Surviving an economic recession

Come 2009 and perhaps for the next few years, the impact of what started off in 2007 as a sub prime mortgage crisis in the US, and which later evolved into a global credit crunch will unfold into a global recession. Companies in most industry sectors are already starting to feel the pinch. Dwindling demand for their products and services sparked by cash flow problems and chokes incredit lines are enough to send company revenues in a downward trend. Even if oil prices are in a downward trend, business cost across the board will take time to deregulate itself to comfortable levels for companies to operate. During these challenging times, top management of companies are compelled to look for innovative ways to keep their businesses afloat. There could be both short and long term solutions. The usual considerations , just to name a few, tend to be such as headcount cuts or freezes, wage cuts, budget cuts, freeze in expenditures of all sorts or even mergers & acquisitions - which should really be actions of last resort. But innovative ways of surviving a downturn reside in business improvements engagements such as Lean implemenation, six sigma, kaizen, etc. How many of us have actually considered business improvements to ride us through an economic recession?

TPS or Lean Six Sigma - Which is better?

There have been suggestions that the improvements made through a Lean Six Sigma deployment are not sustainable. While results have been largely positive, and companies who use it for operations improvements have reported substantial savings, the gains achieved have only been for the short-term and have no sustainability. The good side of it is that in such deployments, there usually is a pool of highly trained and skilled statistical problem solvers - the Black Belts - who are able to ferret out root causes of problems to effect improvements and change. There is also a supposed network of trained Green Belts to support the Black Belt projects.

On the other side of the spectrum, is the Toyota Production System or any variants of it. While the name may be misleading, it is essentially a set of philosophies which sets the culture for an organization to continuously improve (kaizen). A company who solely subscribes to the use of TPS methodologies would probably have a system and culture of involving everyone in the organization in waste elimination and problem-solving. It is by this very nature that results and improvements will be more sustainable.

It is in the author's view that perhaps there are the good things of both Lean Six Sigma and TPS that can be brought together. Neither deployment is inferior than the other. It all depends on the deployment context and organizational culture. The strength of the Lean Six Sigma program lies in the rigourous statistical reasonings used, while the strength of TPS lies in the continuous improvement culture it preaches. Just as there are both hardwares and softwares in computer systems, an organizational excellence system would also benefit from both a hardware (Lean Six Sigma) and a software (TPS).