Before you cut budgets, hire more people or invest in new technology, make sure the way you work isn’t costing you more than it should.
When finances tighten, organizations start looking for answers.
What can we cut?
Do we need more people?
Can technology help?
Where can we find more revenue?
All reasonable questions. But there is another question leaders should ask first:
How well are we operating with what we already have?
In my experience, there is almost always room to operate better. Not because people aren’t working hard. Usually, they’re working extremely hard. The problem is often the way the work gets done.
Unnecessary steps. Poor handoffs. Weak accountability. There are frequently inconsistent practices and policies that have resulted in unintended consequences. And there are always problems that get fixed over and over again instead of being eliminated.
When money is plentiful, organizations can absorb a lot of operational inefficiency. When money gets tight, they can’t.
And often, the problem costing the organization money isn’t the problem leaders think they need to solve.
Look for the Problem Behind the Problem
A few years ago, I worked with an organization facing significant financial losses from unusually high customer turnover. Leadership believed the answer was to add staff so they could handle that turnover faster and get new customers in the door.
But when we looked more closely, we discovered something very different.
An unnecessarily restrictive policy was contributing to the very turnover they were struggling to manage. A relatively minor customer issue could trigger a costly series of actions for the organization.
Instead of adding people to handle those consequences faster, we changed the policy to give customers more time to resolve their issue. The financial impact was immediate and very positive. They didn’t need more people. They needed to stop creating a problem that they were then spending money to solve.
I saw the same pattern with another organization also facing serious financial pressure. Leadership was considering expensive new software to improve billing.
But technology wasn’t their solution. Their problems stemmed from the way their work was being recorded, or more accurately, wasn’t being recorded. Work that wasn’t recorded couldn’t be billed. Accountability for getting the information in on time was weak, so delays continued without consequence.
But the problem didn’t stop once the invoices went out. Unpaid bills weren’t being systematically followed up on, and customers weren’t given an easy way to pay electronically. In other words, revenue was being lost or delayed at several points in the process.
We tightened these 4 basic operating disciplines:
clearer accountability for recording work promptly,
consistent follow-up when expectations weren’t met,
implementation of an online payment option for customers, interestingly, this option was already included in the software they had, they just but hadn’t enabled it yet
a defined 30-45-60 day process for following up on unpaid invoices
The problem wasn’t one big failure. It was a series of small breakdowns in a process directly tied to revenue. The solution didn’t require expensive technology, additional people or more work. It required better processes, clearer accountability and the discipline to follow through. Within three months, the improvement was clearly evident on the P&L.
Different organizations. Different problems. Same lesson: Before adding resources, make sure the way you’re operating isn’t creating the need for them.
How do you do that?
Start With What Isn’t Working
You don’t need a major operational initiative to begin. Start with the places where the organization is already telling you something isn’t working.
Look for:
Workarounds. When good employees regularly create their own way around a process, pay attention. They may be compensating for something that doesn’t work.
Recurring problems. If you keep solving the same problem, you haven’t solved it yet.
Bottlenecks and delays. Where does work consistently slow down, wait for approval or get handed back?
Inconsistent results. If outcomes depend on who does the work, or which department or location does it, find out why.
Policies that create unintended consequences. Is a rule still accomplishing what it was designed to accomplish, or is it creating new problems?
Money being spent on symptoms. Before adding people, software or outside resources, ask what problem the investment is supposed to solve. Then determine what’s actually causing the problem.
Don’t start with the solution. Start with the problem.
Understand what is actually happening. Find the root cause. Then fix the way the work gets done.
Final Thoughts:
Better Operations Can Change the Equation
When finances tighten, it’s tempting to slash and burn.
But before you do that, look at how the work gets done.
Find the unnecessary cost. Find the recurring problem. Find what good employees are working around. Find the policy, process or lack of accountability that is getting in the way.
Then fix it.
Because better operations aren’t simply about efficiency. They change what an organization is capable of.
Excellent operations help an organization perform better, respond faster and adapt more easily. They protect you when times are tough and strengthen you when they’re not.