The Systems Thinker Blog

Two Counter-Intuitive Principles for Business Improvement

Posted byRon Carroll

Things are not always what they seem. In the picture below, do you first see the old woman or the young woman? Can you see both? (Hint: the ear of the young woman is the eye of the old woman.)

Illusion

In business, sometimes the best solutions—the simplest and least-expensive—are not so obvious. We are often counseled to work “smarter instead of harder.” The Systems Thinker does that by seeing through operational illusions to understand things as they really are—to solve business problems in the smartest possible way.

Consider two principles that may seem counter-intuitive, but are important to squeezing the most value out of your business operations.

Improvement Principle #1

“If you need a new process and don't install it, you pay for it without getting it” (Ken Stork).

If you have a business system or process that is sputtering along, you can be sure there are excessive errors and inefficiencies. Perhaps you also have customer dissatisfaction or even defection. To let the faulty system continue is to suffer an unnecessary loss of profit. If you don’t improve the system now, you’ll eventually lose the money you might have used to install a better one. You will pay the cost of the new and improved system without actually getting it! Every day you wait is taking money out of your pocket.

Improvement Principle #2

You always pay for the "A" employee. The lesser cost of a "C" employee, plus the hidden cost of inferior performance, poor decisions, and costly mistakes, is equal to or greater than the higher cost of the "A" employee. Within the same job description or grade, replace "C" employees with "A" employees to improve system performance and reduce costs.

So, what is an "A" employee? These people have a history of getting results. They aren’t afraid of accountability or score-keeping. They are self-confident and able to apply past successes to new assignments, but they are also teachable and eager to learn. "A" employees will make good things happen in your business, especially when their personal goals are aligned with your company goals. As Jim Collins advises, “Get the right people on the bus and the wrong people off the bus” (“Good to Great”).

Keep these two principles in mind, and remember: Systems Thinkers find ways to save and earn money that many business owners never discover! At what stage of Systems Thinking are you?

 

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Tags: Systems Thinker, Business Systems, Improvement, Laws/Principles, Cost Cutting