The world is a noisy and cluttered place to live; so many choices and so many people exercising them.
Resources available are scarce and limited but demand continues to grow.
How can organizations — and governments for that matter — achieve their growth objectives with limits on the available time and money necessary to achieve them? And in some cases, not just holding the line on resources but reducing their availability?
Obviously productivity gains will offset the need to add some resources.
If the organization can realize a 10% increase in productivity, and growth requires a 5% increase in operations expenses, growth goals can be more than achieved assuming the targeted productivity savings are realized and are allocated to growth projects — spending productivity gains elsewhere is a waste and results in added costs being necessary.
But there are limits on how much should be mined out of expenses from productivity to fund growth.
Doing things more efficiently has its limits and it’s trade offs
Changing operational processes to drive cost out can impact customer service.
Costs of a re-engineered process might decrease but customers could be dissatisfied with the resulting way they have to engage with the organization — it’s less customer friendly.
And they express their dissatisfaction by buying less or by moving to another supplier.
Outsourcing call centers to remote regions of the world may reduce unit costs but could also reduce customer loyalty due to the new experience that customers have to endure.
And of course when productivity benefits are calculated, the opportunity costs associated with impaired service and lost revenue are rarely part of the analysis.
In my experience, the bigger play is not to focus on how to do things right — seek more efficiency — but rather to do the right things — be more effective.
Effectiveness is achieved when the right set of new programs is selected and is flawlessly executed to achieve the long term strategic intent of the organization.
But effectiveness is not just deciding on the new things to do
A huge part of effectiveness is not what additional to take on, but what you decide to give up — the current activities in motion you decide to stop.
It’s forced obsolescence — productivity applied on a macro scale (large projects or blocks of activity) as opposed to eliminating smaller pieces of the operations (a call center or product fulfillment process).
Forced obsolescence — cut the CRAP — is consciously eliminating yesterday’s relevance for tomorrow’s necessity.
Examples of forced obsolescence initiatives could include marketing programs established in the past to enhance a product line that are no longer in the crosshairs of the strategy.
Or a planned HR systems build to support acquiring skills and competencies no longer considered essential.
This is my step-by-step process to force obsolescence out.
Assign a senior champion
Appoint a respected and trusted senior person with a “high tolerance for pain” and whose compensation is based on how much savings is actually realized by the cut the crap activity.
Avoid the mistake that most organizations make by assigning a mid level manager to the task. This communicates that forcing obsolescence out isn’t really all that important and like many other corporate programs, “it too shall pass”.
Inventory all current initiatives in the organization. It’s important that the list be complete in order to capture all of the activity consuming resources. I suggest that you set an annual expense threshold — say, $100K — and identify only activity that exceeds this amount.
The point is to isolate activity that consumes a material amount of resources and a threshold criteria is a meaningful way of doing it.
Create a “keep” list
Create a list of those initiatives that should remain because they all directly support the organization’s strategy.
Make the list short, as there is a tendency to try and justify everything that is currently going on as vital to the future of the company.
This, of course, is hogwash and is merely an attempt for people to protect their position in the organization.
If you end up with 100 major initiatives on the list, walk away. You are wasting your time.
Create a “cut” list
Create a list of yesterday’s work that is no longer needed because it is not relevant to the strategy the organization has chosen.
Make the list long; make it tough to keep doing activities of yesterday.
As a guideline, you should have at least 3 cut activities for every keep activity; on a threshold of $100K that means you are cutting $300K in expenses for every $100K you keep — a 3:1 payback; not a bad place to start.
Finalize “keep” and “cut”
With both lists in hand, the senior leader must present and get input on both lists throughout the organization to get as much buy-in as possible.
Forced obsolescence will never get 100% support so don’t bother fretting over it. This is a challenging step as no one wants to give up what they’re doing. They have too much emotional equity what they’re busy at.
So debate and listen then make the call on what needs to stay and what needs to go.
Prepare the CRAP execution plan
Develop a 6 month action plan to execute the cut list initiatives. Include firming up the annual savings and the organizational units that will realize them.
THE key step — close the loop by reducing their operating expense budgets and place savings in a special account that can be used to fund new initiatives.
This fund should be available to anyone responsible for introducing a new strategic program that is a priority.
Cut the CRAP will save the world
If we don’t expunge today’s the unproductive and wasteful activity, we won’t have the resources to take on the new initiatives necessary to advance organizations and societies.
Taken to its ultimate conclusion, the obsolete will rob the world of growth and limit our possibilities.