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This myth was the brainchild of the great American corporate raiders who gained fame and fortune by cutting up large companies into tiny pieces. According to their business plan, the objective was to fire as many people as possible, sell all that they could, and divvy up the proceeds amongst shareholders. This is the logic of downsizing that caught so much attention in the 1990’s. |
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According to this myth, if companies were going to survive in difficult times, they must do so with fewer people on staff. "Doing more with less", became the battle cry of the day, as restructuring efforts were launched, employees let go, and entire divisions sold off. |
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But what of competition? What of customers? These essential foundations of the free enterprise system have been forgotten in this leaner and meaner paradigm. This is not to argue in defense of over-bloated bureaucracies or overstaffed businesses. Rather, we must remember that an idea in business is a good idea, if it helps a company to compete for the favour of customers. |
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The Lean and Mean approach counsels the disintegration of a company for the profit of its shareholders. We must recognize that this idea holds the short-term financial interests of shareholders, above the many long-term interests of the company, and all of its stakeholders – shareholders included. While this is a fairly common state of affairs in North America, it is much more rare in other parts of the world. (Japanese Board of Directors) |
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At the same time, it has become fashionable for businesses to stick to their "core competencies", to do what they do best and outsource the rest. Much corporate downsizing has been motivated by this rationale. In many cases this is indeed sound advice - but this advice must be applied and considered on a case by case basis. It is a fact that some business activities - though they may lie outside of the organization's core competencies - may actually bestow significant competitive advantages, where and when they permit an organization to accomplish things that others cannot - especially if these are things that are appreciated by customers. Other times, these competitive competencies can serve as force multipliers (to use a military term), that enhance and enrich the power of the organization's core competencies. This is especially true where speed or secrecy are important factors. |
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Perhaps those corporate raiders would have spoken more to the point if they said "Companies must be lean and mean to survive us." Take a look at the companies that have undergone significant outsourcing and downsizing. Are they better able to compete now that they are leaner – or is everyone overworked? Do most employees worry about delivering their best to their employers – or are they worried that they will not be needed much longer? Are employees taking risks, going out on a limb and nurturing innovative ideas - or are they keeping their heads down hoping not to be noticed? |
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Chances are, the people who are left in these leaner and meaner organizations are more fearful, more passive, and more politicized than ever before, precisely when an organization most needs its employees to get involved and apply themselves.
(Retrenchment and Decline)
None of these developments serve the needs of customers, and all of them are bad for companies that require a competitive orientation to succeed, not merely survive, in this new millennium. |
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