Youngstown, Ohio shares some parallels with any mature industry faced with the possibilities of constricting. The town sits on the bank of the Mahoning River about halfway in between Cleveland and Pittsburgh, Pennsylvania. Steel made Youngstown a relative economic boomtown until the domestic steel industry started to decline through the 1970′s. Nothing, with the exception of a nearby GM car factory, has replaced the former economic engine and as a result the population has been in steady decline.
In search of a replacement, the town has grasped at any idea to stimulate growth no matter the improbability. First came the hopes of a Nascar track. Next a riverboat casino. What about a balloon factory? But faced with dimming prospects the city chose an even more audacious plan, to consciously shrink the size of the town. Since 2006 the city has offered economic incentives for those left in sparse locations to relocate. If the city’s population is more centralized, then the thinking goes that the cost of services to its residents will be less.
While listening to the Youngstown story unfold on NPR’s Planet Money, I wondered if a similar structure could work for businesses? Not a single company comes to mind as having intentionally shrunk its customers, employees, overhead, revenue, et al., to a point of stabilization. Usually these are knee-jerk reactions from plummeting financial conditions that lead to actions supporting the minimal viable option. In other words, putting a Band-Aid on a shotgun wound. Too often the patient, to continue the metaphor, bleeds to death in the form of bankruptcy filings.
What if an industry or company facing continued economic difficulty went radical? What if it cut 70% of its payroll and focused on 1% of its product portfolio? The risk is usually more than C-type leaders are willing to stomach. But at least some think that this type of swinging-for-the-fences approach might be a viable option, in this case for Kodak.
Do you know of any company that has consciously shrunk itself? If so, tell us in a comment.
photo: stu_spivack
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