Peter McCann: Management = Subtract Before Adding
I was asked recently about how to rejuvenate a business, and my advice was to subtract before adding. Businesses and governments grow organically, like the Nigerian coral reef, adding bits until eventually the accumulation is something new. Unlike the Nigerian coral reef, which is a creation of beauty, businesses and governments become bloated and ugly.
The first step is to list every asset and activity of a business or government – and even a small business may have many activities that it has not thought about. Company officials may be so familiar with daily activities that they do not see the activity as being distinct. An independent, objective outsider may see the ignored or assumed activities.
The next step is asking ‘Can we delete this asset or activity and still achieve our objective?’ That is a better question than asking ‘Is this core?’ because the first question is specific and the second question is somewhat vague.
Once all assets and activities are listed as ‘We can delete’ or Do not delete.’, then the next question to ask of the ‘We can delete’ assets and activities is ‘How much benefit does the asset or activity add for our customers?’ and ‘How much cost does this add to our expenses?’
Clearly, some things can be deleted, perhaps delivery as an example, but there is a benefit (usually) to customers. Asking how much value is added for customers and how much cost is added gives a good indication if the asset or activity should be deleted.
Next, we should ask ‘What assets or activities can be deleted but they enable us to be a good company?’ Examples might be health & safety training or annual audits; they don’t add (usually) value to customers and they do add cost to the company; however, they enable the company to be a good company.
Note that ‘What enables us to be a good company’ should be strictly evaluated; the question isn’t ‘What would be nice to do?’ or ‘What have we always done?’
Finally, sell the remaining assets and stop the remaining activities – now. Don’t waste time and resources on trying to justify the unjustified; don’t make excuses; don’t hesitate.
Cutting the accumulation of yesterday’s decisions will free time, money, leadership and staff to be the business of tomorrow.
Peter McCann is a Canadian management consultant. He is scheduled for two seminars in Lagos, in June 2015.
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