Monday, September 3, 2012

About saving costs

Saving costs is something every organization needs to do now and then. Usually the focus is on training, travelling, personell, office costs and vendors. However, there are a few areas that usually are overlooked when cutting costs. As these are very important and big costs they definitely demand more attention from the managers.

First - "Projects that get 90% done.... but are not launched". A project that is almost launched is like an "almost goal" in football. The effort has been made - work done and money spent - but there is no use of it.  If you look around in your organization I am sure you can find numerous such things. For example:
- Strategies that were worked out by a team and left then laying in the shelf
- New products that were developed, but never introduced to the market
- Process development that was designed, decided on, but not implemented
In many cases the reasons for not doing the last bit are subjective. A person leaving or a change of mind of someone. However the waste created by such efforts should be carefully monitored by the managers and projects that are not going anywhere should be stopped immediately.

Second - "Fighting between people, organization units - us and them". In general grown-ups and children are not that much different. For some years now I have had the possibility to compare relationship issues at work to the issues my two groundschool age daughters have with each other. It is amazing how alike these issues are. Usually they are:
- I want to do this, they want to do that.
- I have done my part and it is a lot more than they have done
- They are stupid and don't know how things really are
At home these fights result in very long "dressing up to go for a walk" time and mostly a higher authority in the form of a mother or a father is needed to get the process going. But imagine how big is the time and money wasted if two specialists or even organizational units substitute co-operation with arguing. Tens of people might spend months on working out information flow, strategy implementation or similar processes to start co-operation whereas the real problem is relationships.
 A challenge with the fights between adults is that they are not so visible as the fights of children. People are polite and hide their feelings. So as a manager you really need to look for these fights in order to solve them.

Third - "Non-organizing". Modern organizations are globalized and this means being big and having a complex structure. In this complexity however one easily looses the total end-to-end picture of a process or a product. Things might get also very complicated. The (legacy) IT systems create their own unefficiency-s.
 Solving the organizing issues is difficult. It means change, it means learning how things work thoroughly and deciding on the 20% of cases that will not be solved by the new process, but will be handled manually.

All these three areas of costs are difficult to solve and provide results in the long run. However getting them solved provides huge value for the organization and ... these are the most important tasks of the managers.