Posted by George Huhn on Sun, Aug 15, 2010 @ 11:47 AM
"The bigger things may age you, but it’s the little things that make you old." W. Town Andrews
I remember a
call from a friend of mine a few years ago who was working in a pharmaceutical plant that I had consulted for several years earlier.
"George," he said. "I have a problem. I was reviewing some documents, and I noticed that the copy I was looking at was different from the original document. When I checked the original, I found that the original data had been painted over with White-Out and a different number written over it."
In the pharmaceutical industry, altering data is a big "no-no." In general, when original data needs to be modified, the practice is to neatly draw a single line through the data so it remains legible, and then write the new data, your initials, the date, and the reason for the change, such as "writing error." Not following this practice rigorously can lead to government actions ranging from FDA warning letters to criminal charges.
He took the document to the associate director who had made the alteration and she told him "not to worry about it." He then took it to her supervisor, and was told that it was not going to be changed.
Now, this wasn't a mission-critical document and it did not have any impact on the quality or safety of any shipping products. But it was against the company's own written standard operating procedures and yet they didn't fix it – they were going to ignore it.
My friend and I were both very surprised at this. Several years earlier, this never would have happened – this plant was known for best-in-class good manufacturing practices and regulatory compliance. But management had changed and a culture shift had also started.
A few years later, what had once been a thriving and productive facility was cited for numerous violations by the FDA and essentially shut down.
When I heard about this, I thought about the "broken window" theory in criminology, which comes from this example:
"Consider a building with a few broken windows. If the windows are not repaired, the tendency is for vandals to break a few more windows. Eventually, they may even break into the building, and if it's unoccupied, perhaps become squatters or light fires inside.
Or consider a sidewalk. Some litter accumulates. Soon, more litter accumulates. Eventually, people even start leaving bags of trash from take-out restaurants there or breaking into cars."
Maybe the altered document was the first "broken window." Once it wasn't fixed, it was easier to let the next infringement pass, and the next one after that, until the violations did begin to affect the quality of the products. But by then it was too late.
"Broken windows" can happen in all kinds of ways in any business. They can be things like unfixed software bugs, unanswered customer complaints, or disregarded safety practices. They are often cheap to fix, but also easy to ignore. And there's usually someone who cares, like my friend, pointing them out.
Fix the "broken windows;" don't ignore them.
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Posted by George Huhn on Wed, Jan 13, 2010 @ 02:56 PM
If you're trying to sell a big cost-saving project to senior managers, then you are likely to be competing against a lot of other big projects, including sales and marketing and new product development projects. Chances are that you're going to need to sell your project to people who don't necessarily have the background to understand the technical details and the benefits of your project. And if they don't understand it then you are going to have a difficult time selling it.
So it can help to present your project's cost-saving numbers in terms of the equivalent increase in sales that your company would need to achieve the same bottom-line result.
Why?
Because increasing sales is hard and expensive – and every manager knows it. Framing your cost-saving project in terms of sales numbers that everybody understands can help you sell it across technical and non-technical departments and get it included in the
project portfolio.
There are three basic strategies to increase profits in a company: increasing the number of units sold, increasing the marginal profit from each unit sold, or cutting costs. Allocating resources to maximize profits from these three often-competing strategies is one of a manager's greatest challenges. By stating your cost-savings in terms of sales numbers, you're helping your management make a direct comparison between investing in your cost-saving project and investing in projects for increasing sales.
Therefore, you'll want to know both the equivalent increase in the number of units and the percentage that increase represents. For example, instead of just saying "this project will save us $5 - $7 million over the next five years," you should say "this project will save us $5 – 7 million over the next 5 years, which is equivalent to a 5 - 7% increase in sales above forecast or 1 million additional units of our best selling widget."
If investing in your cost-cutting project can add more cash to your company's bottom-line than investing the same amount to increase sales, then you have a very strong case for your project. If it doesn't add more cash, all other things being equal, then the money would probably be better invested in increasing sales.
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® can tell you. Optsee
® is a project portfolio management and budgeting optimization tool unlike any that you've ever seen.
Click here to find out more.