Manage, not administer the project!

To continue from our previous posts on 13 Rules to succeed in cost reductions, once you got clear view what is the content that you want to cover, stop. You should design the cost reduction program in a way that allows people to come up with all sorts of ideas which lead to cost reduction or increase of EBITDA. As we said in our website (www.avanton.si), the revenues are the blood of the system, not costs. Therefore, we should allow people to come up with ideas that increase our EBITDA. Do not throw them away. But be careful in accepting these ideas into the program. They have to be executable and revenues that should help to achieve your EBITDA goal realistic.  The same goes for "pure" cost reduction ideas also. Do not allow measures at any cost into the program. The program will fail. It should be designed to implement only those ideas that have value for you in the long run. So, planning is essential.
 
How we nailed it with SCORE?

 

 

 

 

 

 

 

 

 

 

 

 

Plan carefully and continuously.

• Board must give clear guidelines. And you have to set clear measurable goals! They are not “just something” to be occupied with. They have to be followed.
• Cost reduction goals have to be anchored to the company strategy as the ultimate authority and provide a lighthouse of where we should be after app. three years journey over rough sea of costs. The ultimate result of your goals is an "ultimate number" which you can easily measure to see whether you are on track.
• Cost-benefit analysis should be performed before the measures are taken into the overall program. You have to plan what you want to achieve and be able to measure the progress and set the milestones you have to check to see whether you are on track. And to do this througout the program.
• Therefore, decompose comprehensive cost reduction approach into inherently integrated manageable smaller steps.
• Declare SCORE program as priority No. 1. This makes good foundation for executive officers to unambiguously plan the resources to execute the designed cost reduction initiatives.

 

 

Set up adequate infrastructure to do planning and monitoring wisely.

These questions should be of help in getting it right.

• What is the right organization of the program – internal or external involvement? How many consultants per 500 employees? For how long? How big the internal team should be? With what competence profile? The organization necessarily should reflect top down involvement. All the hierarchical levels should be represented in the organization.
• What is perfectly managed time schedule of comprehensive all-business-area cost reduction process as regards preparation, identification and elaboration of measures, start of implementation until critical point of relative comfort is reached? We found a three year program a great approach. First year to develop the measures and get them running. The second year to carefully monitor the execution and manage deviations and risks and the third year to slowly incorporate cost management into everyday life at work.
• How to set up immediate planning and reporting system? Joure fix? Time fix? Use easy tools. Develop your own or ask your consultant to provide you with KISS (Keep It Smart and Simple) planning and reporting system that will need no time to learn how to use it, little time to provide data for it and offer enough data to assess whether we are on track and where to push harder.

Lead, not administer.

• Limit the bureaucracy and set up “Undercover” administration of SCORE program:
• Limit yourself to one page approach in planning! 
• Reporting should consist only of 3 numbers per 14 days (if everything on track). 
• Set up TOP Central Think Tank support as a nerve center for entire cost reduction mission. This is the way to include knowledge management across the companies in one group and allow personal contact to replace long reports. It will work better! It did for us.

  

We intentionally have not used a word project anywhere above. But actually all we were talking about was applying the right set of project management techniques to ease the job. You can read tons of materials on project management, which say how you should plan, monitor, manage time, work and risks. But at the end it comes to the person who is in charge, how and where he or she will use them and the competnecies that she/he has.

More about that from a  bit different perspective in our next blog.