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May 23, 2023

How Enhanced Productivity Can Help You Win Despite the Recession Ahead

Kevin D. Kuchinski

Many managers’ initial instinct in advance of a recession is to hunker down by cutting headcount, reducing marketing spend, and hoping for the best. But successful business leaders do something different: not wanting to leave things to chance, they make their own luck.

As Thomas Jefferson famously said, “I’m a great believer in luck, and I find the harder I work, the more I have of it.” One of the simplest ways to make your own luck is to focus on enhancing productivity.

Here are several productivity-enhancing strategies to help you get ahead of the coming recession:

1) Necessity is the Mother of Invention – Leverage It!

Too many businesses get comfortable doing things the same old way and are slow to adapt when the economy decelerates, leaving them with bloated inventories, shrinking margins and touch decisions on what it’ll take to survive. But there’s a different way.

Start by creating a crisis mentality within your organization, challenging your team to identify opportunities to each bring in 2-3 new ideas to increase productivity. Be bold in your goal setting and give them a stretch objective, such as eliminating 5 to 10% of total costs while maintaining output. Necessity can be a powerful motivator and you might be surprised what they can deliver when their backs are to the proverbial wall. The winners of tomorrow will find a way forward despite the recession. I have seen this first-hand.

When I was VP and General Manager at a global consumer products company, our secret sauce was to leverage productivity initiatives to not only preserve margins, but to also invest back in growth. We typically delivered 50% of productivity gains to the bottom-line, while investing the balance in growth initiatives, including increased advertising, trial programs and special promotions. As a result, we were able to take market share and accelerate growth as our competitors pulled back.

2) Approach Productivity Gains as a Game of Inches.

Ideas that seem small on the surface can deliver big savings. In a former role, one of my team members challenged me on the value of back labels on Detergent bottles. After talking with consumers, I realized that most did not read 90% of what we provided on our back labels and were overwhelmed by the jargon and technical terms. By simplifying the regulatory information, converting technical terms to plain English, and moving to a new squared-off label design, we were able to save several million dollars, without impacting the consumer experience.

One strategy for identifying new cost-savings ideas is zero-basing your cost structure. It’s akin to starting with a blank sheet of paper. First identify what the most critical driver of consumer satisfaction is for your good or service. Next identify what’s second most important for consumers, and so on, until you reach the point where you have elements that deliver little to no perceived value for consumers. In Detergents, clean clothes was the #1 need, but most detergents already deliver on consumers’ everyday cleaning needs. Beyond basic cleaning, we found that consumers wanted clothes that also “smelled clean”, but attached little to no value to our packaging, including the outer corrugate. This led us to increase the number of bottles per case from two to four, significantly reducing packaging costs. We reinvested a portion of these savings into higher quality and increased levels of fragrance, leading to increased consumer satisfaction at lower cost.

Another area to look to for productivity gains is within your organization. Do you have the right people in the right roles? If not, look for opportunities to upgrade talent and shift headcount to where it will add more value. New technology that automates routine work and better processes that streamline workflows and can help your organization reach its goals faster. Project management software can help on the latter. When looking for potential savings and productivity gains, remember that it’s a game of inches and small changes can add up.

3) Think Outside the Box…

…and look at a recession not as a threat, but as an opportunity to reinvent your business so that you emerge stronger after it ends. Start by thinking of yourself as a new entrant aiming to disrupt your industry and analyze what changes they would make to dramatically lower cost and improve output.

Tesla did this successfully in automobiles, starting with wiring. They determined that legacy manufacturers had added new wiring and wire harnesses as cars added features (lighting, air conditioning, anti-lock brakes, etc), leading to many miles of wires in the average vehicle. They set out to change that, starting with the Model S which had under two miles of wiring. On their next vehicle, the Model 3, they were able to reduce total wiring by additional 50%, and their latest design on the Model Y aims to reduce wiring per vehicle to just 328 feet. That’s a cumulative reduction of over 93% and has saved Tesla billions. It’s no wonder they have the highest gross margins in the industry. Existing players can benefit from this strategy too if they’re willing to think outside of the box.

Remember, recessions are a normal and recurring part of every business cycle and we’re overdue for one. Rather than fear what lies ahead, now is the time to get prepared and make your own luck by planning how you can enhance productivity. It will help your business weather the coming storm and emerge stronger.

I’m hopeful these three general productivity strategies and the examples I have shared will put you on the right path.

Gain a competitive edge with our Recession or No Recession series.

In our next Insight Tuesday, my partner, Tom Sullivan, will address People and Talent-Focused Strategies to Help You Weather a Recession. Subscribe to Insight Tuesday.

Kevin D. Kuchinski
Follow Kevin D. Kuchinski

Kevin D. Kuchinski is a proven leader in the corporate, governmental and non-profit worlds with a 30+ year track record of success. Currently Managing Partner and COO at Princeton Partners, working with companies to innovate and deliver out-sized revenue and profit growth. Prior to this, he was VP of Marketing at Church & Dwight, working on iconic American brands such as ARM & HAMMER™ and OxiClean™ and leading a $1 Billion+ division. He also worked at Procter & Gamble, with assignments in the US and Belgium, including the global launch of Swiffer. Kevin was recognized by Advertising Age as one of the Top 100 Marketers of the Year for his leadership of the Swiffer launch. He is a partner at Sourland Mountain Spirits and has served on the Township Committee since 2015. Kevin was elected as Mayor from 2016-18.

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