Inflation, ride it with innovation and not just cost cutting
This crisis will be with us for some time to come and the squeeze is on!
Royal Mail announced it will be facing strong headwinds and will have to raise prices once more just shy of three months from having hiked the price of a first class stamp by 11%. Things must be tough.
I run an electric car and have just received notices from Shell, BP Pulse and others to tell me that tariffs are changing - and not for the better. The rush to pass on cost to the consumer is coming at us like a tsunami and we see it across our daily cost of living expenses.
Some years back I read an article by Robinson and Schroeder titled ‘The Role of Front-Line Leaders in Lean Performance Improvement’ and this
crisis brought it back to mind. The premise being that organisations implementing Lean tend to fall short of their full potential, leaving as much as 80% improvement opportunity on the table due to the lack of a high performing ideas generation system. Yes, folks, you heard me correctly: 80%!
So imagine if you were able to replicate such a high performing ideas system as part of your organisation’s Lean culture, something which, in Robinson and Schroeder’s article is eminently possible, you might be able to protect your customers from this frightful crisis. You might be able to ride the wave and emerge as more trustworthy in the marketplace, the brand of choice, not determined by your website or brochures, but by your ever returning customer.
Now I can hear the twitterati already and I haven’t finished penning the article. Yes, inflation is at a crippling high, the highest in the UK for 40 years and there are extenuating circumstances. And yes Covid haunts us, as does the financial crisis from a decade earlier. We are weary of the perma-crisis that has consumed our lives from the day Lehman Brothers hoisted the white flag.
However, there are companies that have been improving productivity year on year by 15% - unionised organisations to boot. And they attribute their strength in performance improvement to their front-line teams driving ideas on a herculean scale. They are not reaching constantly for the next technology to lift the bar. No. They are driving cost out through waste elimination, small ideas, implemented by the team, done so with gusto and ownership and constancy. They are taking the 80% off the table with relish and converting that into margin and cash. Now, imagine if the C suite could spot the opportunity of using that advantage to protect their customers as best they can. And if they chose not to, imagine the profit they will make when they hike their prices and shrug their shoulders blaming ‘external influences’. Either way, they have the advantage over their competitors as they surf this crisis wave to the bank and get ready for the next set of waves.