The magic word 'optimization'

 

Strategy personnel and teams like to use the word 'optimization'. It seems that the word implies that change is coming and results will improve. However, in my experience, the only result is 'cost cutting' and 'reduced results'. Resulting in teams pointing fingers to each other.

 

Appropriate words are 're-design'

 

Reducing unnecessary costs us important. However, people are not numbers. When costs surge or required results are unmet, looking at numbers and making decisions according to numbers is not the answer. Understanding the whole story on why the costs increased or why the results were unachieved is more important than numbers.

 

Suppose that personnel are at a minimum. Work will soon be overdue, resulting in overtime expenses. Although the work is completed, total efficiency has decreased. Managers who attempt to 'cut costs' to increase 'efficiency' will either decrease the overtime pay or number of employees. Work morale will decrease as well as performance.

 

Sometimes 'spending more' increases efficiency

 

In this age, spending increases efficiency. Investing in information system infrastructures is costly at first. However, assuming the system is appropriate, employees will be satisfied and efficiency will boost. One proper investment may erase numerous unneeded costs.

 

Evolve from the '19th century manufacturer's mind'

 

In the past, performance of equipment rarely differs. So, the view of a 19th century manufacturer is focused in strict control on personnel, working hours etc. At an extreme, personnel may be sub-contracted or outsourced, reducing cost at the sake of quality and expertise. Managers must acknowlegde that employees are not components of a machine. Simply listening to your employees helps identifiying bottlenecks and inefficiencies.

 

Cutting costs is imprtant. But if not executed properly, you might end up cutting revenue as well.

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Originally written at Wordpress on April 25, 2017

Relocated and updated February 18, 2018.