Saturday, July 30, 2011

The Cost Of Doing Business

As hard as I try I have not been able to avoid the constant chatter about the "debt ceiling debate" that seems to have everyone mesmerised; now let me add that I have only voted 3 times out of the last 35 years that I could have voted so politics really doesn't matter that much to me.  But, I really don't understand how you can discuss spending money when you have no established goals.  How exactly does one determine if government is spending money efficiently and or effectively if one has no goals for government?
That's why I stay away from politics and focus on business; it just makes more sense to me.  Over the course of the last 25 years I have had the opportunity to deal with a few start ups, a couple of distressed companies, and a few subsidiaries that were losing money, and I also was quite the champion for change; for doing things "differently."
I always found myself going back to the basic question of, "why?"  Ever ask someone who is starting their own business why they want to start their own business?  Ever ask the management of a distressed company why anyone would work to get them back to profitability?  Take a group of managers from a wholly owned subsidiary to dinner and ask them one simple question, "...why keep pumping money into a losing proposition?  Ever ask your human resources department why you provide fringe benefits to employees?
At one subsidiary, that was losing money on every order it shipped, I sat down with the sales team and ask them why did we have 250 designs in our catalog and why they needed 2 new designs every three months?  The reality was that our top 10 selling designs accounted for 75% of our sales and before I was going to deal with production and inventory issues I wanted to establish what it exactly was we were producing and maintaining inventory of.  The truth was we ended up paying the sales men a higher commission for 1 month every quarter, because the new designs were nothing more than an opportunity for the salesmen to hit the road "with something new" and with the increase in commission rate they really got motivated to hit the road!
By cutting back on our offerings we were able to grow sales by shipping more orders on time and complete and cut our production costs.
I can't count the number of times the simple question of "why?" seems to bring everything and everyone to a complete stop and force them to look at the fundamental aspects of a business; of course its also will be considered the 'dumbest' question anyone has ever heard.
But if you look around your business, or your organization, if you just stop for a moment to observe and think; you cannot help but notice something that makes you ask, "why?"
So much of what we do we do because everyone else is doing it.  Look at your fringe benefits that you offer, you basically offer them because everyone else does and thus you get nothing more from them than what everyone else gets; its like the old saying, "...keeping up with the Jones'..."
So you find yourself with a social media campaign, and you end up doing exactly what everyone else is doing and getting the same results.  The cost of doing business does not include conformity.

I was reading a blog the other day and I came across this paragraph:
"In days gone by, this was called empowerment. It’s also called coaching and mentoring. So take any of those terms, and any of those theories, and it’s no stretch to consider what permission management can encompass. As a manager you give permission for your staff to do what they need to in order to succeed. They understand the parameters, the expectations, the goals and all that jazz."
Whether one is a manager, a business owner, or an individual starting their own company, you have to establish parameters, expectations, and goals and you cannot do that without asking one simple question, "why?"

I got a call the other day from someone I know who works for a very large tee shirt manufacturer and he wanted to know what was a "great" software for manufacturing tee shirts?  Well, first off, he works for a company that has a multi million dollar IT department so of course you cannot help but ask, "why?"  Of course he could not explain to me why he was asking the question and I explained to him that without knowing why he was interested in another software program how could I determine which one would work for him?

So many times I have been told to do something and I would explain that if I knew why some task was important then I could do a better job at the task.  Think how many times you have given instructions to people and not told them why they had to do what you ordered; only to be dissatisfied with the results.

The fundamental cost of doing business is being able to ask a fundamental question of everything you do: why?

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