Tips to Starting a Cost Reduction Plan

Putting a cost reduction strategy is always beneficial but many times difficult to start. I have listed a few steps below just to get the juices flowing and an entry into cost reduction. Put them to use and brainstorm a few more. But the most important tip I can leave behind is one the you have heard many times before by Rudyard Kipling: "I keep six honest men. They taught me all I knew. Their names are What and Why and When and How and Where and Who." I urge you to use these six men.

Most effective way to reduce cost is STOP DOING IT!: Really, just stop doing it! It is simply amazing how many things you may not need to do. If you think the process is unnecessary, skip it for 1 minute, 1 hour, 1 day, 1 week, 1 month and finally 1 year. You may find out parts of it can combine into other parts of the process but trying to only do part of something is very difficult. Try it on something simple and see what happens. If you do not think you can, how do you react to a person absence, a machine's failure or missing paperwork? Try it! I am reminded of an observation by Peter Drucker in 1963: "There is surely nothing quite so useless as doing with great efficiency what should not be done at all."

Do cost reduction in an area where you have a competitive advantage. This will enable you to have the greatest impact and the most "bang" for your buck. If you make great strides in this area, it will in fact strengthen your advantage and may protect or even strengthen your long-term market share. Long-term market share is in fact the true measure of a company's growth.

Spend an hour per day/week on each "impact area" of your business, and you will be astonished at how much you can accomplish. You must schedule time to be effective. Even with yourself. An old line that I have heard many times is "It is not a Matter of time but a matter of priorities." If you cannot schedule time than cost, reduction is not a priority.

Use matrixes with low, high impact, low, high cost return, easy, hard to do to help decide what to do first. I typically use a 4-box matrix but on items that are more complicated a 6-box matrix should be used. Prioritizing this way can help you visualize the process so much better. It also can be used in defining the difficult/easy areas by department. Sometimes it is readily seen why it is easy for operations but difficult for finance or sales. The clearer the picture is for all, the easier it is to accomplish.

Most savings/expense is created in the design of the product/process. How many times have you told an engineer we are not designing a space shuttle? How many times do you come under budget? Anyone can do anything if he has all the money in the world. Do you wonder why our government is in the position it is? Cost effective and simple are not dirty words. They should be the words we reward.

Cost Half: The Method for Radical Cost Reduction by Toshio Suzue is a book that I offer on my website for cost reduction. However, I do not recommend for a Turnaround or a company in trouble. I do like it for the approach he takes for cost cutting activities. Base your goal for cost cutting on something big, 50%. People will not start with small incremental changes but approach it with a much broader perspective. Be radical; accomplish something if you are going to do it.

Look at what is important, not to you, but to your customer. Lean is a great process for this. It is process that I highly recommend everyone receive training in, especially the design team. Proven Methods in process Improvement is beyond the scope of this writing but Lean, Six Sigma and Lean Six Sigma have made great strides in manufacturing, administration, sales and other areas. The principles are sound and with minimal creativity can readily apply to just about any field. The value of these processes, I believe require a long-term commitment. You can spend a great deal of money and make little progress. Ease into it gently but with full commitment, the pot of gold is certainly at the end of the rainbow but it is a steep climb.

Be Objective, no Sacred Cows! People have a tendency to take ownership of "their ideas" and justify them. I have seen jobs created and continued for years in positions that did not do anything that added value to the company. I once removed a position and took the "book" away that the person was responsible for neither was missed. Objectivity can be tough though. We all love our own ideas and struggle to see the other side. We must be careful and especially the leaders of the project. Remember to lose a few battles; we are trying to win the war.

Typically, it is not the lack of available savings, but the lack of a process to find them or to improve them. Processes are important. You have a culture within in a company that you have created and most cost reduction actions will have a tendency to go against that culture. It may rub a few people the wrong way. That is typically when you know you are getting somewhere. You need to develop a process or borrow one from someone. I happen to supply a Cost Reduction Process kit on Amazon. Back to the reasoning though. A process kit should allow you to be objective, determine relative value to the different departments and customers have built in matrixes and used where you have a competitive advantage. Like most processes and plans, it must be a living document. One meant to be massaged and changed as you develop as an organization. It is why processes like Lean, Six Sigma, Theory of Constraints, and TQM became popular but why did most fizzle out or just become another FAD. They really did not fade away they evolved many time into something else and we were better for it. Take Lean Six Sigma for example. People will argue with me but most of them have sound principles that can be used today. What is important is that you take ownership of a process and use it day in and day out. Develop it and leave it become rooted in the culture of your company. Cost reduction should not be a once and a while fix that we pull out and use. It should be an ongoing part of our everyday lives. Remember Great Companies have Great Systems.

Below is a very simple methodology that you can start using today without any training, just a little common sense.

Seven Step method for solving a cost reduction problem:
1. Define your problem
2. Define your ideal solution(Stop doing it!)
3. Gather the facts
4. Try various combinations, look outside the box, but be careful when you…
5. Break the pattern – not everything happens outside the box. It is interesting how many things are solved within the box. Do not forget the simple solution. Complexity is seldom a solution; it is usually part of the problem.
6. SCAMPER it
a. What can you Substitute?
b. What can you Combine?
c. What can you Adapt?
d. What can you Modify or Magnify?
e. Can you Put to other uses?
f. What can you Eliminate or reduce?
g. What can you Reverse/Rearrange?
7. Leave it sit for a day, but set a deadline. Sleeping on it has value!

Good night.

Do You Market Within Your Organization?

Do you use your marketing to sell inside your organization? Few projects are on time and under budget? These failures can be devastating to the individual, costly for companies and damaging to morale. Why do so many projects fall short of their initial expectations? There is a huge difference between who has a plan and hits the ground running, but as important is making an impact or creating a burning desire to get it done . Who is best at creating a burning desire than your marketing department?
Do you include them in your internal communications and projects? Are you ever forced to sell an internal project? Would it help if your marketing department was part of it? On the next important initiative work with marketing to sell the project within the organization! Marketing needs to play as important role in your internal communication as they do in your external communication.
Internal Marketing Suggestions:
1. Give it a name? So many times the sales & marketing will call it by a company name and operations will use it by the work order number. We cause a division between before it ever starts. It is also a lot easy to get behind a "Name" than Job #1405098-78965.
2. Next, work with marketing on the key milestones and the critical points of the project. Create an event on that day or reward. Plan celebrations based on the importance of the event. More importantly, leave everyone know the importance of the date beforehand.
3. A good project has completion criteria and save the biggest celebration for that. Have marketing recognize key contributors during the project and people that go above and beyond their normal duties to get something done.
4. The customer, did we forget him? Include them in your communication. Maybe even ask him to participate in certain celebrations or be seen during the process. Personalizing a project will always add more strength to a project.

The Value of One Page

Name the most famous documents! Most of U.S. origins will name the Declaration of Independence or the Gettysburg Address. Most Englishman would name the Magna Carter. Imagine, with one piece of paper people have changed the world! Business today competes on clarity and there is not anything that drives execution more than clarity. And without clarity, there is procrastination, mistakes and ineffectiveness.
Winston Churchill was asked how long he would need to prepare a speech. Churchill asked how long he had to speak. He was told 2 hours. "I can do that immediately." When asked about a 10-minute speech, he replied, "In that case, I should need a fortnight to prepare." Business people must filter out the unnecessary and trim their documents into brief but concise statements. Here are a couple of steps to help:
1. Prioritize information
2. Target your audience.
3. Focus attention on supplying key information
4. Use active positive wording.
5. Compress date without losing important content.
6. Never begin with a blank piece of paper.
Never begin with a blank piece of paper? You will be more concise, creative and effective if you use a template. Most feel that they lose creativity in using a template but this is not so, creativity is typically increased when you follow a pattern. Look at Mindmaps for example. Jotting down ideas in a random order and than linking them together, is there really randomness to the pattern. Not really, it is method in itself. In the book, “Made to Stick” by Chip and Dan Heath, they make an excellent case for using a template to promote creativity, not hinder it. Worth the read, just for that thought.
You are more effective if you commit to something in writing. Writing is the key to clear thought. And if you can get it all on ONE PAGE, you will stand a greater opportunity getting your message across. Jefferson did!

Simple Marketing Ideas Utilizing Performance Marketing Solutions

Some of the best selling books on Amazon at the present time are The Secret, Results Rule, Instant Income, Marketing for " " and the list goes on. What that list indicates is that most people are looking for immediate marketing results. However, the magic answer --- there is no quick fix. It takes effort and commitment on your part to succeed.
I have always professed that most business results are decided by this formula: Results = Time + Money + Skill
Willing to spend more money? It may take less time and less skill. If you need a high degree of skill, you may hire a marketing firm for example and by doing it may take less time. But don't just attempt to throw money and resources at your marketing to get a faster result. Businesses would benefit from using a methodology that consists of basically three elements:
1. Market Definition
2. Market Calendar
3. Linkage of Resources
As a result of this program my new Success901 formula: Results = (Time + Money + Skill) x Methodology
Quick Tutor on the Methodology:
Market Definition is the single most important element of the plan. A simple statement of What you are marketing and Who you are marketing to will drive all other activities of the plan. This definition will result in a 100 targeted prospect list that will be used to sample your marketing message and base future marketing efforts. It will also reduce your marketing dollars as that definition increases.
Marketing Calendar is used as a primary marketing planning tool. The idea is to keep doing something related to marketing, according to plan, day in and month out. When you plan your marketing activities using a calendar, your focus tends to be on the immediate goal leaving the long term goals become part of the process. Tracking and accountability is built into the calendar so that you can see the progress or where you may become off-track.
Linkage of resources takes your objectives, the strategies that you develop to achieve them and the resources and actions needed to carry them out into one well defined plan using the One Page Planning and Performance System. You will develop a One Page Marketing Plan and if you choose marketing and sales plans for each individual in this area. Clarity of objectives and Simplicity of action equals Execution of mission.

Training is Dead, Culture is In!

Training is dead! That caught my attention. It's what I am doing. I offer training packages and services, well not quite, what I do is offer planning methodologies. Not exactly training, but the heading did get me to think. Training is dead!
How many times do you go to a seminar or a conference and take any of advice to heart let alone implement them! And after a month 99% of us have completed less than 1% of anything! What does that figure out to? In my math, it is “0”. Than what’s the sense of it all and what should we do! The process that works in today’s world is interactive study. If you are not doing the process while you are building it what is the point.
Can you build a business plan and not live it! Look at it sitting there eon the shelf! Put a cost to building it and than knock the dust off it. Are you using it? What about your marketing plan? Does your salesperson follow it? What about the marketing guy that wrote it? Someone walks in the door with a new crazy idea! WOW! Let’s do it! Planning for companies and individuals are either too specific that they change as you are before the ink dried or to vague to provide any guidance at all. What is the point in planning? Planning should give you a living document. One that you use and adjust from the bottom up! Huh!
Using the One Page Business Plan as an example, you start from the top with Vision, Mission, Objectives, Strategies and Actions. But as we live our lives, we our concerned about the actions which develop through the strategies in place. Oh yeah, the strategies developed to meet the objectives and the objectives developed to meet the vision. But back to the bottom. We create our actions in the short term by following the outlined strategies. The work that takes place is always on the bottom of the document. If something goes awry than you will need to change a strategy, and the action for that strategy will follow. Objectives are constant unless the business climate changes.
What does this got to do about training and Dead Training at that! Well, I put on a seminar and teach business planning. I even spend 4 hours to 8 hours with many and develop a One-Page Plan. But what happens? Is the One page plan still being use after a week, a month, a quarter, I doubt it! Was my training bad? I don’t think! I think there are 2 basic reasons. One, we have become conditioned about receiving training and putting budgets and plans together that after doing we go back to everyday life. It is like it never happened! Typically, not everyone received the same training and not everyone is on the same page.
But more than that, the biggest reason is that we never get to develop the skill. Unless you master a skill set it never becomes a part of daily life. Look at Diets? Exercise programs…How about that body? Well it is the same with planning! Seldom will it ever become a reality without a coach! You need to accountability and you need someone else to provide it! Your wife or husband does on certain things right? We hope, you provide that to your children. Is that not what school or athletics do for them? Let’s face it how many of us be Tiger? Can we be that self-motivated? Aristotle said it best: “We are what we repeatedly do. Excellence, then, is not an act but a habit.”
Planning is tough! For it to work you must develop excellence and if we follow Aristotle advice it must become a habit! Successful programs become a habit. How do you accomplish this? The best habit-forming ritual is to: 1) Start slowly on things that are doable, 2) Create some early wins, 3) Have a friend or a coach there to provide motivation and accountability and 4) Write it down. Goal setting and accomplishments are beyond the scope of this article but these four items go a long way in creating habits.
What about training? We call it training or learning but what we need to teach is culture. One of the great culture changers of all time is Jack Welch. He changed the culture of GE several times. He started with himself and championed these changes and accomplished them. If he can do it with GE, we should be able to do it our companies. But why does it not work? We have to be committed to the plan. Can you commit to a diet or an exercise program? Seldom does that work but many times lifestyles change will occur after a heart attack. Why? We have raised the stakes high enough!
Our the stakes high enough for you yet? That culture thing takes a lot of commitment and will not work unless a leader is willing to lead.

The One Page Business Plan®, Fact or Fiction

In the legal profession it is a joke that if you can get a file to be over one inch thick that it will start contradicting itself. Is that they way your most important document in your organization should be constructed? People may look at The One Page Business plan as a gadget type planning instrument or a simplified version of a real business plan. Oh contrary, what it actually does is forces you to write using simple but powerful language. No vague statements here, it wastes too much space.
The One Page Business Plan is not meant to be a full blown instrument that a bank will accept for funding or is it? If used, they will certainly ask for more, but it will be the document that determines if you will get the funding. This is the page that sells them! The basic premise of the plan: Vision, Mission, Objectives, Strategies and actions is pretty rudiment to any plan. It has the great ability to link objectives to strategies to actions and to your vision and mission, yes, all on One Page. But don’t all plans do that, more completely and in much greater detail? They try, but does anyone use them or even read them after completing them. The basic difference is the importance of putting your thoughts into concise language and of course getting it all on one page does exactly that.
I use the One Page Business Plan over and over again as a recurring planning instrument for proposals, marketing, performance and project planning. However, I believe the strength of the plan is in the constant use of it. Once people get accustomed to a certain planning process it can be used over and over again creating a large amount of clarity through an organization. And in today’s world, there is not anything that we compete on more than clarity.