Everybody is talking about efficiency these days. And customer value. But mostly about efficiency. How do we become more efficient? How do we gain efficiency? All that kind of stuff. The drive is to reduce costs.
We have all heard the trite, stale, overused homilies. Do more with less. Work smarter not harder. Yadda yadda yadda. Right. In todays (over) process driven business environment, I am pretty much convinced that none of this is going to work. We have to get our collective heads around the idea that true efficiency is in fact going to come from doing less with less while still delivering the desired performance result. Efficiency is going to come from looking at what gets done while at the same time quantifying what was actually not needed to be done in getting the deliverable result.
In the past I have been party to and sometimes involved in multiple local, regional, global, galactic and intergalactic programs aimed at standardizing processes and methodologies in the name of gaining efficiency. For the most part none of them have been what I would call an unquestioned success. In many instances they actually seemed to have added incremental effort and complexity to the existing model for doing business.
I think what they all lacked was a business case that took the time to quantify what the work effort required to provide the desired deliverable was prior to the change or standardization and what the work effort to provide the same desired deliverable was at the end of the change or standardization process. Hopefully the new work effort is less than the initial work effort required for the same deliverable. The difference between these two amounts is the “Work Not Done”. This would be the quantifiable improved efficiency.
This value is the work that was being done, but now is no longer being done. You want this value to be as big as possible. A positive Work Not Done value means you have removed effort from a process. You have streamlined. You have become more efficient. A negative Work Not Done value means you have added effort to the process. You are less efficient.
For so long we have had it hammered into our collective business psyches that standardization equals efficiency. We strive to standardize our products, our services and our processes in the hope of eking out additional efficiencies and savings. We seem to have pursued this single minded approach to standardization against the competing back drop of infinite specialization with respect to both the roles required for delivering the standardization and the infinite variety of products being created from the standardization for the customers.
Figure that one out. But I digress.
I think the idea of Work Not Done should consist of looking at the work effort, process, functions, roles and people associated with the delivery of something towards an agreed goal, and then deciding what parts of it can be removed (or not done) and still successfully deliver the goal.
I think it can be and should be as simple as that.
Now this may sound suspiciously like some sort of “Lean” principle, where everything that does not contribute value to a customer should be removed.
I guess it actually does sound a little like that, even to me.
However, my point is that if we are going to try and be more efficient, let’s be more quantitative and less qualitative about it.
Stop me if you have heard this one before….
Most of these standardization drives, and by extension the drives for efficiency seem to be based on the concept or principle that if we standardize we will be more efficient. Standardization usually involved the creation of a centralized function group that would be responsible for the standard and its implementation. This group is normally referred to as incremental effort or over-head. They have been added to the existing process where they didn’t exist before. They would be considered “negative” Work Not Done (or “incremental work being done if you prefer”).
There is then the maintenance of the ongoing standardized process where there is significant effort over time from both the centralized standardization group and the other (regional?) groups that have been standardized. At the end of this standardization process there is usually a centralized group that remains in place since the standards must now be managed and the regional groups that are now utilizing the expected standards must report their adherence to these standards back to them.
There is usually no place in the drive for standardization where a baseline of the current effort spent is captured, an expected effort associated with implementing the standardization change is estimated and a resulting and hopefully lower new work effort line is estimated. This would result in a quantified Work Not Done going forward goal is set for the success of the standardization to be measured against.
If you are going to standardize, you ought to expect to get some efficiency out of it, otherwise, why would you do it?
When looking at the mechanics of a Work Not Done business case there would be an initial Work Not Done “Deficit” or debt incurred as there will be a period of time where there will be incremental work input into the process or system in an effort to change the way the current work method is conducted. Once the change has been implemented there needs to be an ongoing return on the Work Not Done investment in the form of the work that is no longer being done during the deliverable process. This is the actual efficiency or work savings paying back on the change effort work investment. It is expected that this Work Not Done payback will eventually cover the incremental cost associated with the change effort, and then start paying dividends in form of savings for the business.
The shorter this payback time, the more efficient the new process or capability is. This is a quantitative approach to the desire for efficiency.
As Robert McNamara (President Kennedy’s Secretary of Defense) once said:
“First get the data.”
I am also going to paraphrase one of my favorite authors here, Robert Heinlein. He said:
“If it can’t be expressed in figures, it’s not science. It is opinion”
Business keeps score, and reports it progress quarterly with figures. In fact many laws have been passed that limit a business’s ability to provide “opinion” on its relative or perspective performance lest they unfairly or inaccurately lead the market. There may be some qualitative (opinion) aspects to how a business reports its performance, but by and large it is quantitative and the figures speak for themselves. It would seem that this would also be a very good way to start looking at all efficiency and standardization programs – via the figure they generate.
I think many managers are of the opinion that simplification, cost reduction, streamlining, efficiency, etc can come from standardization. This is a qualitative approach. There is usually very little analysis (and quantification) of the incremental work required to implement a standardization change into a business. Everybody just seems to know that it is a good thing to do.
Heinlein addressed this type of topic in the past as well. He said:
“If “everybody knows” such-and-such, then it ain’t so, by at least ten thousand to one.”
I am not going to say that the odds are stacked that strongly against standardization in and of itself generating quantifiable efficiencies and cost savings. I just happen to think that most of that low hanging fruit associated with this argument has already been picked and that quantification of performance is needed.
If there is little analysis of the effort required to implement a standardization change, there is usually no time spent examining the Work Not Done payback that should be expected from such an effort. If a business is going to invest capital in an attempt to generate greater efficiency there is normally a return that is expected. Whether it is Return on Investment (ROI) or Return on (Invested) Capital (ROIC) there is a metric to see if you are efficiently using the capital resource.
When we are looking at trying to generate efficiencies, synergies or any other kinds of cost reduction we need to start implementing the same financial rigor into the process that we do when we are investing capital, and try and quantify the efficiency return we are looking for from a labor or a process modification investment. It should be in the form of Work Not Done.