“Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion.” — Jack Welch, former CEO of General Electric.

“Efficiency is doing better what is already being done.” — Peter F. Drucker, Austrian-American management guru.

Back when I was a kid, a big winter storm hit my hometown, delivering perfect snowman material—so naturally, my brother and I decided to build a huge one. We started with a very large base; easy enough. The real challenge was the next snowball up…it was just too heavy for us to lift. Luckily, my brother was a budding engineer. Using our Red Flyer wagon as a fulcrum and a 2 x 8 board as a lever, he lifted the middle snowball onto the base while I guided it. After that, finishing was easy!

In a similar way, you may sometimes find it necessary to leverage your human capital and other resources in order to move your organization forward, possibly even to divert it onto a new path. In this analogy, here’s how the leverage factors break down:

• Effort = you, the leader applying the input force
• Lever = the employee(s)
• Fulcrum = the right tool or enabler
• Leverage = the output force that moves an object

There are many ways to effectively maximize your leverage, from applying greater effort to finding a better fulcrum and using more levers. But there’s another way to handle the situation that may not immediately occur to you: you can lighten the snowball so it’s easier to handle.

The Basis of Business Economics

It took me a year and a half to get my MBA, but let me summarize it for you: In order to be successful, a business must make as much money as it can and save as much as possible. There you have it—an MBA in a sentence.

To make money, an organization must use three strategies:

1. Attract as many customers as possible. Many marketers call this “front end” marketing.

2. Keep the customers it attracts. Also known as “back end” marketing, where you make more offers to existing customers in hopes they’ll rebuy as often as possible for as long as possible for the highest possible profit margin.

3. Invest wisely in people, facilities, infrastructure, processes and financial instruments like stocks and bonds.

To save money, an organization can try six techniques:

1. Reduce staff, either through attrition, early retirement, packages, or direct layoffs.

2. Reduce benefits. Health insurance and retirement plans are popular targets.

3. Reduce salaries. Most employees won’t stand for this because they can’t afford to; the fact that executives rarely slash their own salaries compounds the problem. (Chrysler’s Lee Iacocca was a notable exception.)

4. Reduce the quality of your product or service. This is the worst possible option, because it has negative consequences both now and down the road. (Has my cereal box gotten smaller?)

5. Reduce expenses. Find ways to pinch pennies, switch to cheaper vendors, conserve resources, and cut nonessential services. This can be the best option of a bad lot, but it’s definitely no fun.

These first five options take reduction too far. While viable and sometimes even attractive to misguided or desperate organizations—as we’ve seen in recent years—all of them stink. The sixth one better be good:

6. Increase productivity.

Rather than damage your infrastructure and reputation with false economy, find ways to tighten efficiency and increase team productivity instead. Think about it: If you have 10 people on your team, and as a leader you can improve team productivity by just 10%, you now have the equivalent of 11 headcount—and you didn’t increase salary expenses one cent. There are hundreds of ways to hone your productivity, and you’ll find most of them right here on my website and in my blogs, newsletters, and books.

But at the very least, implement these practices:

• Drastically triage all unnecessary tasks.
• Rein in unproductive behavior.
• Improve communication in all directions.
• Implement technology that benefits everyone.
• Cut back on meetings.
• Lead by example.
• Delegate widely.
• Allow your team to execute as they see fit.
• Pitch in when absolutely necessary.
• Never micromanage.
• Hire carefully and for team fit.
• Tap into individual creativity.
• Motivate your team in every way possible.
• Encourage initiative and individual empowerment.

I could go on but won’t, because it’s apparent you have many, many options for saving money by increasing productivity. Done correctly, you might not need to make bone-deep cuts in staff, salary, benefits, and quality.

You can either implement potentially damaging reductions that lead to short-term gains, or start tightening your belt early on, initiating habits that will benefit the whole team for years to come. I like the latter.