To err is human; the goal is to minimize the number of errors we make. In business, that means developing the habit of examining problems from a multitude of perspectives before creating a solution.
The biggest mistake companies make in solving problems is that they create more problems than they solve. Here are some examples to illustrate this point.
Examples
In an attempt to keep costs down, procurement/purchasing personnel are incentivized to find the lowest acquisition cost rather than the lowest total cost. The result: Operations people are left dealing with:
- Parts that require rework or don’t work at all.
- Materials with shorter life spans that result in higher warranty costs.
- Loss of customers caused by inferior parts/materials used in the manufacturing process.
And these are just a few examples of additional costs incurred when purchasing is tasked with finding the lost acquisition cost.
************************
A CFO sees the average age of accounts receivable rising and puts pressure on the collection folks to bring that number down, yet fails to remind them that “we want to retain the customer.”
Additional pressure on customers to pay, without exploring the reason behind slow payment, can, and often does, result in the loss of good customers…without identifying or resolving the real issue.
************************
Developing lower-priced alternatives to increase your customer base often diminishes your brand image resulting in the loss of your most valuable customers. Image is one of the things that people spend considerable money on. Take that image away from them and they’ll look for an alternative to replace the image they feel they’ve lost. A Mercedes customer said that he almost left when Mercedes came out with its C class.
************************
Putting pressure on your suppliers to reduce their price so that you can remain “competitive” often results in one of two things. Either you get lower quality or you orders become a lower priority for your supplier.
************************
These are but a few examples of how failing to consider the impact your decisions have on customers…and what costs they may be creating for you.
Minimizing errors
The key to minimizing errors is to examine the solution you’ve crafted from a multitude of perspectives before implementing the solution.
Once you’ve identified the problem and crafted a solution ask yourself:
What impact will this have on my customers? Specifically, how does it impact the convenience they currently experience, the image they have of our brand, their view of us in terms of our ability to innovate? After all, time savings, image and innovation are the only things any of us buy.
What impact will this have on our employees’ ability to do their jobs as quickly and effectively as they currently do? Will this solution diminish their productivity, increase warranty issues, involve more rework, increase the volume of returns or cause our best employees to leave?
What impact will this have on our suppliers? If they can’t make a decent profit, will they be around to serve us? Will they reduce quality and, consequently, cause our customers to lose confidence in our brand? Will they delay deliveries in favor of customers who don’t put price pressure on them…again with the potential of costing us customers?
If you’re not questioning the impact your decisions are having on your customers, employees and vendors, you’re opening the door to significant, unpleasant, unintended consequences.
Takeaways
We can’t eliminate errors; we’re human, we make mistakes. We can, however, minimize errors by considering the impact that our proposed solution will have on our customers, employees and vendors before implementing the solution.
Often, you’ll find that a few simple tweaks to your proposed solution is all that it takes to avoid very serious problems that your initial solution would have created.
Your life becomes much easier, much more enjoyable and more profitable when you minimize errors.
If you’ve found this post helpful, please share it with your friends. It’s a great way to let them know how much you care.
If you’d like the leaders in your organization to learn how to use the numbers more effectively and dramatically improve the productivity of your workforce, contact me to learn more about these resources:
Resources
Making the EXCEPTIONAL Normal program helps you identify and nurture emerging leaders who elevate all around them to higher levels of performance and greater job enjoyment.
Financial Awareness & Strategy program where employees learn to identify opportunities to improve financial results and prioritize these opportunities on the basis of which produces the greatest impact with the least effort. Greater financial awareness = Better decisions.
Leave a Reply