THE UNNATURAL “NATURE OF THE INDUSTRY”, PART 6
In our last post we reviewed Intervention Point 4 of the 12 Intervention Points in a System. By addressing Intervention Point 4: The power to add, change, evolve, or self-organize system structure we were able to create a learning system that optimizes the flattening of the peaks and valleys.
In this post, we will examine how the interventions we have implemented thus far are guided by Intervention Point 3: The Goals of the System, and what we can do to further optimize as we go deeper.
To this point we have been building an approach and optimizing it; but now we need to aim this approach so that we hit the correct target — hitting the wrong target has the potential to put a limit on the impact of the approach or, worse yet, cause it to backfire. So how do we manage to hit the right target?
3. The Goals of the System
Quick, I need you to reduce the cost of our staffing. What do you do?
Lay-offs, right? After all, we just went through 8 interventions to make our team more efficient. We have redundancies. We can save a bundle by getting rid of half the team. This achieves our goal of reducing the cost of staffing… or does it?
Not necessarily. Reducing the cost of staffing may be a great way to drive profit margin in the short term, but there are unintended consequences that come along for the ride. For example, a reduced staff count may offer a streamlined and cost-efficient model in the present, but what about looking ahead?
If the team is tuned entirely for client work, that means they don’t have any time for anything else. There’s no bandwidth to explore more efficient paths through daily operations. There’s no room for optimization, because they’re head down day in and day out to meet the needs of their existing clients. And what about when the opportunity to bring a new client onboard arises? A team already stretched to the limit will not have the capacity to take on any new clients, so new hires will be required in order to grow the business… which in turn increases the cost of staffing.
Now, imagine that instead of me asking you to reduce the cost of staffing, the goal becomes “reduce the peaks and valleys in the staff’s workload”.
With reducing the peaks and valleys as our goal rather than reducing staffing costs, we may have staff with increased idle time. But that staff now has the opportunity to create efficiencies — that idle time doesn’t have to be wasted. Throughout this process, we’ve been developing a learning system with the A/B testing capabilities. Let’s set them to work on running those tests. They can drop that at any time to do client work, so they are still keeping those peaks and valleys down.
Furthermore, the team already has capacity to take on new clients, so without delay they can onboard additional business. This may reduce their A/B testing capabilities, but they can choose to hire to maintain that level of A/B testing which will in turn increase their capacity for more clients as well. Thus, maintaining the staff size becomes a critical component of managing peaks and valleys.
So where does all of this leave us?
Both of the above established goals rely on the efficiencies we have been building throughout this series, but they each have very different outcomes. Reducing the cost of staffing will increase profit margin immediately, while reducing the peaks and valleys will not. However, looking longer term we can see that reducing the cost of staffing via lay-offs will debilitate the operation from growing and adding new clients/revenue; while reducing the peaks and valleys will empower growth while simultaneously reducing the cost of staffing via proven efficiencies.
We can build an approach and optimize our performance, but where we are aiming our efforts makes a huge difference. Two organizations that are working on the same problem and coming up with similar (or even the same!) solutions can end up in completely different places based solely on their underlying goals. These goals aren’t always acknowledged or are sometimes in direct contradiction with the stated ones, so it’s important to keep a close eye on them and to question the stated goal to ensure it is the right target for ongoing success.
Next post, we will take a look at Intervention 2: The mindset or paradigm out of which the system arises, and see how that informs our goal making process and sets up the interventions for success.
