As a follow up to my last blog post, I thought I’d mention another of the four areas where valuable projects hang out: decreasing something. That’s right, not only can you achieve the pinnacles of success by making more, you can be equally effective in helping your company by making less. What a country! How can you add value by taking something away? Below are a few examples:
- Costs – Belt tightening is very popular when times get tough. The irony is that the best companies trim waste when times are good then focus on customers during down markets. Is that your strategy? If not, you have room to take a giant step forward.
- Time – Speed trumps perfection. An excellent solution now beats a superlative solution later. For instance, in the pharmaceutical market carving one month off the time to can mean tens of millions of extra dollars. Where can you reduce time to increase performance?
- Effort – Wouldn’t it be nice to earn twice as much in half the time? Sometimes reducing cost isn’t as effective as reducing effort – a subtlety that escapes many executives. In fact, imagine what you could do if you spent 10% extra to reduce effort by 30% then used that extra time or energy to better effect.
- Complaints – Customers, employees, and even contractors’ complaints are a sign that people care enough about what you are doing to want you to improve. Reducing complaints is a sure fire way to have those same people love you more. As the old saying goes, there is not zealot like the converted. Address your complainers’ concerns and you will have evangelists supporting you.
- Attrition – It’s a truism that hiring an employee is far more expensive than retaining one. When an employee walks out the door, she takes experience, knowledge, familiarity with your processes and the confidence of others along with her. The same holds true for acquiring customers versus retaining those you have. Losing employees and customers is an expensive way to do business. Can you reduce that negative trend?
- Risk – Reducing outcome risks, cost risks, opportunity risks, and other risks is a seldom trodden path to immense value. As followers of my blogs and articles know, managing and reallocating risk is a hidden treasure trove and one way you can elevate yourself head and shoulders above the competition.
- Conflict – Some people believe a certain amount of conflict is healthy and helpful. I’m not so sure. Conflict redirects productive, creative energy to self-preservation and destruction. Reduce conflict and enjoy a sudden flourishing of ideas, solutions and business.
- Administrative Burden – Did you know that most sales people in a corporate sales force spend 40% or more of their time on administrative work of one sort or another. That is often three to four times as many hours as they spend in front of a customer. The same craziness applies to internal positions too, and the numbers get worse, not better, in very small companies. Reducing administrative requirements is an easy, fast way to boost value.
- Infrastructure – Similarly, many companies, departments and processes are overbuilt. As problems and issues arise, structural solutions are put in place (e.g., “We had bad result on one product, so let’s install another step of quality checking”). Those systemic solutions calcify over time, making your company slower and less responsive. Slashing infrastructure can remove the shackles holding you back from achieving your true potential.
One of the four categories of creating valuable projects in your company is increasing something. Here are the most common increases which will garner you fame and fortune. Or at least a solid pat on the back:
- Profit – Obvious, but not always correct. Any project which increases revenue or decreases costs should increase profit; however, it doesn’t always work that way because 1) project value is overestimated, 2) project risk is underestimated, 3) system-wide impact has not been through through. You’re better off increasing Net Preference
- Revenue – Bring in more top-line dollars (or Euros or Yen or Rubles) by
When you hire a consultant, you only know if you’re paying a fair fee if you have some idea of what the project is worth to you. Unfortunately, you overestimate the contribution of your project to whatever your larger goal is and therefore you risk overestimating the value of your project.
By the way, this same principal applies to the projects and initiatives you do in-house: you overestimate their value. Why? Let’s go back to 1979 for a moment, when Michael Ross and Fiore Sicoly at the University of Waterloo, Canada wrote about egocentricity biases. Really, you need to know about these.
When you hire a business consultant, coach or some other expert, don’t you wish that they would produce outstanding work every time? As a consultant (and, often, a consultant’s consultant), I know that consultants want to exceed your expectations on every project. Unfortunately for them and for you, they didn’t have the professor that taught Carnegie Mellon’s Pascal Mastery class.
Pity, or they would have learned the amazing lesson in this blog post.
Every Project Has Risks
The work may take too long and miss an important deadline, or use more of your people’s time than you originally thought, or become irrelevant because your needs change, just to name a few.
Usually those risks are given a passing thought, at most, then dismissed prior to bringing in a consultant. Sometimes you voice a concern internally or to the outside expert.
Risk is Actually an Opportunity
Let’s say you ask the consultant, “How much of our people’s time will this project take?” The eager expert, sensing your worry, will
The cover of this month’s Inc. magazine is graced by the smiling visage of Tony Hsieh, CEO of Zappos. Why is Tony’s cute dimple on display and why do we care whether or not another youthful, high-tech zillionaire is feeling chipper? Because this executive’s sunny disposition, Zappos’ ascension to $1 billion in online sales, and the company’s place among Fortune’s top 25 companies to work for are all inextricably linked. Is a similar dynamic shaping your company?
Today a headhunter sent me the specs for a position he is trying to fill. One quick glance through raised more red flags than you’d see at a Chinese parade. The offending job description included these choice phrases:
“…looking for a process improvement professional… newly created position leading effort to streamline Sales and Marketing processes.”
Below, the company listed the must-have attributes for the new hire. The very first skill they are looking for? “Some kind of Six Sigma certification. BLACK BELTS WILL BE GIVEN PREFERENCE.”
In good conscience I could not recommend anyone in my network even consider a job like this, because the hiring company was making a huge, costly mistake:
Are You in Action?
The most admired management sage today is without a doubt Jim Collins, author of Built to Last and Good to Great, and interviewee in this month’s Inc. While revealing an idea-rich landscape Collins mentions three important concepts, which I am taking the liberty of linking together: Corporate success – regardless of the size of the company – rests on entrepreneurship; Entrepreneurship is a life concept reflecting the choices we make; Successful entrepreneurs choose to take action.
I discovered something called OLE when IndustryWeek asked me to deliver a webcast to their audience and Kronos decided to be the sponsor. Read on to see why I am intrigued by OLE. (Kronos is not a client and I do not receive any compensation from them for talking about their concepts and products.)
My clients and long-timer readers know I believe companies need to focus on Net Preference (NP), which is customers’ choice between you and the competition, taking everything into account. One of the challenges with NP is connecting all the activities inside the company to customers’ preferences outside the company. Behavior on the shop floor seems too far removed from the sale and internal processes are intricately interdependent.
Got to love it when someone looks at a system everyone takes for granted then changes one assumption to create an excellent new idea. In this case, Bikestations goes to a core dynamic of American society – the automobile – and asks, “what system is in place to support the automobile that must be in place for bicycles to be used in a similar fashion?” See this Fast Company article: http://bit.ly/8L9QR