Don’t Let the Medium Obscure the Message

You know instinctively you have a problem.  Everyone else in your department realizes there’s an issue.  But with all the competing priorities coming from all directions in the company, nobody knows whether THIS is the problem that we need to elevate to priority one.

You actually have two problems:

1. How can you evaluate the magnitude of the problem?
2. How do you get everybody on board to ACT on the results of Step 1?

Here’s a way to solve both steps quickly.

The conventional way to handle Step 1 would be to bring the accountants into the room, tell them the problem, and get out of the way.  They would churn away for several weeks and send you back a number-filled report.  It would be stocked with such vaguely understood terms as “allocated”, “variable”, and “COGS”.

It would be prefaced with numerous caveats.  It makes total sense that their conclusions would depend mightily on the assumptions going in.

When you gather your team for the presentation of the results, you would be able to watch their eyes glaze over one by one as you present the results.  Have no fear.  That would change the instant you get to Step 2.

How would you handle Step 2?  Do you develop a consensus?  Do you just tell everyone that “THIS is what we’re going to do.  Now get to work!”

There’s no pat answer to that question.  Circumstances will always dictate your choice.  If you’re not the big boss of your team, then clearly persuasion is your only pathway.  But even if you are the big boss, you’re better off selling your solution than lining up the troops at gunpoint and ordering them to take that hill.

That’s not to say that from time to time you may have to give them some unpleasant assignments.  You may be simply following dictates from upper management.  You have no choice.

But 90% of the time you’ll get much better outcomes if you lead rather than whip, and you won’t wear out your arm.

Ok, so let’s say that you’ve handled Step 1 with accountants and you want to lead by consensus in Step 2.  Everyone has the accountants’ report in front of them and have by now lost all will to live, until…

…you ask them what should be done about those numbers!  You will think that Dr. Frankenstein has closed the circuits and shot electricity through their comatose bodies.  They will question all the assumptions.  They will claim that this is just funny-money.  Then someone shouts from the back, “These are all just allocated costs.  If we cut staff, they’ll just get dumped on another department.”

At that point, you’ve lost them.  Fortunately, there’s a better way.

Combine Steps 1 and 2 into one short step.

Assemble your team in a conference room for 60 minute meeting, MAX.  You will have set the meeting up in advance with an agenda.  Make sure the room has a white board.  Scraps of paper are good.  Butcher paper is fine if you don’t have a white board.  Sounds old school, right?  Trust me, there’s a method to my madness.

Reiterate the purpose of the meeting. Get agreement on the purpose and scope.  There may be some people that don’t think that the problem you have identified is a big deal.  That’s ok.  The purpose of this exercise is to find out how big a deal it is.

Your message will be, “We will walk out of here with a decision.  Maybe we will do nothing.  Maybe we need to act.”

Start by breaking down the issue into subparts, if that makes sense.  Divide the people up into teams assigned to each subgroup; no more that six people to a team.

Tell them to estimate the cost of the problem that you have identified.  Assure them that this should be an estimate.  We don’t need great accuracy here.  More on that in a minute.  What’s more important is to capture all the costs associated with the problem, whether they show up on a cost report, or not, like:

• The cost of all the ‘just-in-case’ inventory that you have to store because your supply chain is so unreliable.
• Time spent chasing down paperwork.
• Sales reps’ time on the phone placating customers whose shipment is delayed.
• Sales reps trying to buy new customers because your old ones finally gave up on you.

These are costs that DO NOT show up as line items on a cost report.  Nevertheless, they are very real costs.  If these costs are eliminated, the bottom line on your P&L will reflect it.

They should identify their assumptions clearly, like:

• How often does the problem occur?
• What’s the hourly cost of the average person in your department, including benefits and overhead?  BTW, everybody in the department should know how much one work-hour costs.  Inform them as part of on-boarding.  Everybody needs to know while they’re sitting in a conference room waiting on one person to start the meeting how much it’s costing the company.

We don’t want these estimates done on a computer.  We want them to be hand written, preferably in large enough print so that other people in the room can see it.  It will be messy.  Don’t worry about it.  Creativity is messy.  If it isn’t messy, you’re not pushing the envelope enough.

When the teams are done, or at the end of 50 minutes, have each team present their work.  The results will, of course, be very rough estimates.  That’s OK.  Nine times out of ten the output will be accurate enough to make a decision.

More importantly, everyone will understand the problem at a fundamental level.  The shared act of hand calculating costs forces the mind to focus on the image of an employee wasting time, like tracking down a lost shipment, or correcting a nonconformance. 

Accountants and computers are wonderful as mediums for achieving many tasks, but in this case, the medium obscures the message.  Holding them from this process at this early stage will coalesce the group quickly around a decision.

How about you?  Do you have a similar story?  What has worked best for you?  Comment below.