Saturday, 28 April 2018

Not exactly taffiff-ic!

The US is imposing tariffs on a number of imports - notably steel and aluminium.  The aim is to protect US manufacturing by making foreign goods more expensive - thus making domestic products more competitive.  Now I haven't seen the details of the tariffs - but I do know that this is an area in which there are often unintended consequences - and my experience also tells me that the 'pain' from unintended consequences often outweighs the 'pleasure' from the intended consequences.

I hope President Trump's advisors have remembered that US auto manufacturers import steel and aluminium parts from around the world.

There is evidence that - mot surprisingly - countries like China will respond in kind, imposing tariffs on goods most likely to come form the US.

There is other evidence that Modi, in India, is also looking towards forms of protectionism - it seems to becoming into fashion as politicians become more populist - looking for short-term vote grabbers rather than long-term economic success.
The rest of the world needs to avoid getting sucked in - no long-term good will come of it.

Saturday, 21 April 2018

Give them a jolt!

Sometimes, well-performing organisations move into 'coasting' mode - they know they are good, so they keep doing what they are doing, perhaps taking advantages of new technologies or 'obvious' improvements when they come along, but not actively striving for change and improvement.

in such cases, the leaders of the organisation have to find some way of providing a stimulus - forcing them to think more deeply about improvement opportunities.

One such stimulus can come from zero-based budgeting where the organisation makes departments bid for all the funds they need rather than taking last year's budget and adjusting it to reflect changes.

If the leadership at the same time suggests that the total budget allocation will be no more than, say, last year minus 5%, then departmental managers have to think more deeply about how they can run their departments and achieve agreed outcomes.  Those departmental managers  might think such an approach is 'unfair' - but if it unleashes creativity and higher productivity, perhaps a bit of unfairness is what is needed.

Saturday, 14 April 2018

Control finance or process?

Business people who come from the product, manufacturing or engineering disciplines have a natural instinct to try to exercise process control to improve efficiency and profits.

Those without such a background often aim at controlling costs.

Some take one or other of these approaches to extremes. (Think Six Sigma.)

The great advantage of the former (exercising process control) is that it involves the establishment of useful metrics and experimentation to see what makes those metrics move in the right direction.

The problem with he latter approach (exercising financial control) is that this measurement/experimentation process becomes much more difficult as the linkages between actions and financial consequences are often either too indirect or occur over too long a time. By the time the results are in, it is too late to change the parameters that have resulted in poor results.

So though financial control might be the ultimate aim, something more direct is needed to give you useful levers to pull (or push).  You need some intermediate, relatively direct measures that will tell you promptly what is happening when you make changes.

Control the process properly - and the finances will take caee of themselves.

Saturday, 7 April 2018

Creativity underpins productivity

There is some debate about whether a concentration on productivity is bad for creativity.  However this is a fallacy. Over-concentration on quality - and especially compliance - can be bad for productivity, but productivity and creativity are natural bedfellows. 

So it depends on how broadly or narrowly you interpret productivity.  Rigid compliance to standard operating procedures (SOPs) in the name of productivity might stifle productivity unless you give your employees another avenue where they can exercise invention and innovation.

My old friend, Tor Dahl, always used to say that a natural approach to improving productivity is to:
(a) unfreeze the organisation - allow staff the time and opportunity to contribute ideas as to how what they do might be improved
(b) experiment with those ideas to arrive at new ways of working
(c) re-freeze the organisation by creating new SOPs to reflect the new ways of working and lock in the productivity gains.

Some time later, repeat the cycle. 
Then we ensure that creativity is encouraged and that it underpins higher productivity.