You’ve cut your staff and your budgets and it’s still not enough. You’re buying the cheapest supplies and materials you see and the costs are still too high. But you’re missing something.
The employees who actually spend your budgeted dollars don’t have the time, tools, guidance and knowledge to make the best financial decision for you. They’re working hard just to get by. And at 3:39 PM the last thing on the mind of even your most skilled employees is how to increase your profits.
Cost reduction efforts typically:
On the other hand, world-class methods engage all of your people in a positive way to create a better place to work with higher profits. Unless you have a Profit Improvement Process or the equivalent you are missing out on world-class profit methods that overcome the problems with Cost Reduction.
Typical cost reduction efforts focus on cutting expenses (headcount, materials, supplies, and other purchased items). They may have a narrow focus (Level 1 in the following table) or they may encompass the entire organization (Level 2). In some cases they are expected to continue year after year (Level 3).
By their very nature, all Level 1 and 2 cost reduction efforts will eventually end. And Level 3 cost reduction approaches will eventually reach finite limits where there is little left to cut without breaking bones.
While pure cost reduction has its place, no company has ever cut its way to long-term success. Sooner or later revenue must become part of the equation. The long-term question is whether or not profitable revenue growth and cost-effective thinking will be built into corporate practices and culture. When this is accomplished, the entire company can work in concert to achieve profit goals.
World-class companies use the world-class methods of the Level 4, Profit Improvement Process (PIP).
Level | Approach | Characterisitcs | Advantages |
1 |
Targeted One-time Cost Reduction Project |
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2 | Corporate wide One-time Cost Reduction Project |
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3 | Continuous Cost Reduction Process (CRP) |
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4 | Profit Improvement Process (PIP) |
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The following four key elements provide a framework that gets the process up and running and producing results year after year.
World-class systems include all of these four key elements for success. Anything less will not achieve your full potential.
Achieving Level 4 World-Class Profit Improvement requires a commitment. The primary key to success is management commitment. Management and leadership must be willing to invest time, money and resources toward getting it started and keeping it supported. Once that commitment is made, the process will take on a life of its own and will pay for itself.
We start the process with an initial assessment of the following:
This assessment is accomplished through management and staff interviews and through an initial Power Idea Session. Give us 16 hours over two days with a group of up to 24 of your key people and we will not only complete the assessment, we will:
It is at this point, with this powerful information in hand, that we will meet with management and make the decision on how to proceed. Options are to move ahead with a limited trial or to move toward a full PIP installation. Our Business Solutions consultants will fully support your PIP installation, teach you how to be self sufficient, and provide ongoing support if needed.
At the very least, as a result of the Initial Power Idea Session, you probably will have identified profit improvement projects that can substantially or completely pay for the PIP consulting and training work.
Power Idea Sessions and the Profit Improvement Process tap the intellectual capital of your people to help you help them achieve increased profitability and better corporate health. These methods are described in our books.
Contact Steven C. Martin
What’s the Difference Between the Profit Improvement Process and a Power Idea Session?
Element |
Power Idea Session |
Profit Improvement Process |
Overview | A Power Idea Session is a facilitated meeting with a relatively small number of people (typically 7 – 24) that will achieve specific results. |
The Profit Improvement Process is a large-scale change process that is focused on achieving real profit growth for the organization. |
Timing |
A power idea session is a discrete episodic event that lasts from 8 to 16 hours. | PIP lasts for years and produces ongoing results |
Scope | Is focused on select objectives and scope and includes limited training. Conducted with a small group of people. This is a piece of the PIP process. | As defined by the objectives and typically encompasses the entire organization. |
Elements |
This is run in a training and/or working session format. They:
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Includes all of the elements necessary for a change process to function such as:
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Methods |
Uses specific creativity and innovation tools in small working groups led by skilled facilitators. |
Relies on the above elements to organize the use of any and all appropriate business and technical tools and methods that enable people to achieve PIP goals. PI sessions are one of those tools. |
Results |
Finite actionable decisions and product for results within the limited scope and objectives of the session. Hundreds of thousands to millions of dollars bottom line benefit from each session. |
Overall corporate profit improvement through the engaging of the intellectual capital of the entire organization. |
Impact | Support for profit growth and corporate improvement | Maximum profit growth and corporate improvement |
Power Idea Sessions and the Profit Improvement Process tap the intellectual capital of your people to help you help them achieve increased profitability and better corporate health. These methods are described in our books.
Contact Steven C. Martin