Business Improvement in Challenging Times

Many factors contribute to tough times for businesses, whether it’s rising employment costs, political uncertainty, supply chain disruption or the rapid pace of technological change.  While inflation has eased significantly from the highs experienced in 2022 and 2023, many organisations continue to face pressure from increased labour costs, supply chain volatility, higher borrowing costs and growing customer expectations.

Whilst the global inflation rate, currently at approximately 4.13%, has eased considerably since the highs seen in 2022/3, it is still a long way from the 1.44% rate in 2015¹, and many businesses are still feeling the impact of increased operating costs and tighter budgets. At the same time, organisations are having to adapt to new technologies, including artificial intelligence, whilst meeting ever-increasing customer expectations.

The impact of these challenges can be significant. Costs continue to rise, customers are more selective about how they spend their money, and employers face ongoing pressure to attract and retain talented staff. For many businesses, particularly SMEs, this can paint a gloomy picture. So how can businesses not just keep their head above water, but also thrive? Well, one thing is for certain, if there is one easy step to making a success of a business, everyone would be doing it and over 50% of businesses wouldn’t fail in their first three years². There’s one thing for sure, though and that is that if a business is doing well today, but doesn’t change with the times, things won’t look so great in the future.

“To succeed in this world, you have to change all the time.”

Sam Walton, founder of Walmart

The first reaction of many businesses, especially SMEs, when things start to get difficult, is to cut marketing and staff training budgets. However, this can land the business in even more difficulties further down the line. A lack of training has a direct impact on staff morale as it sends the message that the staff aren’t valued. In turn, this can result in increased staff turnover, which is both expensive and time-consuming to address. Well-trained staff are more likely to engage and take pride in their work, are loyal, take more responsibility, are innovative, better at handling change and bring efficiencies to their role.

This has become even more important as businesses increasingly adopt new technologies. Artificial intelligence and automation tools are changing the way many organisations operate, but technology alone does not create success. Employees need the skills and confidence to use new tools effectively and understand how they can support business objectives.

Recent years have demonstrated just how quickly circumstances can change. Businesses that can adapt, make informed decisions and implement change effectively are often the ones that emerge strongest from challenging periods. Your staff are your greatest asset; invest in them through training and development to remain competitive and maintain a loyal workforce.

“Learning is not compulsory; it’s voluntary. Improvement is not compulsory; it’s voluntary. But to survive, we must learn.”

W. Edwards Deming

So apart from maintaining marketing and ensuring staff are well trained, what else keeps a business on track in good or bad times?

One of the main challenges when difficult decisions have to be made is identifying the best course of action to achieve the desired results. This is where recognised frameworks and proven processes can help, so that decisions are based on evidence and analysis rather than guesswork.

Two such frameworks are Kaizen and Lean; both are approaches to continuous business improvement with quality and the customer being at the heart of it. The ‘KAIZEN™ philosophy is based on the belief that everything can be improved and that every process can perform better or more efficiently. It is more of a mindset and culture than a specific tool.

Lean is a tool that aims, like Kaizen, to improve efficiency and quality through small incremental changes in processes. However, Lean also aims to support an organisation in identifying and eliminating waste, reducing or eliminating activities that don’t add value, and increasing activities that do. There are many ‘Lean tools’ which are deployed in different business contexts e.g. Agile and Six Sigma. However, for most SME’s Kaizen and the Lean frameworks are excellent for properly evaluating a business and making improvements.

“If you define the problem correctly, you almost have the solution.”

Steve Jobs

In the past, business improvement philosophies were often viewed as something that could only be successfully implemented within large organisations. However, continuous improvement is just as important for smaller businesses. Success depends on an organisation-wide culture that empowers employees to embrace change, contribute ideas, share in problem-solving and the implementation of improvements. There also needs to be a culture of continuous learning and development to ensure that management and staff understand the methodology that they are applying, its use and effective implementation.

Another improvement methodology, A3 Thinking, is about a logical and critical thinking process to develop a structured problem-solving approach. The tool was developed by Toyota to foster learning, collaboration and personal growth in employees. You may have also heard of improvement methodologies being combined to meet the requirements of different continuous improvement strategies, such as A3 Thinking combined with the Lean method, known as the A3 Lean Thinking Process and Lean Kaizen to implement change and reduce waste.

n an increasingly competitive and fast-changing business environment, continuous improvement has never been more important. Businesses that invest in their people, encourage learning and adopt proven improvement methodologies are far better placed to adapt, innovate and succeed, whatever challenges the future may bring.

If you’d like to find out more about continuous improvement methodologies and how they can help drive improvements in your organisation, or train staff in your adopted approach, take a look at our Business Analysis, Strategy and Process Improvement online courses.

Author: Carolyn Lewis, Head of Business Development

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Sources:

1. https://www.macrotrends.net/global-metrics/countries/wld/world/inflation-rate-cpi
2. https://liquidationcentre.co.uk/statistics-on-business-failure/