Recession Lessons #3: Just-in-Time Management as Best Practice

It’s never been harder to be a C-suite executive.  Since the start of the recession, every firm has been forced to operate in an extremely difficult and uncertain environment.   Specifically, customer demand is soft and volatile; access to credit is tight; supply chains are at risk and; brands are vulnerable to social media-powered consumers and interest groups. At the same time, the pressure to make your numbers and follow good governance has not diminished.

This turmoil has significant implications on management and leadership practices.  For example, demand volatility gives managers less time to make bigger decisions.  Uncertainty creates a dearth of actionable information and shatters conventional wisdom, hampering efforts to set priorities and allocate capital.  Interconnectedness in areas like supply chains and counter-party obligations triggers 3rd party and system-wide risks that can not always be predicted or mitigated in the short term.  Despite recent stability, some sectors continue to operate in highly uncertain environments including Financial Services, Manufacturing, IT and Raw Material suppliers. 

Historically-proven approaches to management (e.g., consensual decision making, yearly strategic planning and matrix-driven execution), born in more stable and predictable times, are no longer as effective or relevant in periods of confusion.   Many companies might consider adopting new ways of decision making and managing, at least for the short term.

Most leaders can benefit in some way from newly emerging management best practices that have evolved over the past 18 months.  These situation-influenced structures, processes and habits could be described as just-in-time, adaptive or dynamic management.  Below, I outline some of the more successful new approaches and strategies.  Separately, other thought leaders are studying this area including McKinsey. 

  1. SWAT teams – In place of process-heavy & collaborative strategic planning and program management, a dedicated team of experienced senior leaders (the smaller team the better as long as key functions, lines of business and skill sets are included) is convened to monitor and manage key activities during periods of uncertainty.   These activities would focus on ensuring key customer retention, supply chain stability and mission-critical program management. 
  2. Rolling budgeting – A quarterly and dynamic process of managing spending, financial scenario planning and tight capital allocations replaces a yearly, formalized event which often is overly-reliant on questionable assumptions and macro economic variables as well as being cumbersome to execute.
  3. Strategy simulations – War gaming various market scenarios is an excellent way to drive immediate, real-world thinking.  War games help gage potential competitive moves, align around threats & opportunities and catalyze bias-free, fact-based thinking.
  4. Fact base updating – In times of uncertainty, making the right decisions at the right time requires having an updated information bank for mission-critical data such as customer/channel revenues, costs, and risk exposure as well as macro economic variables like exchange rates and input costs.

Paradoxically, corporate turmoil is also an ideal time to address internal structural, process and communication challenges.  For example, senior leaders could refocus their efforts on key strategic and leadership issues while empowering others to handle more tactical tasks.  Furthermore, a crisis is a great opportunity to goad internal communications, priority-setting and teamwork.

Companies can’t totally forecast the future and plan for every contingency.  However, they can improve decision making processes and structures to drive responsiveness, flexibility and speed. While I outlined a number of best practices, one size does not fit every organization and executives need to come up with the best structure, process and protocols to suit their firms.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.


2 comments so far

  1. Jeff Wilson on

    Changing management behavior begins with self-acknowledgment that the way you have been working isn’t working anymore. Do you really think a CEO of a bank is capable of this? Given the track record in Financial industries in Canada and abroad i question whether this could work or whether they even believe they are in difficult times. Certainly bonuses are not reflecting that and personal accountability seems to be a non-issue.

    I dunno man. I get it and like the idea. But for industries as ego-centric and self-deluded as banks i seriously doubt it could ever take off. Now, if you made bail outs contingent on adopting new management policies you are on to something!

    • mitchellosak on

      Thanks Jeff, interesting take on the Canadian industry. I don’t know how they have managed over the past 18 months. However, during the recent Wall Street meltdown, many of those Financial Institutions – Lehman, AIG, Bear Sterns etc – could have benefited from systematic JIT management instead of their ad hoc approach. This was amply demonstrated in Sorkin’s book, Too Big to Fail.

      Given the above, JIT management has advantages for many different kinds of firms in other industries

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