good times

Staying Lean In The Good Times Can Make The Bad Times Less Grim

By Bill Higgs

COVID-19 has brought tough times to American businesses, and, across the country, business owners and CEOs have huddled with their management teams, figuring out where costs can be trimmed and learning that some expenses considered indispensable a couple of months ago are dispensable after all.

As these businesses work to get lean, many of them may make this discovery in the process: they should have been running lean all the time.

That’s the philosophy we lived by at the company I helped found, Mustang Engineering. Run lean in the good times, we felt, and you will be in better shape when the bad times arrive—as they always eventually do.

Our business started in the 1980s during a “bust” cycle in the oil industry, and because of that experience, we constantly strove to not be captive to that boom-and-bust cycle. Our goal was to be solid in good times and solid in bad.

In many cases, it becomes clear pretty quickly in times like these which expenses you can do without and which are necessary.

But there are also some steps you can take that will help you run lean that might not be so obvious. Let me share a few::

  • Make sure every employee is the right fit. It’s critical to have the best people at every position, and if employees don’t measure up, you need to part ways. You can stay lean in the good times by keeping only the top talent and those who are a good fit for your culture. This habit makes you all the more ready for the next inevitable downturn.
  • Sell while the shop is full. In good times, it can feel like your company has more than enough work and there’s no urgency to make a big sales push. But in truth, you always need to be selling. At Mustang, we found that being slightly overloaded with work actually inspired us to develop new efficiencies and concepts. The overload kept us running lean and hard in the good times and was a huge advantage in terms of being ready for the next downturn. Continuous selling is not only the lifeline of your business; it is critical to developing a differentiated culture because it provides job security.
  • Be on the lookout for wasted time. Many organizations – maybe every organization – has inefficient situations where a worker must do extra steps before they can do the actual job they were hired to do. For example, at one time at my son’s business, high-paid welders spent a lot of time moving parts around instead of actually welding. The solution: hire a lower-paid person to assist the welder, which increases the welder’s productivity. In such situations, you might even be able to hire fewer welders because they will be more efficient. Look around your organization and see where there is wasted time. If you can’t think of an immediate fix, ask your people to brainstorm ways that can make themselves more efficient and productive.

As bad as the current economic situation is, it can also be a learning opportunity. You are being forced by circumstances to transform temporarily into a lean operation, but consider whether some of the steps you are implementing now can continue when the good times return.

Perhaps you combined two jobs into one and discovered it should have been one job all along. Maybe some corporate travel can be curtailed. Perhaps some positions can be farmed out to the “gig” economy.

The economy will rebound at some point and soar again, and the temptation will be there to revert to wasteful habits. But if you can stay disciplined and stay lean during those good times, the next downturn won’t be as painful as this one.

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