book.chapter Eight hidden obstacles

Dodging disputes In a bank's customer service center operating 24/7, the head of operations proposed reducing service hours to save over $2 million annually by shifting to two ten-hour shifts. The retail banking president initially opposed, fearing competitive disadvantage. However, after reviewing calls received between 1:00 and 5:00 am, it was found that most were from lonely individuals seeking conversation, not banking services. Realizing the bank was providing a social rather than banking service during these hours, the president supported the proposal. This case illustrates the importance of an unbiased evaluation process in overcoming resistance to controversial ideas, leading to better decision-making and minimizing resentment. Inefficient time utilization In today's fast-paced environment, innovative ideas often go unimplemented due to poor time management. For example, a firm's tech department failed to stop printing online opt-out statements, incurring unnecessary costs. This reflects a broader issue where employees repeat past efforts or stick to outdated processes without seeking improvements. To address this, individuals must evaluate their priorities and understand the value of their time. Companies should foster a culture of urgency and maintain a knowledge repository to avoid redundant work. Additionally, considering customer preferences for time savings could lead to premium pricing options, potentially boosting revenues by aligning services with customer schedules. Resistance to alteration Humans naturally resist change, preferring the familiar, especially when outcomes are uncertain. For example, a retail store's reliance on two telephone lines for critical data transmission, vulnerable to simultaneous disruption, illustrates this resistance when a wireless backup system was proposed. Overcoming this requires identifying the source of reluctance and fostering an environment that encourages innovation. Asking employees directly can reveal common fears, such as satisfaction with current processes or fear of unintended consequences. Transforming organizational culture to celebrate and reward innovative ideas, ensuring transparency, and encouraging the sharing of concerns can help overcome the fear of the unknown and promote a culture of change. Departmental isolation Silos in organizations can both distribute responsibility effectively and hinder information flow. A food manufacturing company's experience with 30 distinct chocolate flavors illustrates the drawbacks of silos, as it diluted purchasing power and increased management costs. To overcome silos, strategies include encouraging managers to discuss priorities and foster a culture of information sharing. For instance, the company's managers collaborated to reduce the flavors to eight, requiring approval for any deviations. This approach promoted teamwork, improved economies of scale, and achieved bulk purchasing discounts, demonstrating the benefits of connecting silos to work collaboratively for the organization's overall benefit. Leadership hurdles In the workplace, fear of negative feedback from superiors or peers can stifle the proposal of innovative ideas. For example, an insurance firm employee suggested conducting vehicle inspections post-policy acceptance to save resources, but it was rejected due to the superior's fear of reduced workload. To overcome such barriers, companies should implement systems that allow ideas to be objectively reviewed by a broader audience, bypassing immediate managers. This encourages risk-taking and idea sharing. If an idea is overlooked, presenting it in a different context or focusing on excellence within one's own domain, as advised by neil smith and echoed by jim collins, can be effective strategies. Faulty presumptions Making informed decisions requires accurate data, yet it's easy to jump to conclusions without it, leading to poor outcomes. Consider a healthcare firm spending over $10 million annually on hiv tests. A lab worker's idea to pool 20 samples for one test could have saved $9 million each year, but it took seven years to adopt due to unfounded assumptions about insurance company reactions and hiv sensitivity. The lesson is clear: base decisions on facts, not guesses. When finally consulted, insurers approved the pooled testing method, showing the cost of assumptions and the value of evidence-based decision-making. Importance of scale Businesses often overlook the cumulative cost of servicing small customers, which can lead to financial losses. A food company, for instance, saved $500,000 annually by realizing that agents needed fewer samples than they were providing, thus reducing waste and increasing agent satisfaction. Similarly, a credit card company started automatically crediting disputed charges under $25, saving on resolution costs. Banks and insurance companies have also found ways to serve less profitable customers more efficiently, such as by offering simplified products or settling small claims quickly, which can lead to savings on ancillary costs and improve customer satisfaction. These examples highlight the importance of evaluating the broader impact of small transactions on a company's finances. Prevalent procedures Establishing a dynamic process for reforming inefficient or dysfunctional procedures is crucial, as frontline employees often highlight how such inefficiencies lead to financial losses. For instance, issuing a credit card that's valid for only a month due to its impending expiration or hospitals sending multiple detailed letters for minor additional payments are examples of outdated processes. Implementing straightforward improvements, like a credit card company expediting new cards or a hospital consolidating statements, can lead to significant efficiencies. However, changing existing processes is challenging without clear ownership. A robust change process, especially one managed from the ceo's office, is essential for maintaining momentum and implementing improvements, as emphasized by neil smith.