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

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

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.

 

Example

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.

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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.

Direct 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.  

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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.

Contributing Authors: Karen Zimmermann, Charles de Monchy