Howard Raynor says that dealing with reduced budgets can be a catalyst for introducing new ideas and boosting creativity.
April dawns: a new financial year, a new budget and as is so often the case its less than last time. If you are having to go about cost reduction with any real vigour it can be a heart-rending process that saps morale. Our conditioning tells us that what we have is probably what we need; radically rethinking our organisation to be more effective feels like pain and looks like trouble.
However, it doesnt have to be that way every time. In my experience the problem is usually not about getting new ideas in, its about getting old ideas out. If you really want to improve what you are doing, you need to think about how your organisation goes about its business and thats good for creativity and good for your competitive advantage. Are you now just thinking He has got to be kidding? Read on.
If you are out of options and you have to find savings, there is no advantage to making a bad job of it. I thought it might be helpful to look at what the best approach to cost reduction actually is with a strong Japanese bent, of course and its not always about cutting people or ideas. When it comes down to it, improving efficiency is actually about eliminating wasted time and resources so it might not be such a bad thing. Its just what we think that gets in the way. (If you havent read Blink yet by Malcolm Gladwell1 I would recommend it.)
Focus
Efficiency isnt about dropping your best creative idea: its about building quality into the workplace systems and perfecting the business processes so you have the scarce energy and resources focused in the right place. Being clear about what your organisation is trying to do is paramount: the context for business decisions is an important first step. Being half-baked here means trouble for everyone. If you can get that important first step right you can then look at how the various activities your organisation gets up to are triggered. The customer is usually the best start point for that analysis, but you could equally well start with the creative processes.
I would recommend you draw the process of how you make what you make on a piece of A3 paper and try and work out who is doing what as the flow of the creative process takes place. The best question to ask if you are trying to improve efficiency is How do we do that? This sort of question will take you to where the inefficiencies might be hiding. Dont forget that this is nothing to do with judging the people who work with you: its all about what you are doing actually physically doing whether thats making phone calls, writing reports, pulling in freelance contractors, whatever the overall transformation task is. Stand back and look at what people are doing.
The way things are
From this map of the task, you can probably already start to see things that are there because We have always done it this way, or because systems were established before technology caught up. Organisations can grow up but some tasks can get left behind. If you can isolate the key processes of your organisation, be it a theatre company or a museum, you can start to look at:
What the key controls are
What the limits are on success, and
What makes you unique and outstanding from your customers perspective.
There is a whole separate exercise you can try here, which is What are the measures of success around here? but thats a big adventure all of its own and is not well suited to urgent cost-reduction planning. The critical bit for financial success and growth is knowing what the customers want, what they like about what you do and how you streamline resources to achieve that specific goal. Identifying the key know-how in that flow is what will make you legendary.
Keeping sharp
If you look at world-beating companies even in very, very competitive sectors you will find the key tasks that make the product or service unique are not contracted-out or short-resourced. The high-ups in the commercial food chain know that if they want to stay as market leaders they have to keep the key attributes of the product or service razor sharp. Failure to get this right leaves the mediocrity envelope surrounding you and the trouble really starts.
As you look at the sequence of events in what your company actually does, think about this as a flow of work, try and generate a visual picture of the business a storyboard if you like mapping the flow of information and resources as they come in to make your final production. Mapping this and understanding how the value is created is critical to getting improvement. Can you see how you could achieve the result your customers want by improving the flow?
Self-evaluation
If you are still struggling, try physically walking the process of how information or items travel through your organisation. It will reveal a myriad of opportunities. These are the moments when you start to see how you can cut costs without harming the people. If people are going to be affected, remember that world-class organisations like Toyota do their level best to reposition and retrain people to work with the flow improvement, adding resource where its actually adding value.
The key questions here are:
Which costs are essential to the unique proposition of our company?
What are the key operational systems and how good are they?
What is the core know-how on site now?
How do we incentivise and reinforce our people?
Are there any service agreements/funding agreements that govern us?
Are there any unrealised income opportunities relating to our core skill?
What is expected of us?
Process mapping or value mapping is just about stapling yourself to something your organisation does and posting yourself through your own organisation (metaphorically, of course). It is very revealing and should be healthy for your organisation rather than harmful.
If you are half as talented as you thought you were when you were recruited you should not try to do this task solo. Process mapping is best enjoyed as a group activity you need everyone to see the process and to agree the improvements. It may take a couple of months before you see payback and cost reduction but you are going to make a difference, you will identify cost reductions, you wont harm the core of what you do and you are much less likely to harm your organisation or your people. Enjoy.
Howard Raynor is Managing Director of World Class Service Ltd.
t: 0161 456 6007;
e: hkr@lineone.net;
w: http://www.worldclassservice.co.uk
1 Gladwell, Malcolm; Blink: the power of thinking without thinking (2006) Penguin Books Ltd