Current economic conditions are testing the leaders of many companies across multiple industries. We are hearing terms like “ride the storm out,” “hunker down” and “lay low.” The majority of executives are frustrated with their financial performance as businesses continue to cut their staff and ask their employees to do more.

Having the Right People Focused on the Right Responsibilities

I recently visited a client in the housing industry and talked with several employees from front-line operations to the president. A common theme emerged: managers should remain steadfast in allowing operational employees to oversee and be held accountable for improving production outcomes. This enables management to remain focused on overall process improvements and growth initiatives. This client previously had difficulty managing over 20 items with a four-week lead-time, where as today they are managing 350 items that are being shipped in a week. The management team consistently trains employees how to make day-to-day decisions to “run” the business, allowing the management team to look for areas of improvement and the leadership team to focus on growth into new markets, new products and new offerings. This client is now second in its market, closing quickly on becoming number one, growing in six years from $25MM to $170MM.

Another one of our clients is an automotive supplier. The company is down more than 50 percent in volume from the previous year. However, by having front-line personnel focused on operational improvements and executives being proactive in the marketplace, it acquired new business when its largest competitor was forced to close its doors. By previously aligning its production systems to handle complex products, this client was able to ramp up quickly to meet the new demand and deliver a high quality product. Being nimble in its operations has positioned it for projected record revenue levels this January, even in the face of the current automotive industry difficulties.

The Run – Improve – Grow Principle

“Run” is defined as the day-to-day activities that have to be executed consistently to effectively operate. If business systems are unproductive, executives have a tendency to constantly engage in “firefighting,” which keeps their eye away from potential opportunities or threats in the marketplace.

“Improve” occurs when companies instinctively challenge the status quo and realize it is dangerous not to constantly adapt. It is important for companies to continually examine their current operations in order to determine the best ways to eliminate waste and focus their time, money and energy on achieving better business outcomes.

“Grow” is looking outside your current business to areas of potential new markets, products and services to differentiate you from the competition. By becoming a solution for other’s problems and offering a unique selling proposition, your company can avoid simply being the lowest bidder.

Executives must spend the majority of their time in “Grow” and “Improve” activities.

Too often, when companies “hunker down,” the improvement and growth activities take a back seat due to fear of the unknown. Executives who cut only to control costs, or, worse yet, get involved with running the daily business activities, are putting their company’s long-term future in jeopardy. Successful business leaders are investing their time and energy in areas of improvement and growth to prosper, even in the face of a challenging business environment.

The leaders of the two highlighted companies are engaging their employees and eliminating to the obstacles that are preventing them from optimal job performance. They are empowering their employees to address issues before they become real problems and working to develop confidence in their employees by setting performance expectations and providing them the tools to achieve desire results.

Successful businesses continuously invest in leadership development and process improvement. For example, the housing industry client mentioned earlier had their changeovers go from six hours to 30 minutes. How? By listening to operators and involving them in the solution. The team was able to organize pre-build changeover kits and implement SMED techniques to make radical improvements, enabling it to now complete 12 times more setups without impacting production.

As the Run Improve Grow Principle takes hold in a company, the executive leadership team can focus on growth opportunities due to the high confidence in the operational process. They have time to think about what separates them from the competition. Too often, executives get distracted by working “in” the businesses instead of “on” the business. In order to achieve long-term success, business leaders must engage clients to understand their needs and anticipate industry trends. Business leaders must keep asking themselves these simple questions -

1. I have confidence in WHO ?
2. I need to let go of WHAT ?
3. I am going to do it by WHEN ?

After they are done, they do it again and again until the right people are focused on the right activities.  They also must insist that their direct reports do the same.

I recently met with a company struggling to adapt to today’s economic conditions. I had the company president participate in this simple exercise. We discovered that he was spending too much time settling disputes between a department manager and a supervisor.  This operational dysfunction was causing him to spend valuable time and energy on running the business on a daily bases rather than focusing on critical, future growth opportunities.

The market is on the side of the business leaders preparing for tomorrow.  So what are you spending your time on today? Are you running or growing your business? Whether you are a line leader or a president, you can take action today and start making a difference. By developing confidence in your team, you can meet the changing conditions of today’s economy and continue to grow your business.

This entry was posted on Friday, October 9th, 2009 at 8:32 am and is filed under Definity Solutions: Thought Leadership Articles, Management Insights. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.