The 7 Leadership Wastes That Nearly Killed 426 Manufacturing Companies—And How They Fought Back

The Scene: Calgary, 2009—The Worst Economic Crisis Since the Great Depression

Picture this: 426 manufacturers walk into a convention center in Calgary. The year is 2009. Orders are down. Layoffs are looming. The economy is in freefall.

They should be back at their plants, putting out fires. Instead, they're here—learning.

Why?

Because they knew something most businesses never figure out: The crisis wasn't going to kill them. Their own leadership habits would.

This is the story of how a room full of struggling executives discovered the seven hidden wastes draining their companies dry—and what happened when they finally addressed them.

The Inciting Incident: When the Data Told the Truth

Jay Myers, President of the Canadian Manufacturers & Exporters, stood at the podium with numbers no one wanted to hear.

His team had been collecting data monthly—something no one else was doing. While the government published economic reports three months old, Jay had real-time intelligence from manufacturers across Canada.

Here's what he shared:

• 10% of companies reported orders were up
• 20% saw no change
• 66% watched their orders collapse
• 36% were planning more layoffs in the next three months

The room went quiet.

But then Jay said something that changed everything:

"If you're doing the same thing now that you were doing five years ago—you are at risk. And if you plan to do in five years what you're doing now... you will not make it."

The message was clear: The companies that survived wouldn't be the ones who waited for the economy to recover. They'd be the ones who hunted down their own hidden wastes—starting with leadership itself.

The Struggle: Discovering the 7 Leadership Wastes

What Jay and his team had uncovered wasn't just about market conditions. It was about the systematic ways leaders unknowingly sabotage their own companies.

They called them "The Seven Operational Wastes." But don't let that name fool you.

Every single one of them traces back to leadership failures.

Waste #1: Failing to Manage Risk Properly

The Problem: Most leaders think they're managing risk. They're not. They're reacting to it.

True risk management means setting priorities, making fast and accurate choices, and—critically—listening to your people, customers, and suppliers while gathering the right data.

The Leadership Question: Are you choosing the right risks? Or just fighting the fires closest to your desk?

One manufacturer at the conference had sales down 70%. Sounds like a death sentence, right?

Wrong.

Because he had been managing risk aggressively, he was positioned to acquire struggling competitors. By the end of that year, he had tripled his market share while others folded.

The difference? He made choices before the crisis forced him to.

Waste #2: Misaligned Cash Management

The Problem: Leaders say they focus on cash flow. But their processes tell a different story.

Here's what alignment actually looks like: Every single process in your organization—every activity, every decision—must be optimized toward generating cash.

That sounds obvious. It's not.

How many meetings did your team have last week that generated zero revenue? How many projects are running because "we've always done them" rather than because they contribute to the bottom line?

The Leadership Truth: Any misalignment of activities from your corporate goal generates waste. Every time someone's working on something that doesn't move cash, you're bleeding money.

The discipline required here is brutal: You need a vision so clear that every single person knows exactly how their work connects to cash generation. Not vaguely. Not theoretically. Precisely.

When that alignment clicks, activities point toward goals "like a laser."

When it doesn't? You're funding your own decline.

Waste #3: Unscreened Inputs Destroying Your Operations

The Problem: You're letting garbage into your system—and it's not just materials.

Think about all the inputs flowing into your organization:

• The quality of goods and services you receive
• The quality of relationships with suppliers and customers
• Infrastructure elements like government regulations

Here's the advice that shocked the room:

"Right now is the time for all world-class suppliers to fire their worst customers."

Read that again.

The Leadership Insight: You probably have customers, suppliers, or partners consuming time, energy, and resources that should be going to the relationships that actually matter.

Who should you "fire"? Who deserves more of your attention? These aren't just operational questions—they're leadership decisions that most executives never make.

Waste #4: Treating Energy Costs as "Fixed"

The Problem: In 2009, an embarrassing number of companies still believed their energy costs couldn't be changed.

The data said otherwise: Companies that actually attacked energy costs typically reduced cash outflow by 20-35%.

The Mindset Shift: This isn't about installing LED lights and calling it a day. It's about what the experts called "Thinking Lean and Green"—a fundamental change in how you view every resource flowing through your operation.

The best part? Most companies could generate more cash without any capital costs. The waste was just sitting there, invisible, because no one had decided to see it.

Waste #5: Ignoring Your Byproducts

The Problem: Every company produces byproducts. Most have become invisible because you live with them every day.

S&T Micro won the Euro Environmental Award by doing something radical: They directed every producer of major waste in their semiconductor business to be turned into a Profit Centre.

Read that carefully. Not a cost center. A profit center.

The Leadership Reality: When you designate something as "waste," you've given your team permission to ignore it. When you designate it as a potential profit source, everything changes.

The companies ignoring their wastes in 2009 were watching disposal costs skyrocket—cash literally being sucked out of their operations.

The ones who confronted those byproducts found new revenue streams where they least expected them.

Waste #6: The Untapped Human Potential (The Big Lever)

The Problem: This is where most leaders fail catastrophically—and they don't even know it.

Lockheed Martin had identified an "8th waste" beyond the traditional seven wastes of lean manufacturing: The Waste of Untapped Human Potential.

Their aggressive commitment to eliminating this waste led them to win the largest aerospace contract in the world—the F-35 fighter program.

Here's the disconnect that should keep you up at night:

Companies say employees are their "most important resource." But the numbers tell a different story:

• 4% of total work time is lost to injury nationally. That's a 4% defect rate that most companies simply accept.
• Companies spend 10-12% on equipment maintenance to keep machines running well.
• Those same companies spend 1-3% on upgrading employees.

The Leadership Hypocrisy: Almost no manufacturing company in North America would tolerate a 4% defect rate in their products. But they accept it in their people.

Everyone talks about innovation being critical to competing in future markets. Yet the innovation that comes from people is constantly inhibited by a lack of training, development, and fundamental respect for what humans can contribute.

To paraphrase Jack Welch: "The information you need to build your company is always closest to the work."

Your people have answers. Are you creating an environment where they can share them?

Waste #7: Leadership Gaps Everywhere

The Problem: When leadership is lacking anywhere in the company, waste rises and cash drains.

But what does leadership actually mean?

It's not a title. It's not seniority. It's the ability to generate followers—and that requires two core competencies:

1. The ability to Vision — seeing clearly where you need to go
2. The ability to Communicate — making that vision shared by everyone

What Leadership Looks Like in Practice:

• Beginning with fundamental respect for people and the environment
• Achieving results through people, not despite them
• Acquiring the followers needed to do the job now and in the future
• Empowering and growing people—every day
• Challenging people daily
• Providing direction through a shared vision so clear that the wastes of non-alignment (confusion, people not on the same page) are eliminated

When any of these elements break down anywhere in your organization, cash starts disappearing.

The Transformation: What the Survivors Understood

As the conference wrapped up, Jay shared a final insight that tied everything together.

"The real problem globally is that no one really knows the true worth of their assets."

But manufacturers—the people in that room—were different.

They were the ones who bring People, Processes, and Technology together to produce products and services that people will actually pay for. They consume real materials, real inputs, and process them through real processes.

The challenge? Speed up production velocity while never losing sight of the fact that it's not about the product—it's about the solutions you bring to your customers.

One auto manufacturer (you can probably guess which one) had lost sight of the customer and was paying a massive price for it. Companies of any size experience the same stress when their eyes shift away from customer solutions.

The winners would be those who could bring people, processes, and technology together in waste-free processes, all aligned like a laser on customer success.

The Takeaway: What This Means for You

Around the same time as this conference, Jim Womack—founder of the Lean Enterprise Institute—wrote a letter to the lean community reflecting on what General Motors' bankruptcy meant for everyone.

His observation cuts to the heart of what you need to understand:

"Whether you prevail or fail, endure or die, depends more on what you do to yourself than on what the world does to you."

That auto manufacturer that went bankrupt? They had developed competitive factories, quality products, and efficient processes. They had even started implementing lean principles throughout their organization.

But lean came too late.

Jim Collins, in his book "How the Mighty Fall," identified five stages of corporate decline:

1. Hubris Born of Success — You stop questioning what made you successful
2. Undisciplined Pursuit of More — You chase growth without foundation
3. Denial of Risk and Peril — You explain away warning signs
4. Grasping for Salvation — You try desperate fixes
5. Capitulation to Irrelevance or Death — Game over

The encouraging news? Even companies near the bottom of Stage 4 have come back stronger.

Corporate demise is largely self-inflicted. You are not imprisoned by your circumstances or history unless you mentally accept it.

Your Next Move

Look at your organization through the lens of these seven leadership wastes:

1. Are you managing risk—or reacting to it?
2. Is every process aligned to generate cash—or are activities running on autopilot?
3. What inputs should you stop accepting? Which relationships need to end?
4. What's the actual waste in your energy costs?
5. What byproducts have become invisible that could become profit centers?
6. How much are you really investing in your people versus your equipment?
7. Where are the leadership gaps causing confusion and misalignment?

The companies that made it through 2009 weren't the ones who waited for better times. They were the ones who hunted down their own hidden wastes—especially the ones hiding in plain sight.

The same will be true in every economic cycle that follows.

The question isn't whether you'll face a crisis.

The question is: What wastes are you tolerating right now that will determine whether you survive it?

What's the biggest leadership waste you've seen—in your organization or others? Drop your answer in the comments. Sometimes naming the waste is the first step to eliminating it.