Outside of periods of global warfare, the world is in it’s most unstable period in at least a century. Your business needs to survive and that means adapting quickly.
Covid swept the globe and governments over-reacted with restrictions that have done far more harm than good. Those restrictions impacted supply chains, work environments, and even provided encouragement for those who could retire, to do so. Companies were left weakened by the loss of knowledge that simply didn’t come back to work. Supply chains have largely healed and businesses were bouncing back, but then we have conflicts in the middle-east and Ukraine, not to mention dozens of others around the world. Some are impacting supply chains, oil and gas prices, and the availability of materials needed for production. Politicians are trying their best to protect their own countries, often harming others in the process. For certain, the free flow of goods and services is being restrained and companies are again adapting. Populist movements are growing as harm spreads, making the whole global picture even more unstable and fears are leading to extra caution in business decision making.
Problems in your production lines that existed before all this, are largely still there. Costs are among the first things companies in crisis, or the fear of crisis, take a look at. Among the first things to go are improvements – training, then outside help for improving business processes, systems and practices. Companies that were not ready for a crisis often set those improvements aside. The opportunities to improve spending and even improve on asset productivity are moved to the back burner. After all, having lived with them in the past, they are the devil you know. Improvements often bring some additional risk, the devil you don’t know. So why risk it? But what if you could cut costs by making improvements that pay for themselves?
Risk works both ways – you can lose if you get it wrong, you also stand to gain if you get it right.
Risk is often perceived negatively, as something to be avoided. But what about risks that can actually be of benefit? Many of us buy lottery tickets because the cost is low and the potential payback is huge, despite the overwhelmingly small odds of winning. What if the odds of winning were really small, the cost is just a little more than trivial pocket change, and the payback is multiple times the cost? i.e.: low risk, high payback and quick? Why avoid that one?
A comment I’ve heard frequently this year is that companies want to “go back to basics” – and that makes sense, but what if your practices and processes are not even up to the standard of “basic”? The improvements we work on are designed to put those basics in place. Many companies truly have no idea what those basics even look like – they are far below “good” and need to get their first, before moving on towards “great”. Yet, like the Dunning-Kruger effect, they don’t know what they don’t know and they probably think they have strayed only a little way from the basics. In reality, most are far off the mark!
In the work I do with clients, it’s all about common sense activities that are all well proven. They are the “basics”, not something complicated or new. They are readily accepted by the workforce and low risk. In most cases, they are quick to implement and the payback is similarly quick. Money invested in making those changes comes back before the first year of making the changes is up. In some projects we’ve seen multiples of the project costs paid back before the project is even over.
If the payback and spending were in the same account, it would be easy to see a positive net result. But accountants insist on costs being in one account, savings in others, and earnings in even others. It’s difficult for them to see the relationships because they are simply not looking for them. Bigger picture thinkers like those in finance and your executives understand this. It’s their job to keep the business profitable and improving.
We help our clients see what the opportunities are, what it costs to realize them and can help in identifying how long it will take. We have tools to determine a preliminary business case based on some simple inputs and they cost you nothing to use them. Why not talk to us about what you might be missing?
