Do You Understand the System?

The pressure is on

Your cost base is spiralling upwards, your boss is squealing, and his boss is squealing louder. Unless you get a firm grip of the situation you are going to get lots of “executive help”.  You need to do something and do it now.

When caught like this, it is easy — perhaps even mandatory — to jump to solutions:

• Reduce the training budget
• Buy cheaper raw materials

Actions like that are bound to cut costs, you may even get back on track and hit your budget (and get your boss off your back, and, better still, get paid your bonus).  Act now and act quick.

Life is never that simple

How many of our initiatives really save money?

• Perhaps the training programme was designed to up-skill your staff.  Stopping it will simply lead to more expensive mistakes.
• Perhaps your raw materials are substandard and causing lots of defects.  Cheaper raw materials are unlikely to resolve that problem.

It happens in the real world

A large bank was faced with ever-increasing investment costs, the IT budget kept growing and growing and delivery kept shrinking and shrinking.

In an effort to contain the situation,, the scope of a major project was curtailed.  The last discretional part of a core system replacement was cancelled and the project came in — just — below budget.

Backs were slapped and parties held.  Finally a successful implementation.

Skip forward 5 years

The bank was still losing money.

A team of data analysts were given the task of investigating why and coming up with the root causes and possible solutions.

They failed miserably.

The part of the IT implementation that they canned was installing a management information database.  In its efforts to save money the organisation had stopped the investment in the very tools it needed to be more efficient.

Organisations are complicated

There are a whole host of interconnections,  linkages and interdependencies.  They have hard tangible parts (IT, processes, policies and procedures) and soft emotional parts (customers, suppliers, employees) that link together in a whole host of interrelated ways.

The obvious solution rarely leads to the outcome you expect.

Action is good, but unless you really understand the cause of your problem, you are doomed to make change after change that never lead to any improvement.

Enlightenment is easy.  It involves visiting the shop floor and then running a test.  I guarantee it will amaze you.

The hardest bit is admitting you need to look.