Business Improvement in Challenging Times

Many factors contribute to tough times for businesses, whether it’s a pandemic, a recession, fluctuating currency rates, a change in buying habits, political influences or high inflation.  Despite global inflation rates having dropped in the last year to 6.8%, down from 8.71% in 2022, they are still along way from the 3.25% rate in 2020¹. The impact of inflation for business is the erosion of purchasing power as the currency devalues and the cost of materials and resources go up. Employers often feel the need to increase salaries as staff struggle with their own cost of living and customers buy fewer items with the money they have, all of which paints a gloomy picture for business. 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 60% 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, which in turn can result in staff leaving. Replacing those people is an expensive and time-consuming exercise. 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 results in a more competitive business that is fit for the future, whatever that future might bring. And we now know exactly how the future can change, very quickly and with devastating consequences. The pandemic showed just how those businesses that were agile and could make quick and effective changes, with trained and confident staff, were much better placed to succeed in a very challenging time. Your staff are your best assess; invest in them with training to stay 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 tough decisions have to be made is how to identify the best course of action to get the desired results. This is when you need a recognised framework and process to follow that has proven success, so that you aren’t just raising a finger to the wind and hoping the wind doesn’t change in a few months!

Two such frameworks are Kaizen and Lean; both are an approach to continuous business improvement with quality and the customer being at the heart of it. ‘KAIZEN™ philosophy says that everything can be improved and everything can perform better or more efficiently’ and is more about a strategy and mindset rather than a 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 have often been viewed as only being successfully implemented in large organisations, but continuous improvement is vital for businesses of any size. Success depends on an organisation wide culture that empowers employees to embrace change, 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 implementation. Two case studies published on ScienceDirect found that that challenges faced required skills in organisational management, the continuous improvement techniques, engagement and education, and that a good implementation strategy was vital. It was also found that training that was undertaken, was not delivered in the context of SME’s but large organisations, which failed to engage SME candidates.

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 heard of improvement methodologies being combined to meet the requirements of different continuous improvement strategies, such as A3 Thinking combined with the Lean method, knows as the A3 Lean Thinking Process and Lean Kaizen to implement change and reduce waste.

If you’d like to find out more about continuous improvement methodologies and how they can help youdrive 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.statista.com/statistics/256598/global-inflation-rate-compared-to-previous-year/
2. https://business-insolvency-helpline.co.uk/how-many-businesses-fail-in-the-first-year-in-the-uk/