Cost Cutting is Much Different than Waste Removal

The very last thing to consider is the one thing managers seem to embrace most readily: cost cutting. This means leaving out steps and features that actually create value from the perspective of the customer and removing employees who are actually needed to get the job done right using the current process. The hope, usually wrong, is that the customer won’t notice.

This last expedient is the one I most fear, because it is likely to be justified in the name of “lean.” Every recession seems to produce a major cost-cutting campaign sold by traditional consultants. Their key promise is rapid financial payback, even within one quarter, and the only practical way to achieve this is layoffs. I truly hope that the recession of 2009 will not be known to history as the “lean” recession and everyone in the Lean Community should vow to avoid the cost-cutting urge in their own organization.

To avoid the need for cost cutting, I hope that every would-be lean enterprise will assign someone responsibility for developing a “recession A3” that carefully reviews the background situation. The critical step in the A3 process will then be to develop a set of countermeasures that can protect the organization and its people through the current recession while laying the ground work for a sustainable lean enterprise in the future.