In Downturns, Don’t Just Downsize. “Right-Size”

Sagi Eliyahu
Sagi Eliyahu
February 7, 2023
December 15, 2022
min read
In Downturns, Don’t Just Downsize. “Right-Size”

Meta: 11,000 employees. Amazon: 20,000 employees. Twitter: 3,700 employees—or, roughly half of its workforce. Snap cut its staff by 20%. Across tech, it’s the same story. Companies are cutting back.

A good reminder of the only rule in nature—adapt or die.

But what else is going on? The media would have you think that all these cuts are a product of hubris—a painful, necessary course correction. And to an extent that’s true. We’ve known for a while now that the good times of the last 13 years or so—when money was essentially free, hopes were high, and all that mattered was growth—were coming to a pause, and that, when they did, certain difficult adjustments would have to be made.

It’s like David Sacks tweeted recently: We’ve entered the “Wile E. Coyote economy. Everyone is trying desperately not to look down as they go off the cliff.”

In other words, the time for difficult adjustments has come.

But during downturns, companies don’t only downsize. They also reassess the means by which they’re leveraging their internal resources—from their people to their tools, their processes and their systems—to achieve their business goals. Inefficiencies are identified, sure. But so, too, are opportunities to better invest in specific leverage points seized and capitalized on.

This is what great companies have always done. History has proven that downturns, recessions, and instances of change function as windows of opportunity for the next generation of category leaders. AirBnb, Uber, Salesforce—all leapt through the last slowdown, as Amazon persisted through the dot-com bust, in part by being proactive.

As Ranjay Gulati found in a 2010 Harvard Business Review essay that studied the companies that fared best during the Great Recession, “Some layoffs are inevitable in a downturn; during the Great Recession, 2.1 million Americans were laid off in 2009 alone. However, the companies that emerged from the crisis in the strongest shape relied less on layoffs to cut costs and leaned more on operational improvements.”

Another great example is Starbucks, where, in 2009, CEO Howard Shultz responded to challenges “of a breadth and magnitude unlike anything [he] had ever seen before” by “focusing on operational excellence,” as Shultz wrote in a letter to shareholders. Starbucks worked to develop “a better go-to-market engine, with stronger creative execution and more effective channels to reach our customers.” The results were clear. That year, the company reduced permanent annual costs by $580 million.

These companies didn’t just downsize, in other words—they “right-sized.” Tech companies should do the same today. Here’s where to start.

1. How you work

Earlier this year, Asana surveyed 10,000 knowledge workers from all across the world to learn more about how they and their colleagues are spending their time at work. The results were sobering. On average, more than half of every employee’s day—58% of the work we do—cannot be accounted for. The time is effectively lost. And it’s lost in ways we’re not even aware of, due to how processes inside most companies are structured.

“One-off” requests; endless Zoom meetings; interminable to-do lists—there is just so. much. noise.

There was a time not long ago when we thought we’d found a solution to this. But we can all agree that neither moving from email to Slack or from in-office to remote work made our operations less noisy. If anything, it made it all worse. Consider the way most organizations manage informal internal request handling across teams, or, ongoing cross-functional collaboration. One example: when someone on the sales team needs a contract approved by Legal, or when a customer success manager has a feature request for the product team. In such an instance, the requester will probably do something like Slack a colleague with their request, or send them a message in Teams (or even an email). Seems easy enough—and if the two people are using the same ticketing software, and the request in question can be completed without involving other people or other teams, it might remain easy.

The problem: most teams tend to be siloed and possess their own priorities, processes and tools.

And in reality, only a few requests can be solved in isolation—the person of whom action has been requested often needs to ping someone else to help them do or check on whatever they’ve been asked to check on or do. In this way, complex webs of fragile internal dependencies are created. And because few organizations provide employees with any kind of structure or hierarchy to help them quickly and easily prioritize requests in the context of the rest of their responsibilities—because most employees are not equipped or trained to focus on handling things that fall outside their main task list—each new request becomes a black hole, and every new black hole swallows time.  

This is a product of poor process design. We tend to invest in the execution of work, but not on how we work.

But this is something organizations can redress quickly. Technology that automatically intakes, triages, and standardizes unstructured inbound internal requests can help. As can using such technology to more clearly define and consistently reinforce a structural hierarchy with which you can make sense of internal dependencies, more effortlessly prioritize every inbound request, and make more scalable and systemized cross-functional rules of the road. (A good way to approach this is to define who, in every transactional interaction, is the equivalent of the “customer”—whose needs take precedence—and who is the service provider.) Low-hanging fruit; big impact.

2) The kind of work employees do

Manually triaging and coordinating responses to internal requests is an example of low-value work that employees spend tons of time focusing on today—but it’s just one example. Every organization runs atop a network of internal, informal cross-departmental processes that deplete time, energy, and mental space in precisely the same manner.

It’s about utilization. A primary goal right now should be finding a way to give employees their time, energy, and mental space back—and reduce low value work to the minimum.

It’s obvious why. Doing so will bolster your ability to innovate. It’s also a fundamental prerequisite of adopting any kind of agile methodology—which is a buzz word in many circles, but at its root still carries a lot of meaning. For example, going “agile” is simply another way of embracing the practice of getting your “products” in front of “customers,” obtaining feedback, and then adding features or making changes as needed. This is how engineers and customer-facing teams work today and for good reason—it results in a consistently better and more innovative customer experience. The same can be true of internal teams and the “experience” they provide for their “customers.” In the case of operations teams, for example, their “customers” are the teams, departments, and people who rely on the processes and systems they design, augment, and manage. Their “products” are those processes and systems. Empowering these teams to focus on working in a more agile way amounts to nothing less than enabling them to more rapidly iterate upon—and, ultimately, improve—the “products” they’re responsible for delivering.

None of this is exactly new. I recently spoke on the Modern Business Operations podcast with Tim Jones, the former VP of Business Operations & Procurement at Epic Games and a former Director of Procurement at Google. He reiterated this idea that all employees are service providers to at least some extent internally, and that the processes and systems they help manage are effectively products. In order to build better products and provide a higher level of service, he said, organizations need to empower them to “launch and iterate.” He shared that this was a mantra he followed back in his days at Google—and that is still a key part of the company’s core belief.

Why, then, have organizations today been so slow to adopt similar beliefs in practice? One reason might be we’ve all been focused on the wrong kind of “experience.”

Right-sizing the “experience” of being an employee inside your organization should not have anything to do with sending employees balloons or care packages or providing them with yoga rooms and ping pong tables. Rather, it’s about creating the kind of environment that allows them to focus more completely and creatively on the kind of work that will actually impact outcomes. That matters just as much for operations teams as it does salespeople and engineers.

3. How you use technology

What’s the best way to do that? Technology can help, of course, but only if you leverage it strategically. Specifically, technology should be used to remove barriers, and not add them.

In other words, what technology you invest in should be personalizable and should actively help people spend their time more efficiently.

That means it should reduce friction. But what does that take? SaaS, traditionally, introduces friction. It’s built in a silo by highly technical people and meant to be plug and play. Therefore customizations are often expensive and require code. Code acts as a wall, because employees who don’t know how to code are unable to build, deliver, or iterate upon their own process improvements.

These walls inhibit productivity. Earlier this summer, my company issued its second annual State of Business Operations report. The report surveyed IT and ops professionals about how they’re leveraging technology today. 76% of respondents reported that they rely solely on in-house engineering and development resources to build and manage new tools and workflows. Only 6% of business leaders said they have tools that satisfy all their organization’s workflow needs.

But software has come a long way. No-code automation; app builders; AI—all these new technologies can be used to unlock flexibility and empower employees who are not traditionally trained coders to take more control over the way they work. Tools like ChatGPT, for example—the powerful new chatbot from OpenAI that can communicate in plain English using an updated version of OpenAI’s AI system—have fundamentally changed what’s possible for humans to accomplish in partnership with technology. These tools go beyond productivity to help workers complete a much more diverse array of tasks and at a consistently higher quality of output.

That’s because they allow what Ethan Mollick, an associate professor at The Wharton School, calls “human-machine hybrid work.” Humans don’t just use ChatGPT, but collaborate with it, filling in the gaps of its capabilities while it simultaneously gets better at doing the same thing for them. In practice, it feels like collaborating with a truly brilliant coworker from a different department to produce a new feature that neither of you would have been able to complete on your own—only this coworker is impossibly cooperative, adaptive, and fast.

This is unprecedented stuff. But it’s here. As I’m typing this, literally any person working inside any organization anywhere in the world can use AI to become better and more dynamically capable. They can use it to break down walls.

The need to adapt

As Gulati and his colleagues wrote in that HBR article, “Companies that respond to a slowdown by reexamining every aspect of their business models—from how they have configured supply chains to how they are organized and structured—reduce their operating costs on a permanent basis. When demand returns, costs will stay low, allowing their profits to grow faster than those of competitors.”

Look, the logic behind all this is pretty straightforward. To not only survive times like these but emerge from them more operationally sound, you shouldn’t only downsize; you should “right-size.” And by “right-size” I mean focus on utilization—or, how you leverage your organization’s moving parts.

But don’t take my word for it. Take Tim Jones’s. Take Susan Wojcicki’s. Take Jeff Bezos’. Take Elon Musk’s. Look at the actions taken by the companies who emerged stronger from recessions past, and look at what investments are being made by the leading organizations of today. Block out the noise, and pay attention to their example.

P.S. This has been our mission and focus at Tonkean for the last decade: to help teams create and manage their own internal workflow solutions. In that time we’ve seen workers use new technology to do all kinds of wildly impressive things. They’ve built internal wikis and apps that promote self-service and autohandle frequently asked questions. They’ve orchestrated all different kinds of automations and technological capabilities to take more total control of their processes. And more and more people understand the importance of personalized experience and the power of custom fit solutions, and are building even more impactful solutions all the time.

Sagi Eliyahu is the co-founder and CEO of Tonkean.

Editor’s note: if you want to learn more about what Tonkean is or what we do, get in touch with a member of our team. We’d love to hear from you.

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