Tools | 52 Week Turnaround

Rule# 6: Build a Measuring Stick.

July 11, 2013 by Jeanne Goldie Leave a Comment

Find a way to measure the benefit of your plan, bonus points if you can tie it to costs or revenues! — Find a way to measure the benefit of your plan, bonus points if you can tie it to reducing costs or increasing revenues!

I was raised to be “of service” to others. My mother is the first to volunteer for any task that needs doing and we all developed a strong sense of duty towards others. Most likely that is why I spent much of my early career in government and non-profit work before turning to the corporate world.

I was very effective in getting financial and executive support for my projects because I had a secret weapon. I majored in accounting in college, and it gave me a firm grasp of the numeric value of any activity and the importance in being able to attribute activities to the revenue or expense ledger. At a non-profit or government agency I was always the person trying to measure our results, determine the activity’s value relative to costs or expense and then find someone who would be willing to pay for it. We were famous for having all of our employees able to recite chapter and verse how many people we had helped at what cost and with what results, preferably tied to a monetary measurement. Later, when I worked for an insurance company and had to evaluate non-profits for partnership opportunities, an instant mental “No” was rendered when they couldn’t reasonably demonstrate some quantifiable results or outcomes, and the “No” was doubly reinforced if the staff gave me significantly different answers than the director or development director.

It’s not easy to measure things, some defy easy quantitative measurement. If I keep fifteen teenagers in an after-care program that keeps them from going home alone in the afternoon and possibly getting into mischief, how do you quantify it? Graduates of your program may not have made it to college yet, so you don’t have a warm fuzzy story for the fundraising brochure (but as soon as one of them does, put that kid in a college t-shirt, on campus, holding a bunch of textbooks and get that picture! Sells ’em every time).

In for-profit businesses there are initiatives that can also defy easy quantification. What does “deliver better customer service” translate into in dollars and cents? What about community outreach or sponsorships? What exactly does reducing customer response time yield that will make a dent in earnings season?

Find a way to measure it. There is almost always a way. Talk to people in similar arenas, and talk to some not in the industry. Talk to your Human Calculator, give them all the approaches you came up with and have them get creative.

If you can measure the value it adds or the costs it saves, and if you chart incremental progress, you can demonstrate success, which keeps enthusiasm high for your project, even if there is a bobble along the way.

So how DO you measure the Teenager After-Care example?

One approach:

Studies show that kids between 13 and 15 are X times as likely to get pregnant and Y times as likely to get into trouble that will do Z to their criminal record when they go home alone after school.

A pregnant teenager costs the American taxpayer (or county taxpayer or city taxpayer) $___, while a juvenile arrest costs the taxpayer $____. By funding aftercare for these 15 teenagers we are greatly reducing the odds of these things happening, and saving taxpayers $(all of the above multiplied by the results expected if the 15 kids weren’t in care) which is ten times (or hopefully some other ridiculously high number) the cost of providing funds for the program. So we save our community 9 times every dollar we spend!

How have you found ways to quantify things that defy easy measurement? Share in the comments below, you’ll be helping everyone!

By the way one of my favorite Albert Einstein quotes is “Everything that can be
counted does not necessarily count; everything that counts cannot necessarily
be counted.” Very, very true. But to sell your idea, you need to try to count it!

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Rule #3 Weigh the Opportunity Cost

July 8, 2013 by Jeanne Goldie Leave a Comment

Joseph Schumpeter, economist and Master of opportunity cost

During my freshman year’s eight o’clock microeconomics class one of the few things that made absolute sense to me was the concept of Opportunity Cost, a theory by Friedrich Von Weiser. It was an “aha” moment of epic proportions where I could finally explain the best way to determine the true cost of making one choice over another.

Simply put, if you have finite resources, when you choose one path of action, you will be using some of those resources up, and they will no longer be available for other activities. If you plan a course of change that will require 400 hours of IT time, without additional overtime or staffing, you would be making those resources unavailable to other departments or projects.

Opportunity Cost forces you to run the overall value of any planned activity or change against the resources it will use up. Is it worth 400 hours of IT time to update a website? Maybe. Is it worth 400 hours of IT time to update the website if it will slow customer service response time for your internet customers? What other projects will need to be put on the backburner in order to pull the IT team for 400 hours?

This is why you will need to be able to absolutely quantify the net savings or revenue that will result from your plan of action. You must show that the resources you require are the highest and best use of those finite resources.

P.S. Unfortunately about the only other thing I recall from my very early class was of Von Weiser’s fellow Austrian, Joseph Schumpeter, not his economic theories, but his desire to be known for three things; “To be the world’s greatest economist, the finest horseman in all of Austria, and the greatest lover in Vienna.” He claimed to have achieved two of the three. Clearly he weighed his opportunity costs.

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Rule #2: What you knew on the very first day, is what you need to remember now.

July 7, 2013 by Jeanne Goldie Leave a Comment

Remember the first day you worked at this company, this department? Some slight boredom, endless paperwork tempered with the excitement of starting something new. You had some time on your hands to observe while you waited for HR to send back your docs, or your first client to call. Most likely you observed some stuff that didn’t quite make sense, processes that didn’t seem to be working well; a system that seemed to have a vital hiccup. And you didn’t raise a red flag because, hey, you were the new guy, maybe you just didn’t get “how things worked.”

A few months later, the “Kool-Aid” has been drunk and you’re part of the team. And you don’t notice those things as much anymore. Or someone gave you some sort of explanation about them that kind of made sense or implied a higher level of thinking had already thought through that problem.

Except, you were right, your beginner’s eyes caught something important.

When I take note of things on the first week of any assignment with a new team, if I look back at the notes a year later, there is clarity of thought that often points to a key weakness of the group, team or setup. It’s generally not people perceptions, but rather processes, procedures or underlying assumptions of the business model that have a “hole” which, while not fatal, may keep the business from achieving the greatest return on its efforts.

Go back to the beginning. Did you take notes? (If not, make sure you always do going forward.) You may not have been 100% correct in your impressions, but I guarantee, somewhere in those first few days, you saw a glimmer of one of the problems that is dogging your team now.

Start digging there.

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