The Value of Continuous Improvement & OPEX During Recession
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.
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.
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
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
Need Help Getting Started?
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