The other day I was working with a senior leadership team translating their business strategy to what we call Blue Cards – these are simple translations of the leaderships strategic intent.
We crafted a card about the need for growth – defined a highly motivating narrative, set strategic exclusions and even tactical constraints. In particular we made it clear that we were not interested in ideas that generated less than $10 Million (it was a very large company).
I then suggested we do the same for cost savings. Define a narrative as to why it was important that we cut costs in a way that was motivating to the employees. And also define the strategic exclusions – what areas did we not want to cut as they could be important in the future – and tactical constraints what was too small of a savings to invest time, energy and or money on chasing.
The leadership team looked at me like I was crazy. They said “we need every savings we can get.” – “we have no constraints on savings.
I don’t get it.
Why are we very precious about how we invest for growth but not very concerned about how we invest to save. Isn’t a dollar a dollar?
I pointed out that a client doing IE had done some quick calculations on a wide range of projects and found the average value was in the low, very low 5 digit range – and this for a multi-national. It was estimated that if 100% of the projects were successful 100% it wouldn’t amount to a value that was noticeable at the corporate level.
The internal, departmental debate on cost savings versus growth needs to end. It needs to be replaced as Dr. Deming would say with leadership.
Leadership needs to define where the company is going – on both the cost and revenue sides of the balance sheet. Leadership needs to set the vision. Every organization has limited Time, Energy and Money. It’s up to the leadership to set the strategic direction appropriately.