies do you know that are good at risk planning, disaster planning, etc).
I like to believe that companies will look at streamlining and efficiences (many wont, but there will be some that will do streamlining, because they are forced to.)
As a professional trainer, I do get calls for training - usually because there is grant money that needs spent or a large change in the organization has to occur due to the downturn. My recent experience has been companies training internally, with internal folks, because the training was required (safety, quality, etc). I NEVER get called for training otherwise (in down times..) Most recently, I did training for a company that won a government contract and had to have this training.
I do see companies looking at improvements and quality changes (what they can do themselves and do with little money) more out of survival rather than any other reason
October 22nd, 2008 at 6:34 pm
I believe there will be a long transitional period from a strong high volume manufacturing base to mid and short run smaller specialty companies. No real progress will be made until they can formulate a strategy depending on the policies of which ever presidential candidate gets elected.
It ill take many years, but with the proper focus, we will find a way to improve and thrive.
October 23rd, 2008 at 7:47 am
Every crisis helps to change company, because it moves people from comfort zone. In other situation, manager/consultant should warm up people to change then? Now it comes from outside. But it does not guarantee improvement. Everything could became worse.
Many of our clients this time is updating ther strategic plans. They say that this crisis will help them to buy weak competitors (or to get their clients). And the opposite thinks the same thing.
It is obvious that every offshore campany plans to get biger stake from this crisis.
October 27th, 2008 at 10:12 am
Thanks for another good question! It is surely no coincidence that Deming’s classics “Out of the Crisis” and “The New Economics” emerged during the last two downturns. I believe they became well-known at that time as leaders looked for new thinking and a solution!
Unfortunately, there is no “instant pudding” and what I pray for most is not only that organisations will turn to systems thinking to get them out of the current crisis; but that we will this time have long enough memories to use this same thinking to stop us digging ourselves into a hole again in the future!
What is important now is to rapidly increase efficiency while maintaining the ability to deliver effectively. In other words, companies in intensive care need to work out how to stay alive without chopping off limbs (such as HR, R&D etc) that will be pivotal to their long-term health.
I am delighted to see that Toyota (the most widely-cited example of “Lean” - and truly a systems thinking organisation) is using this time to build new skills and team strength by redeploying workers to community projects; described as “a bit like Ground Force”. See: http://www.thisisderbyshire.co.uk/business/Workforce-ground-force/article-426586-detail/article.html
How exciting to see that the dream of “Joy in Work” and “Jobs and more jobs” is alive and kicking. It is this magic synergy between process by process (end-to-end) efficiency improvements (currently generally referred to as “lean” or “BPR”) with clear, top-down vision and focus on long-term effectiveness that really makes the difference. Long-term success will not result from one-dimension (efficiency only) effort, but from truly systemic, multi-dimensional thinking; up/down, inside/out and sideways – involving strategists, leaders, managers, front-line staff, customers and suppliers.
Best wishes, as always,
Emma
PS Thankfully, our CEO called our company after this thinking (Efficiency x Effectiveness = E2) - so hopefully we will remember it - crisis or no crisis!
October 27th, 2008 at 10:14 am
Hi Emma,
As always your answers / comments delight me.
I have clients and business associates running around like chickens with their heads cut off. ( This is what a call ” OMG effect”)
I am sorry messengers of the apocalypse but…….. I personally see this moment as an excellence opportunity for companies to excel and good professionals like you and I to succeed even further. (is always easy to be good and make money when everything is great)
Like you properly said Emma, the system thinking requires leadership and total commitment. (I frequently tell people that …….. ” Change is a shower not a bidet therefore from top - down ” )
Thanks again !
Cheers
October 28th, 2008 at 9:56 pm
I think we can learn many things. I think we need to read this book again
” Who Moved My cheese”. It will help us a lot to change many things in our Life and in our Business Strategy.
The truth I am not Professional with Economic Issues, but I am trying to figure out.
Hisham Burdini BPR ,PM , ITIl
October 28th, 2008 at 9:58 pm
There is definitely room for improvements, for those who can affort it. Unfortunately, the economy crisis will take its toll on small and large companies before they come out stronger. There are companies like Whirlpool who will decrease their work force by 5,000 employees by the end of 2009.
The economy will continue to be negatively impacted as people lose their jobs and unable to pay their mortgages, credit cards and other bills.
Middle class employees are falling short as the stock market continues to take a dive. The wealthy who have cash on hand to invest while the stock market is down, will become stronger and weallthier when things start going back to normal.
Companies who have enough can on hand, a strong share value and still standing; this is the time to improve their performance by first identifying their areas of weakness. For example: Products, Potential business market, Operations lines and personnel.
Where would you start?
Edelmayra Lugo-Delanoy
October 28th, 2008 at 10:02 pm
Hi Edelmayra
You are right I am glad we share the same vision !
I am not here to deny that the worldwide economic crisis doesn’t exist nor to tell that is going to be easy. This financial meltdown will take at least 12 moths(if not more) to rebound.
Having said, that I perceive this unique moment as ” Mother’s nature” natural selection process.
” If necessity is the Mother is of the invention” ……… ” Crisis is the Mother of Innovation”
There are different ways to approach this and there’s no right or wrong. It all depends on the organization situation and comfort zone.
I personal chose to work on waste elimination. (the definition is waste is ….. EVERY step, operation, procedure or action that customer in NOT willing to pay for) i.e.: rework, scrap, WIP, etc …. )
You would be amazed to see how much you can trim off just making small baby steps towards a leaner enterprise.
” If the curiosity killed the cat ……. good service brought it back”
All the best
Edison Reis
ereis@qualityassurancemanagement.com
October 30th, 2008 at 1:54 pm
The agile will survive. When the free market operates at its best it is survival of the fittest. When government steps in and props up an inferior business model is where the trouble starts. Imagine if a higher power felt like they needed to save early man — we might still be in caves .. there is nothing as constant as change and sometimes change means that people fail. When people and institutions are allowed to fail better business models emerge and we as a society advance. Without that fear of failure we fail to grow.
Jackie Harms
October 30th, 2008 at 2:23 pm
Hi Jackie
Thanks for your feedback ! Well said
I like to say ……… ” If necessity was the mother of invention, crisis is the mother of innovation”
Cheers
Edison Reis
October 30th, 2008 at 2:25 pm
Many companies get ’stuck in a rut’ doing the same things over and over without too much thinking about what they are doing. Since that doesn’t work in times of economic crisis many of them will be forced to rethink and change what they are doing to find ways of offering better value to their customers. Those who understand that now and do something about it fast will be the winners - many of the rest will just become takeover candidates. So companies with a strong value proposition will come out stronger and more streamlined. As for more training - I’m not sure, it’s such an easy area to cut. Maybe employees might be given time for training but not funding, I suspect.
Fay Simcock
http://www.linkedin.com/in/faysimcock
October 30th, 2008 at 2:28 pm
Hi Fay,
Thanks ! The interesting point like you mentioned is happening already …………
The “unfit” organizations are being taken over as we speak. I know some big holding companies that are currently cautiously excited seeking for good treats.( like a kids prior Halloween eve)
This financial ” OMG ” situation is expected to last 12 - 24 months however, what kind of investment can give you 50% (or more) in return in two years ………. Just a thought
Cheers
November 5th, 2008 at 8:21 am
Less Government???
John Kristianson
November 19th, 2008 at 4:47 pm
Good comments, Edison! My concern is that for political reasons NA governments are going to bail out the Big 3 autos instead of looking to the medium/long term and providing real encouragement to innovative small companies who are the present and future of the economy. Knowledge-based and/or green businesses are where the support should go. Look at Germany; with a few years their green industries will surpass their auto industry in size.
David Jenkins
December 1st, 2008 at 11:00 pm
Well said
December 1st, 2008 at 11:00 pm
Nice writing. You are on my RSS reader now so I can read more from you down the road.
Allen Taylor