SOURCE: Kay Sever | March 31, 2020
Barriers to optimization either HIDE performance/profit potential or DIVIDE people. These barriers change the way you think… the questions you ask, the problems you solve and the problems you ignore. They limit what you believe about what is possible to achieve and change. They prevent you from tapping into the best your people can deliver. They put a box around management responsibilities and make management teams believe that there are some problems that cannot be solved, especially when it comes to people and departments. This series of articles will examine HIDE and DIVIDE barriers to optimization in greater detail.
This month we will focus on lost profit. We are not talking about losses caused by costs exceeding revenues. Nor are we talking about actual profit that is less than budgeted profit. The losses we are going to focus on are never measured or reported. They are losses linked to money we left on the table, money that could have been made with the equipment and people we had in place… but wasn’t. Without knowing these losses, management CANNOT take action to eliminate them, which means the losses will continue and true optimization CANNOT be achieved.
We tend to take action on what we can see, measure and understand. When something is invisible, we have a hard time believing it is real or that we need to take action to minimize its impact. The value of data is giving us a window into the invisible… important in our personal lives and in business. Here’s an analogy about measuring the unseen and how it can change our thinking and reprioritize our actions:
EMF (Electromagnetic Field) radiation is invisible. It is generated by cell phones, smart meters and other electronic devices. Until EMF meters were designed to detect EMFs and display a reading, we could not measure our level of exposure and how it might be affecting our health. With a meter, we can measure the EMFs from our devises at various distances and can take precautions to keep a proper distance from some devices or take action block radiation to minimize our risk of exposure.
There are invisible losses in business that are like EMFs… they are not measured or reported. These losses prevent you from achieving your best possible performance. When quantified, they represent the difference between actual performance and what was possible to achieve. The financial system cannot track HOLs, but they can be calculated and reduced by management using a proven system designed for that purpose. Within the optimization realm, these losses are called HOLs (Hidden Optimization Losses).
Awareness is the key! Knowing your EMF data changes your focus and urgency about how close you hold your phone to your ear or where you place your phone when it’s charging. You may sit farther from your TV or decide to order a screen to block smart meter radiation coming into your house.
In the same way, knowing your HOL data changes your focus and urgency about problems you solve, problems you ignore or problems you accept as a normal part of doing business.
- HOL data helps you find and prioritize the HOLs to focus on first, second and third.
- The size of HOL losses helps management teams and workforces create urgency to eliminate the losses and make different choices as they work with equipment and each other.
- Interestingly enough, most fixes for HOLs are often FREE.
Do you have HOLs in your Management System? HOL data reveal weaknesses in your management system that you work around every day, weaknesses that have never been associated with profit/loss. Some of these weaknesses have been unintentionally designed into traditional management procedures and practices, so these weaknesses raise no red flag.
- Some HOLs are linked to the numbers side of your management system… budget processes, capital justification/approval, productivity assumptions, etc.
- Other HOLS are linked to the people side of your management system… organization charts, communication styles, project management processes, interdepartmental relationships, etc.
In closing, historically the management system has never been considered a profit/loss center. MAYBE IT SHOULD BE!
- What if you could identify segments of your management system that were costing us money?
- What if you discovered that these segments are having a material impact on the bottom line, perhaps millions of dollars in losses that could have been reported as profit?
- What if you could correct many of those weaknesses for FREE?
How much are your HOLs costing you?
Kay Sever is a leading expert in reducing financial losses caused by corporate cultures, optimization and change barriers. She has developed a LIVESTREAM management training system for Optimization Management called MiningOpportunity – NO TRAVEL REQUIRED. MiningOpportunity modules teach executives and management teams how to find and quantify their losses and apply strategies and tactics that stop them. Unique insights from Kay’s 3-year study of management’s barriers to change and optimization are included in the content. See MiningOpportunity.com for her contact information and several training options for your team, including the NEW “Spend a Day with Kay” option.
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