The Processes that Hurt You
If you find your organization struggling with flexibility and innovation, consider whether you have fallen into any of these ruts in your quest to cut costs:
Established specialty areas, like accounting and human resources, serve a range of needs and offer benefits like consistency and stability. But while the expertise is continuously groomed, it’s rarely questioned. Over time, opportunities for growing and evolving are increasingly less common.
There is a great need to challenge the status quo in these areas and seek out newer, better methods of organization. Zappos has recently adopted a flat organizational model steeped in holacracy. This model involves shared authority, rather than standard hierarchies of power and decision-making.
The dominant bottom-line savings mentality is cost reduction. Reducing costs in all areas of the supply chain, much as Walmart has done since its inception, can turn into serious profitability. But the long-term challenge with this approach is to avoid seeing every resource in terms of scarcity. To create new lines of revenue, you must invest in ways that unlock or create new value. An overwhelming need to reduce costs often prevents that kind of investment, especially if the return cannot be readily understood.
Seeing the enterprise as a perfect system and seeking to drive out waste and deviation can also yield significant bottom-line savings. Whole practices of systematic attention to efficiency, such as Six Sigma or Lean, do wonders for refining the effortless production of the same product or services time and time again. However, when a market shifts and the need for that product or service goes away, the organization struggles to reassign resources for developing new and innovative products and services to meet their customers’ needs.
Similar to the desire to systematize everything, the organization that drives stable processes to their extreme also loses the flexibility to be able to accommodate new thinking and practices.
Maintaining process purity in the production of goods and services ensures that operations can be accomplished with as few resources as possible. It eliminates any slack in the system — slack is a vital component in defining and designing new responses to burgeoning customer needs. No slack often means nothing new. Nothing new means a long, slow slide into obscurity or a sharp, sudden termination of profitability.