Several years ago I was an advisory board member of a services business that was struggling. The business had a reasonable market position and a decent customer offer but was going backwards fast. I couldn’t understand it. The messages coming out of the management team were contradictory, overly optimistic and, when compared to the financial results, unrealistic. I couldn’t get a handle on the underlying problems and/or where the team were spending their time and efforts.
Unsure of what was “really” happening I decided to base myself in the company’s head office for a month to get a first hand view. I figured that by jumping in at the deep end I might uncover the truth. Surprisingly, in the first 10 days I learnt more about the business than I had in the previous 12 months.
Early on, it became apparent to me that the basic operational building blocks were not in place correctly or were over-engineered. I also had concerns that the cost structure was bloated. This was not previously obvious to me.
One thing I observed in the first few days was that the staff in head office were sending more than 40 separate emails each day to their branch office managers. Most required a response. Digging deeper it became apparent that the branch managers were overwhelmed and were spending up to 4 hours every day managing these head office requests. This was an incredible waste of time and resources. Oddly no-one had ever questioned it.
Immediately we changed this and one email per day was sent to stores containing a summary of ALL company requests/information. Each item required approval from a senior manager before it made the daily list. The list of 40 suddenly became the list of 8 – the other 32 emails were just “fluff” and not important enough to waste the branch managers’ time with. This resulted in massive time savings and allowed a significant cost reduction to be made.
Meetings were another problem. The management team and the department heads were stuck in scheduled meetings for a full day every week. Same time, same place. For 2 weeks I attended all of these meetings to check them out – almost all were a waste of time. The problem was they were not talking about performance; they were dominated by operational problems and micro-issues that should have been dealt with elsewhere. The business was in decline but there was no urgency and no focus on moving the company out of its perilous situation.
A forced change disbanded this approach and subsequently the management team met for only 1 hour per week to deal with critical issues and to make decisions. This focused everyone’s attention. Anything else was dealt with outside of this meeting. This freed up significant management time to actually do their jobs, rather than sit around in unproductive meetings. The team dynamics changed dramatically and guess what – performance improved…
Expense management was reviewed too. For a month every single expenditure that the company made via cheques or electronic payments was closely scrutinised. What became obvious was that the company was paying for a lot of goods and services it did not actually need or use. Bills were being paid without being questioned. Nobody was asking “why”. The company was burning $500k pa as a result.
Sometimes old behaviours, practices and beliefs need to be challenged, shaken up and broken apart. This is never comfortable but it is unavoidable. You can’t go wrong if you continually ask two questions – (1). Do we really need this? And (2). Would our customers be prepared to pay for it? If the answers are no, then ditch it.
The month I spent in the above business was the catalyst for a much-needed restructure and eventual savings of over $2m pa. Handy money for any company! Sometimes a willingness to jump in at the deep end (and shake things up) may be the only way to break through entrenched behaviours and get you the results you want. It might seem drastic but it works.
image via Insight