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Recession Proof Your Business

March 12, 2008
Companies need to identify the basic building block in determining future success -- it's called the 'tribe.'

Is there a secret to so-called "recession-proofing" in the manufacturing industry? Can you still improve performance, products and productivity when the going gets tough?

The answer to both these questions is a resounding yes... if you know how to build a world-class culture. The process is straightforward, and any manufacturing company would do well to follow its lessons.

Many manufacturing companies rely on forecasted orders. In a downturn demand becomes unstable and unpredictable, and so the very key to our survival seems outside our control. This is an opportunity to take a lesson from the service industry, in which many businesses have to reinvent themselves every few years. Truth be told, some people and companies not only weather recessions but also flourish in them. Here's how you can count yourself among those who thrive.

Identify and Understand Your Tribes

The key to recession proofing your company is to identify the basic building block of companies -- it isn't leaders, or departments, or divisions. It's a naturally occurring group we call a "tribe" -- between 20 and 150 people. In a manufacturing corporation there may be a leadership tribe, a management tribe, a research and development tribe and a line tribe.

Companies that survive and flourish in a recession have to become smart, and fast. Quickly develop new ideas -- for changes in manufacturing processes, exploring new markets, revising products and how to partner with your supply chain in new ways. Remember that companies are only as smart as their tribes. Although tribes form in your company without your effort -- only 22% are strong enough to survive and thrive the predicted economic downturn. In our landmark study of 24,000 people across multiple industries over ten years, only 22% of corporate tribes show the hallmarks of being recession proof. No matter what happens in the economy, they will find a way to thrive.

To get to this stage, however, a leader must have a clear understanding of the tribes "stages" -- of all the tribal cultures -- and see which one runs the show in his company. You can do this just by observing the social groups that exist in your company, and listen to the way they talk. Is it "life stinks" (Stage One), "my life stinks" (Stage Two), "I'm great" (Stage Three), "we're great" (Stage Four) or "life is great" (Stage Five)?

The 48% of workplace tribes in the U.S. operate in Stage Three. This is where the theme is "I'm great, and you're not." In this culture, knowledge is power, and so people hoard it, from client contacts to gossip. People at this stage have to win, and winning is personal. They'll out-work, think and maneuver their competitors. The mood that results is a collection of "lone warriors," wanting help and support and being disappointed that others don't have their ambition or skill. Stage 3 tribes won't survive the recession, only Stage 4 tribes will.

To move your tribe to Stage 4, identify your tribe's leverage points and use those to help your tribe transition to the next immediate stage. For example, tribal leaders intervene in Stage Three by identifying people's individual values and then seeing which cut across the tribe. Point out the values that unite people, and then construct initiatives that bring these values to life. This is key to moving such a tribe to Stage Four, which is where a company gains that recession-proof vest.

The Magic of Stage Four and the Immunity from Downturns

Stage Four tribes are nimble, innovative, stress-resistant, and adaptable -- the qualities that help them do well no matter the circumstances. They have three qualities that make them so successful.

First, they align on core values. Unlike most corporate groups that pay lip service to values and then make decisions based on expediency, Stage Four tribes use their values as the decision-making tool. Core values like integrity and innovation are not situation-dependent, they are the tribe. Hewlett-Packard codified this within all of its diverse tribes with its HP Way. Their values of respect for the individual, quality and reliability, community responsibility, and technical contributions for the advancement and welfare of humanity guide their company.

Second, each member of a Stage Four group builds and strengths relationships around them. Reciprocity kicks in and everyone receives the benefit of this networking style that puts the group above the individual. As a result of people create webs of networks that spread the best practices. When one person has an idea, it's not long before everyone has heard of it. A great example of this is GE Healthcare group. The R&D teams work closely with the manufacturing line, not just to trouble shoot production problems but to work in partnership to create new and innovative products.

Third, they form plans in real-time, and hold each other accountable for following through. Instead of waiting for someone to tell them what to do, they come together in ad hoc sessions to share news and brainstorm solutions. One of the best illustrations of this is Toyota. The Toyota Production System focuses on continuous processes that address problems in real time, reliable open processes and relentless improvement.

Put all these characteristics together and it's clear why business history is dominated by successful Stage Four tribes. When a downturn hits -- or is about to -- someone in the group sees it coming first. That person broadcasts the message through the Web-like interpersonal network. Soon, everyone knows and is adapting to the new situation. People decide to act on it because their values compel them to do so. When something of note happens, people come together-without anyone telling them to -- and they craft solutions and test them immediately, without waiting for permission or consensus -- they act with resolve and focus. Any downturn sparks new opportunities, and Stage Four groups seek these out, and thrive in the face of adversity.

Dave Logan, John King and Halee Fischer-Wright are authors of Tribal Leadership: Leveraging Natural Groups to Build a Thriving Organization. All three are partners of CultureSync which is boutique management consulting firm focusing on strategy, cultural design, high performance, and executive coaching.

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