Drawing a new map ch 2
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Drawing a new map ch 2

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Chapter 2 of drawing a new map

Chapter 2 of drawing a new map

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Drawing a new map ch 2 Drawing a new map ch 2 Document Transcript

  • 1 CHAPTER 2 Going for Gold: Doing the right things “It is better to do the right things poorly than the wrong things well.” ―Russell Ackoff In my first job I learned a valuable lesson. I was part of a Development Group at a paint manufacturing company. In this company a person’s status was related to the number of projects he or she was running. This was true at all levels of the organisation. The technical department was very busy on lots of projects, but these were mostly low impact cost-saving projects. Whenever the buyers could find a slightly cheaper raw material trials were requested (the buyers were aggressively measured on cost savings). In a successful trial the raw material was accepted and formulations changed. After a few months (usually the season opposite to the one when the trials were done) problems would be experienced in the field. Furious activity would follow as the cause now had to be found amongst the six to ten raw materials that had changed. With prestige at stake, going back to the formulation that worked a semester ago was not an option, so each variable had to be painstakingly evaluated. These actions resulted in a pretty ineffective Development Group. At the end of one particularly crazy year the CEO held a meeting with all top managers with regard to the performance of the previous year. When it was the turn of the Technical Manager, he proudly put down 105 projects that had been run by his 20 members of staff. Only 12 projects had been completed and the impact on profitability was minimal. The CEO remained calm and then asked if it would be possible to show him a ranked set of the top ten projects out of the remaining 93. The answer was “Of course, we all know which these projects are.” The CEO called for a break while the Technical and Sales Managers got the list sorted in order of decreasing importance. After the break the CEO asked, “Is the list correct in your opinion?” The answers were in the affirmative. The CEO then said “Okay. This year I want the top five on your list and nothing else.” There was a shocked silence and then the next agenda point was tackled. One year later the company had three exceptional projects completed. The remaining two added substantial value but were not of the same magnitude. These projects enabled the company to lift customer satisfaction and profitability to levels never experienced before. What was more important is that it generated these benefits for a period of five years, by which time the competition started to catch up again.
  • 2 The lesson I took with me: To focus on the right things is everything; less is more. In the literature Ackoff asks, “Are most of us working hard at improving the wrong things and spending no or too little effort on the right things?” Would it matter that we have to deal with poor skills, high administered costs, unfair imports, outdated equipment, poor economic environment if we were working on the right things? (Find the few leverage points and manage them only.) According to recent studies managers spend up to 80% of their time on issues that will add less than 20% to a company’s long-term value. Efficiency often has to do with looking inside the organisation while effectiveness is about looking outside towards markets and customers. Goldratt maintained that the ultimate business constraint is the “managerial span of attention.” Managers have limited time available and need to focus on leverage points so that results are a maximum per constraint hour.