Tired of all of These Cost-Saving Initiatives That Keep Hitting Us? (Part II)


Nederlands

In part I, we identified untapped cost saving and service improvement opportunities. In this part, you can explore whether opportunities may be waiting to be explored in your organisation and how you can start to make a lasting difference. .

Does the Following Sound Familiar?

Patterns Negative Loop

Clients are given reasons to move to a competitor. Examples include ongoing quality and service issues.

Clients and employees feel they are not listened to, which fuels mistrust.

Solution attempts miss critical problems, which fuels quality and service issues (see drawing).

Extra budget and resources must be made available to manage service issues, keep clients, and finance ongoing project failure (= unproductive tasks).

A Negative Feedback Loop

Insufficient results of improvement projects lead to the need for new solution attempts.

With each round, more of the budget has to be moved from productive to unproductive tasks. The competitive position weakens.

 

ExampleExample

At company ABC, the following happened: Quick fixes and demands for more control created new cost saving needs. Top-level priority on cost saving led to insufficient attention for solving the problems in the two lowest boxes, which fuelled the need for more savings. .

 

Insights and Solutions

Various publications, such as Good to Great (Jim Collins), Management 3.0 (Jurgen Appelo) and Power to the Edge (Alberts and Hayes, U.S. Department of Defence), as well as models and frameworks, such as Scrum and Cynefin (Dave Snowden), have provided insights and solutions to challenges, such as those mentioned above. Through initiatives such as the Think Tank Project Netherlands, the Stoos Network, and Stichting Zelforganisatie, one gets the feeling that the needed solutions are available today. Moreover, a pattern that can be seen again and again with complex challenges is this: ‘Simple’ and low-cost solutions work better than large and expensive solutions.

Pressure to cut costs is observed in organisations across the globe. ‘Low-cost’ solutions are available. One would expect the available solutions to be implemented with the highest priority. However, progress is painstakingly slow. It is painstakingly slow because:

  1. Individual solutions address only a subset of the highest-impact problems.
  2. The remaining obstacles undermine the individual solutions (even the most advanced solutions can fail).
  3. Unsolved obstacles make people fall back into old habits.
  4. The negative feedback loop remains intact.

What was missing was an identified future situation in which the highest-impact problems were overcome, as well as a pathway that enables individual solutions to grow into an integrated solution package. With those created, new possibilities emerge:

Cost savings initiatives can be targeted to where they have the highest-possible effect: the unproductive tasks that fuel the negative feedback loop.
The negative feedback loop can be turned into a positive feedback loop.

.

The Desired Future Situation

In the future situation, the highest-impact problems are overcome by lowest-effort but highest-impact solutions. The negative feedback loop has turned into a positive feedback loop. Indirect results show up without a project to make them happen.

Positive LoopDirect Results

Costly project delays are prevented by obstacles being identified and addressed well before they hit projects.

Easy access to lessons learned prevents costly mistakes and improves quality as well as service.

Quick decision making for the situation at hand delights clients and employees.

Clients and employees feel they are listened to.

Indirect Results

A part of the control tasks become obsolete, as it is attractive to be compliant.

Old and new clients are attracted to the improved service and from trust building up.

Budgets previously locked in unproductive tasks become available for productive tasks, price reduction, and reducing debts.  

.

Getting Started

Though it appears to be generally accepted that fresh solutions are needed, the challenge at hand is this: Solutions that have demonstrated to make a difference are lost in the daily routine, bureaucracy, and information overload. What was missing was guidance to whether the fundamental building blocks were in place to turn the negative loop around. One consequence is that ‘everybody’ waits for somebody else to make the first step. A little health check provides such guidance (link below).

Do you think it is time to turn things around?

Then don’t wait for others. Let’s get the ball rolling. Here is what you can immediately do:

    • Invite at least three friends or colleagues to help get the ball rolling by doing something (ideas: see below).
    • Get this to places where your contribution could make a difference:
      • Employers and vendors (management, sales, risk management, and service management processes)
      • Traditional media and social media
      • Politicians
      • Unions and trade organisations
    • Ask for a situation assessment per the health check.
    • Ask for the outcome of the assessment and the corrective actions.
Download the health check Download health check (PDF)

Contributing Authors: Karen Zimmermann, Charles de Monchy

About Eugen Oetringer

Practical, innovative, visionary. Helicopter view; going into detail when necessary. Driven to find high-impact opportunities and to solve high-impact problems once and for all.
This entry was posted in Agile, Avoiding Traps, Best Practice, Bridging the Gap, Bureaucracy, Change Management, Communication Skills, Complaint, Conflict Resolution, Constructive Dialogue, Conversation, Effective Solutions, Governance, Leadership, Leading, Lessons Learned, Management, Project Management, Quality Management, Risk Management, Root Cause Analysis, Scrum and tagged , , , , , , , , , , , , , , , . Bookmark the permalink.

4 Responses to Tired of all of These Cost-Saving Initiatives That Keep Hitting Us? (Part II)

  1. rnknowles@aol.com says:

    Hi Eugen, I sent your notes out to about 20 people who are interested in complexity so share with others. Hope you are well, Dick

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  2. Thank you for forwarding it Dick. Eugen

    Like

  3. Neil Davidson says:

    Hi Eugen,

    thanks for the invitation to be part of the Linked In Group and this Blog site.

    I’m a transformative systems thinker seriously concerned about compounding global crises, most of which will NOT be addressed by our current economic or business systems, which, as your article above suggests, do ‘the wrong things righter’ creating positive feedback loops that favour efficiency over effectiveness, and perpetuation of current practice over transformative change.

    You suggest: “What was missing was an identified future situation in which the highest-impact problems were overcome, as well as a pathway that enables individual solutions to grow into an integrated solution package.” I could not agree more – however, this is a transferable concept that can be applied at many different nested levels.

    Erich Jantsch (1975) discussed nested system where our societal norms or ethics influence our policy objectives and regulation, which in turn influence our strategic goals, which in turn influence our operational targets, and ultimately the way we use resources. In other words, from within any particular systems level it is easier to address the symptoms of a problem than the root causes, because the root causes are usually driven from a higher (or deeper) level than where the effort to address them can be legitimately applied by most players in the system. Sometimes this higher level is also from a different discipline with different objectives – for example economic growth policy driving ecological protection policy.

    Unfortunately this means that efforts to improve the current system, however well-intended and potentially beneficial for ‘shareholders’, will not benefit the broader system, UNLESS the unethical causal issues are addressed at higher order level.

    If the cause of many accelerating global problems is economic growth within an inequitable, destructive and polluting economic growth paradigm (very simplified here) then improving ‘within’ that paradigm will only increase the efficiency with which it destroys the broader systems on which we depend.

    I’m not sure where (how far, how high, how deep, how fast, or in what direction/s) you wanted to go in this group, but you did ask me to introduce myself😉

    As indicated by your recognition of our growing understanding of systems science, and no doubt those you have invited to this forum, we probably have the potential capacity for anticipatory and participatory co-design of better systems. In this I look forward to exploring synergies; especially IF we are willing to try to address some of these more fundamental challenges AND/OR if we are to redirect some discretionary funding from successful systemic correction activities at the ‘vested interest, business-as-usual +/- improved’ level into these higher order, Universal Interest, requirements – for we all live in the same Earth-scale system…and ultimately, all the positive and negative feedbacks add-up (or worse, recursively multiply).

    Kind regards, Neil Davidson

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  4. Many thanks Neil for your feedback! I wonder, how would you see things developing if:
    • We were able to make the negative loop and its impact a matter of public debate?
    • There would be examples demonstrating how far better economic growth was achieved through behaviours per the positive loop in the post (examples below)?
    • Employees losing their jobs can say: “Before another cost savings round, show us how the untapped cost savings opportunities are explored. Show us that the highest-impact problems are addressed this time. Here is a health check through which we can see fundamental building blocks to make it work are in place”.

    Examples for the second question:
    • Jim Collins identified companies that outperformed the stock market 6.9 times (good to great).
    • Simon Sinek identified how Apple attracted clients and on trust (videos: http://youtu.be/qp0HIF3SfI4 and http://youtu.be/4VdO7LuoBzM)
    • Indirectly: the U.S. military replaced the old command and control that we still see in organisations by a new doctrine as the old one was inadequate in complex situations (google “Power to the Edge”)

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