“We’re lean”, a CEO declares at the start of a board meeting. He seems proud of this achievement, signaling his organization’s commitment to a new way of operating. All the metrics are satisfied. Budgets are slashed, teams reduced, and processes stripped down to the bare minimum. Everything is as “lean” as it could be.
And then, six months later: projects have stalled, innovation has dried up, and the organization feels weak. Why?
Because the organization hasn’t really become lean, it has just cut costs.
Leaning Is NOT Downsizing
Far too many times, organizations fall prey to the false notion that lean management begins and ends with downsizing. Austerity is but a small part of lean management. Removing layers of expenses may look good on the balance sheet, but will not make your organization more efficient. If anything, you’ll be spending more money in the future resolving the issues you’ll create with such cost-cutting. Moreover, prioritizing cost-cutting above all else will not only hollow out your organization’s talent but also lead to slow decision-making, ultimately making you more inefficient than you were to begin with.
What Lean Really Means
At its most fundamental, lean management is about reducing and eliminating waste. This includes waste of time, resources, and above all, effort. Done properly, it maximizes value and ensures every project, every department, every campaign, is all contributing as much as possible towards the organizational goals.
Leaders in organizations with ambitions of becoming lean must ask themselves:
- Do I know which departments are delivering the highest ROI?
- Can I track the effectiveness of campaigns in real time, not months later?
- Are my managers aligned, or are they bogged down in layers of reporting that hide what truly matters?
Clarity into such questions requires greater visibility. Visibility requires a new approach to how an organization evaluates its performance and monitoring metrics.
Visibility As The Missing Piece
Most C-suite executives receive information far too late than they should. It doesn’t matter if it’s a few days or hours; an opportunity lost is thousands and millions in lost value. It is for this reason that quarterly, monthly, weekly, and sometimes even daily reports cannot translate into the right approach needed to make the necessary amends to organizational strategy. Doing so requires visibility in real-time and holistically.
Leaders with worthwhile visibility into their organization’s initiatives can understand the ROI of every effort being made across the organization. Using these insights, they can ensure they don’t just cut blindly but strategically. They can prune their operations based on results, scale what works, and mitigate what doesn’t. All of this without the need to cut just for cutting’s sake.
Hence, the real question for organization leaders: are they really lean or just cutting costs?