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Growing Lean in Uncertain Times

Even as the U.S. struggles to shake off recession, companies can expand their businesses by thinking innovatively.

Here we go, or are we going? Uncertainty remains a theme for everyone in the U.S., as economic indicators and employer surveys have returned lukewarm outlooks over the past few months. Employment numbers have been disappointing, and the latest Tatum Survey of Business Conditions indicates general economic weakness. Profits, however, are returning to many companies thanks in part to aggressive cost cuts and technology investments. Banks and other lenders have restored liquidity, but in many cases they remain reluctant to open the lending window. The recovery may be off to a slow start, but these initial stages offer opportunity. Companies destined to survive will come out of the starting gate strong and steady. They will be careful not to make hasty strategic or spending decisions, balancing the need to drive growth with financial caution. There is hardly any doubt that the key to success this year is responsible growth. With little room for error in this environment, finding the right balance is putting serious pressure on the C-suite. So how can companies grow responsibly? Investing too quickly or too heavily in fixed resources will only heighten and accelerate risk. In this climate responsible growth requires a thoughtful approach and a laser focus on learning new ways to grow lean. This should translate into a new way of looking at resources and new ways of accessing the expertise needed to bring your business forward. Growth through aggressive investment is not a new concept. Consider the dot-com boom of the late 1990s or the private equity boom of the 2006–’08 period. Those days are over. A new set of rules is emerging, and those rules are evolving right along with the business environment. Now that the worst of the recession seems to be behind us, businesses must resist the temptation to return to former levels of overhead. Instead, a “new normal” is being defined, one that allows businesses to grow strategically while adapting to leaner structures. Two of the most successful approaches: rethinking the flexibility of leadership resources and intelligently using strategic partnerships to minimize fixed costs. It’s a fact that the leaders most qualified to define and set strategy are drowning in day-to-day operational demands. At times, it’s difficult for them to focus on the bigger strategic initiatives they should be pursuing to really move their businesses. Fortunately, the same recession that drove the creation of the lean organization has also created an emerging trend in the use of flexible strategic resources at the highest levels of business. Today more than ever before, the C-suite can bring in a temporary team of highly qualified people with deep experience tailored to the execution of the project of the day. These professionals can tackle a vast array of initiatives, from structuring financing, evaluating an acquisition or preparing for an initial public offering to completing a large-scale financial transformation. When you don’t want to take on the overhead but need strategic thinkers and hands-on senior professionals to get the work done, this is one approach that makes sense. The legal profession has been accessing expertise in increments like this for centuries. In areas like intellectual-property law or corporate litigation, it’s not uncommon for the general counsel within a company to bring in flexible resources with the exact expertise needed to handle a particular case or situation. An entire organization can adopt this model for kindling growth in a period of uncertainty. Many other companies are facing the same challenges. Why not seek out those businesses and build alliances? Forming strategic partnerships with other enterprises can provide needed expertise and perspective where and when they are needed, while keeping fixed costs low. Some companies are doing this with written agreements on revenue-sharing; others are doing it less formally. Our economy has withstood repeated cycles of prosperity and austerity. The best businesses have always been able to find opportunities, even during dark periods.

Responsible growth requires a nimble strategy that looks to nontraditional approaches. Find that tipping point where organizational demands and flexible leadership needs meet, without directly investing in head count. One way to resolve this tension is to bring in the expertise you need, as you need it, to help make the right strategic choices for your organization. Looking into 2013 and beyond, your C-suite may have little room for error, but by focusing on stability, opportunity and the skills you need, your company can forge ahead and grow lean successfully.  •  •

Frank Tilley is a partner in the Dallas–Fort Worth, Texas, practice of Tatum, a professional services firm with offices across the U.S., now part of Netherlands-based Randstad Holding.

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