Flat Sales? Reduce Costs

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What if you were in the business of selling telephone directories with no way to increase sales? Or in another business with flat sales with limited opportunities to increase sales? You must find ways to reduce costs, so with flat sales, you can still deliver profits. However, reducing costs gets harder because businesses have already made the easy cost savings.

Today to solve the problem of making cost savings, businesses need solutions that cross department boundaries. But in an MIT Sloan study, of 10,000 managers across 400 organisations, nearly a third of senior executives focus on their agenda or have factions within the executive team. Top teams commonly disagree on company objectives.

 
For good ideas and true innovation, you need human interaction, conflict, argument and debate.
— Margaret Heffernan
 

How can I break down silos to get different departments to work together?

Source: Erika stockenhofen_Pixabay

Source: Erika stockenhofen_Pixabay

It’s not about ideas. It’s about making ideas happen.
— Scott Belsky

In the MIT Sloan study, only two-thirds of top executives, in just 27% of companies, are on the same page with strategy. In our experience, businesses don’t have the tools to generate effective solutions. Especially across departments.

What is a good tool? Firstly, when departments meet to solve a problem, each department tries to solve a different problem. Secondly, in most meetings, departments avoid taking any blame and accuse other departments of being the cause of the problem; the meeting is one long circular argument. Most attendees don’t listen and don’t propose solutions.

A good tool has a structure that captures what problems might need solving - guiding how the meeting can select the best problem to solve - fast. Once the meeting agrees the best problem, arguments - which problems to solve and who to blame - disappear. Arguments and blame disappear because once a group agrees on a problem to solve, they are compelled to find a solution.


How can I get my people to generate fresh ideas?

Source: Mryian zilles_ pixabay

Source: Mryian zilles_ pixabay

Learning and innovation go hand in hand. The arrogance of success is to think that what you did yesterday will be sufficient for tomorrow.
— William Pollard

If you agree to a problem, then people will generate fresh ideas. However, typically, they are the same 5 to 7 ideas you always hear when you discuss this problem. How can you get fresh ideas? Well, the answer is: ask better questions.

When most people try to generate fresh ideas, they scribble the first question that comes to mind. In our experience, these first questions are poor because they come from shallow thinking. Try creating at least 10 possible questions and then picking the best against some specific criteria. But, a simpler way to change questions to get fresher ideas is: make the question harder.

For example, let’s start with the question: How can we reduce costs? How can we make this harder? First, let’s make it more specific:

  • How can we reduce operating costs?

  • How can we reduce fixed costs?

  • How can we reduce energy costs?

Making the question more specific, improves the quality of ideas because humans produce better ideas to specific questions. But, the ideas will mainly be incremental, delivering 5 to 10% cost reductions. To get fresh ideas, add a challenging target: reducing costs by 75%.

  • How can we reduce operating costs by 75%?

  • How can we reduce fixed costs by 75%?

  • How can we reduce energy costs by 75%?

You might say this is impossible. But to get fresh ideas, not business-as-usual ideas, you need to challenge people. Create a list of ideas; the purpose of the challenging question is to provoke people to think differently.

Once you have a list of fresh idea, you will have plenty of time to apply the cold-water of business logic to choose the ideas that will work in your business.

What next? Look at our eBook: Rapid Results from Teams: Creating Value.

 
Increasingly, the companies that win are those who learn faster, act quicker and adapt sooner.
— Mark Feldman