There must be a business “dressage” where all businesses, large and small, are trained in profit improvement. Just as ergonomics protects the employee by preventing injuries through effective workplace design, a constant focus on profit improvement helps safeguard a company against the effects of recession. It’s time to make profit improvement a regular part of our business conditioning and build our economic muscle. Only then can we avoid the knee-jerk reaction of laying off large numbers of people at the first sign of economic shortfall.

All types of businesses must begin to recession-proof by undertaking the following steps:

1. Large businesses should develop profit-building teams. This team’s purpose it to uncover innovative solutions or ideas for reducing costs within every line of the profit-and-loss statement. Developing teams specifically for profit improvement is uncommon. However, I have found this method to be extremely successful and have applied it to a wide range of organizations. Over the years, millions of dollars have been saved through innovative solutions produced by profit-building teams. A productive team represents a cross-section of departments and skills within the organization and includes members chosen for their proven ability to come up with creative solutions. There should be no fewer than five and no more than eight team members. Issues associated with cost reduction require urgency, consensus, and action. A large team slows the process down, while a small team can take a narrow view. Team members also need to set performance goals that are easily tracked and measured using the profit and loss statements.

Small businesses should form a profit-building consortium. By teaming up with other small companies, they can pool their talents into one highly skilled team that serves all the businesses in the consortium more effectively. For example, a marketing company, an accounting firm, a software or internet company, a printer, and a mailing service might come together to form a profit-building consortium. Representatives from each company would comprise the team, with each contributing his or her specialized skills and knowledge. Team members could share information, develop new strategies, and come up with creative solutions as they play off of each other’s strengths. Each business could also leverage or barter skills, resources, and talents within the consortium to reduce costs and build revenue.

2. The profit-building team or consortium should have a clear understanding of innovation management. Training in innovation management prepares team members to recognize enablers of innovation as well as how to deal with setbacks. This process takes into account factors such as the size of the organization, its age, the number of times an idea has been tried, and how these factors affect the success or failure of the idea. Team members must learn to measure the company’s ability to change, lay the groundwork for future innovations, measure an idea’s success, and make needed adjustments. Innovation management training also opens the door to greater company-wide participation in cost reduction efforts, as team members are taught to search for solutions by turning to their employees for help. These people are often the ones who hold the answers to the profitability question.

3. The team or consortium should use “questions brainstorming” to uncover creative solutions. This is brainstorming with a twist – the team is searching for questions instead of answers. This process stimulates creative thinking and allows team members to freely explore the possibilities without the pressure of having to find immediate solutions. Coming up with question after question eventually leads to powerful innovations. Give each member a copy of the latest profit-and-loss statement to use as a reference, and announce that the goal is to come up with a list of questions that will eventually lead to strategies for improving profits and reducing costs. The team manager may jumpstart the process by asking questions such as how is revenue generated or how many marketing dollars are spent each year. List all questions on a flip chart. Do not edit or omit any. Sometimes the wildest questions lead to the best solutions. Continue asking questions until a sufficient list has been generated.

4. The team then turns questions into answers and answers into action. The team should revisit the list of questions generated during the brainstorming process and analyze each one to determine whether opportunities for cost reduction exist. The team can then rank and prioritize the questions. The top questions are documented on a performance improvement plan that includes actions steps, measurements, and contingency plans. Team members are assigned responsibility for researching information and implementing the action steps. Periodic measurements will reveal whether these steps are successful. If needed, a contingency plan can help put the project back on track.

By following these four steps, businesses large and small can start to recession-proof their organizations by improving profitability and reducing costs on a regular basis. These steps support managers in discovering innovative solutions for reducing costs. They also show businesses how to give employees an opportunity to participate in a process that perpetuates cost reduction strategies and sustains profit improvement. It’s easy to see how this approach can add value and longevity to businesses as they weather the economic storm and prepare for the future.