After spending decades on both Wall Street and Main Street, I’ve seen multiple business cycles through many different lenses. Companies begin to eliminate jobs and pull back on investments, which stifles innovation, hurts their brand – and even worse – puts us further into recession. I believe there’s a better way: if you invest in continuous improvement and operational excellence, you can tighten your corporate belt, without compromising your future growth prospects.
In this blog post, I’ll highlight the philosophical, economic, and data-driven arguments for investing in continuous improvement and OPEX during a recession.
The Philosophical Argument
We live and breathe continuous improvement in our personal lives every day. When our livelihood is at risk, we simply don’t eliminate food or entertainment from our lives. Instead, we find a smarter and more cost-effective way to do the activities we enjoy.
For example, we cut back on dining out and start cooking at home. We watch Netflix as an alternative for going to a movie theater. You know what? We often realize that alternate activities are better in the long run. We’re not eliminating key components of our lives, we’re simply doing them more efficiently. As a result, we cut back on some unnecessary guilty pleasures because we recognize them just as that…guilty pleasures. That fancy dinner is still a fancy dinner.
If your organization is hiring, developing technology, or spending marketing dollars on things you know are “corporate guilty pleasures,” now is a perfect time to embark on an improvement initiative.
The Economic Argument
If you believe in the basic macroeconomic theory (often built on Y=C+I+G+(X-M), then the economy is driven by spending from all groups in the economy: household consumption (C), businesses investment (I) government spending (G) and the trade balance (calculated as exports minus imports). If you look at the business decisions you’re making, are you contributing to our economic growth or are you negatively impacting it? Operational excellence allows you to continue to add to economic growth, which will ultimately benefit your organization.
The Data-Driven Argument
At Minitab, we believe in making data-driven decisions. You can see countless number of our case studies, where various organizations increased their productivity, increased revenues, saved time, and delivered significant cost savings using data-driven quality and improvement initiatives. If you’re looking for a more general statistic, a paper published by the Quality Management Journal analyzed the impact of continuous improvement and operational excellence. The study concluded that these programs saved companies on average 1.7% of total revenue and saved more than $2 for every dollar invested in the programs.1
In the image below, you can get a better understanding of how Minitab is a data-driven continuous improvement platform.
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Want to Boost Your Current Program?
If you’re a program leader looking for ways to be more effective, it may be as simple as finding a continuous improvement project management solution. In fact, a study by Forrester concluded that by investing in project management software, like Minitab Engage, organizations can deliver an average three-year return on investment of 4-to-1 and breakeven ~6 months.2
And why is that? Because as good as an operation you think you might be running, executing improvement projects can be challenging without the right help and resources. According to Wellingtone’s 2021 State of Project Management Report, 50% of project managers spend 1 or more days manually collating project reports and Forrester found project managers ~10 hours per month setting projects up, 4 hours simply managing emails, and 6 hours reviewing projects.3
In fact, one of Minitab’s customers saved more than 120 man-hours each month by implementing Minitab Engage.
Need Help Getting Started?
There are many different approaches and philosophies to continuous improvement and operational excellence. They all have one thing in common: they revolve around structured and data-driven problem-solving. Over the last fifty years, Minitab has built solutions to support this approach, along with a robust blended learning offering to help you get started on your improvement journey to deliver more impactful results.
If you don’t have the resources in-house to execute a program or want to lean (pun intended) on an expert, we have conveniently compiled our consulting partners that can help you.
Isn’t it time you put continuous improvement and operational excellence into your recession playbook?
Sources:
- 1: Venkateswarlu Pulakanam (2012) Costs and Savings of SixSigma Programs: An Empirical Study, Quality Management Journal, 19:4, 39-54, DOI:10.1080/10686967.2012.11918082
- 2: Connor Maguire, Isabel Carey (2022) The Total Economic Impact of Smartsheet: Cost Savings And Business Benefits Enabled By Smartsheet, Forrester
- 3: Vince Hines (2021) Annual Report: The State of Project Management, Wellingtone