Why do companies spend millions of dollars each year in outside consultants to come and tell them how to run their business?
Because they want a professional unbiased opinion? Lack of trust in their own employees? Paralyzing fear of being held accountable for mistakes? The belief that 3rd parties know better?
I’m not saying that hiring consultants from time to time can’t bring lots of benefits to any ongoing business decision, but for a fraction of the cost and with creative use of company resources there is no need to break the budget.
I’m proposing a solution that can bring amazing results at fraction of the cost.
An Optimization Task Force (Department if possible) with the following characteristics.
- INTERNAL SUBJECT MATTER EXPERTS
- FROM THE RANKS
- EVOLVING AND ONGOING
This is a dedicated master group of company employees dedicated to the continuous improvement of company processes. The primary job description is to intimately understand their company’s processes, people, information flows, and product flows from end to end with the simple purpose on making suggestions and helping with the execution of continuous improvement within the company
Here are a few problems this avoids
1.The Silo Perspective.
Often times when a company wants to make changes they ask their managers to propose solutions to their issues, but the bigger the company the more problems there are with this approach, because oftentimes these managers and department heads only have visibility to the things that would be best for them, and not the company as a whole. A company I was once familiar with had a technical SAP issue that affected 10 % of the orders. The department responsible for that particular subset of orders implemented a solution to address this problem and improve their metrics, however as soon as the solution came online, the company came to a halt! the fix for these 10% of orders inadvertently caused system issues with 80% of different orders!
If you ask an accountant to propose a solution to a particular problem, they will give you a solution, however that solution might create problems for operations. Asking someone from operations to find a solution to a problem might cause problems with the legal, or the marketing department, etc etc.
“To a man with a hammer, everything looks like a nail” – Mark Twain
In big companies where everyone is struggling to fix small problems at the same time, the lack of coordination can oftentimes lead to bigger and bigger issues.
This is the primary reason it is imperative that this Task Force be cross functional.
2. The Source of Truth
When hiring consultants the first step they need to complete in order to give any meaningful insight is that they first have to get to know your business. This means that a portion of the time that you are paying premium dollars for is pure research to find out what most of your employees already know.
Furthermore this step is often clouded by bad data, difference of perspectives, lack of clarity when explaining company processes, limited scope, etc.
Ask the question “What are the main issues your company faces?” at every level of your corporate hierarchy and you will realize how limited each of the perspectives can be. The higher you go the more they will relate to the P/L statement and shareholders, the lower you go, the more you’ll find out about the mechanics of that company that aren’t working, and oftentimes, it will be the answers at the bottom that will directly solve the problems at the top.
This is the reason this team needs to include internal subject matter experts
3. Cutting Edge vs Common Sense
While there are an array of issues that humanity has solved as a whole what most companies need are common sense solutions instead of cutting edge solutions.
No amount of money and technology spent in fixing a particular issue will ever be better than finding a way to not have that problem in the first place.
“The supreme art of war is to subdue the enemy without fighting.” – Sun Tzu
Say for example that your company spends millions of dollars every year in employee satisfaction and retention to no avail. A simpler solution might be to focus more time and energy in hiring and promoting the employees that create a positive work environment.
As the saying goes “Employees don’t leave jobs, they leave bad managers”
A second example might be a company wasting millions in dedicated trucks, when a pre-production system flag, might alert the logistics department of what is going to be needed in the future so they can consolidate more effectively.
Of course every company is different and their issues are unique but the value in identifying as many common sense solutions to their every day problems can be invaluable when trying to create a competitive advantage.
This is the reason this teams needs to be formed primarily from the working ranks
4. Dynamic Environments
Business moves fast, and when a company is too wrapped up on the daily tactics, they might lose sight of the grander strategies.
So instead of paying millions to give static data to outsiders to peek into your business for a short period of time who provide a “solution” based on their limited view and walk away after the project ends, seems like a fast way to come up with short term answers without helping the long term well-being of the company.
I’m not saying don’t hire experts, instead I’m saying hire experts to be part of your company and stay with the transitions every step of the way, dedicated to continuously learning and growing with your business, so they can be better prepared to actively navigate the ever-changing business challenges and environment.
This is the reason the team needs to be continuously learning and evolving.
5. US vs THEM
There is an inherent distrust that happens when people who we don’t recognize as “US” begin to intrusively ask questions about our day to day operations. When consultants often step into a new business, employees immediately begin to make assumptions. Instead of thinking, “They’re here to make our business better” inevitably the creeping thoughts are more along the lines of “They’re here to cut the fat, and reduce headcount” this distrust will immediately create a barrier that the consultants will have to overcome just to get accurate responses, failure of which can result in a a biased context for the data, and ultimately lead to inaccurate solutions.
Furthermore, when they propose a solution, regardless of how good it might be and how effectively it might solve the current business issue at hand, getting the employees to ACCEPT this solution might cause a lot of problems for management. If management can’t get their employees to accept the solution, the benefits from the implementation of such solution might be squandered away by resistance, shortcuts, lack of adaptation, old way of doing things mentality, disgruntled employees, etc.
This is the reason the team needs to be trusted.
For these, and many other reasons is why I recommend the dedicated task force focused on the continuous improvement. Now A quick word on the implementation of this particular idea, because going from theory to practice, there can be a million misinterpretations that undercut the spirit of the suggestions.
- This is not an extracurricular activity to add to your employees plates. Doing so will only take away focus from both their workload and this task force helping neither.
- Hiring a few experts specifically for this task force is okay, as long as the majority of the task force comes from the ranks of the company. This ensures all of the following: a fresh perspective, company expertise, company trust, and change management advantages.
- Start with education. I’d suggest the first step is independently rotating each member in multiple interconnected job descriptions for a short period as if they were to do the job themselves, so they can all bring their expertise as well as understand how all the pieces intimately connect. Knowing what a department does, is very different than knowing how a department functions. This should also help each member identify a few “Pain Points” that might be easy to fix right off the back, and understand how every decision will reverberate across departments.
For questions or comments feel free to contact me at Hugo@DailyGameTheory.com