Destroying Opportunity

Over many years, through the application of the very processes you used to squeeze more opportunity out of your business, you have inadvertently destroyed most of what remains. This opportunity lies hidden, suppressed, or unknown in your business.

 
 

The Three Ways Businesses Destroy Opportunity

Mis-Applying Budget & Performance Metrics

Leaders use common measurement & budgeting systems to sandbag and hide opportunity.

Declaring Problems “Impossible” 

Organizations usually fail to solve hard problems. They cope with this by making problems impossible, thus degrading problem solving ability

Suppressing the Abundant Thinkers

Leaders are locked in incentives that make them not want to find opportunity. They alienate the abundant thinkers that are great at finding it.

 

Mis-Applying Budget & Performance Metrics

Budgeting & Planning Processes

Facing constant performance pressure, businesses have looked for ways to improve their budgeting process. Rather than attempt to find budget opportunity through central planning, they delegated the task of finding this opportunity to their management teams. They created bonuses and incentives--if one reduces their budget by however-much percent, they would get a bonus that year.

The trick lies in setting the bonus targets. How much should a leader be expected to take out of their budget each year? Some areas already run a comparatively tight ship; others have more opportunity. One wouldn’t expect every leader to be able to extract the same amount of opportunity from their same budget.

This birthed budget negotiations. If a leader is concerned that their budget target is too aggressive, they might push back. And leaders know that next year’s bonus comes from meeting a target that will be derived in the same manner. An incentive arises to hold something back--that is, to sandbag. The leaders making the targets know this incentive exists, so they challenge their subordinate. In order to avoid having their budget reduction target grow, subordinates need to make a compelling case that opportunities don’t exist; to say, “here’s why I need this budget and can’t reduce it.” This process of negotiated sandbagging destroys opportunity in budgets.

OEE & Other Measurement Tools

Overall Equipment Effectiveness (OEE) was developed to measure asset performance against a perfect world, taking negotiations out of the picture. It didn’t happen. Instead, it fell into the same negotiation trap as budgeting, and the same incentives have destroyed opportunity. Why is this?

OEE alone may not capture the full complexity of a given asset’s situation. One plant may produce few products that have very long run-times, and thus have few changeovers. Another plant may produce many products with many changeovers. If both plants are managing their assets equally “well,” the plant with more changeovers would have a lower OEE. Alternatively, one plant’s assets may require a more thorough cleaning between runs, due to handling nuts or some other allergen. Such examples crack open the door to bringing negotiation--and thus sandbagging--back into the incentive process if OEE is being used as a performance standard for leaders. Such nuanced realities make it entirely reasonable for subordinates to argue that they should be held to different standards.

When they successfully argue for these standards to change, the OEE measurement becomes corrupted, and the opportunity is destroyed.

 

Declaring Problems “Impossible” 

The Impossible Problem

Failing to solve a hard problem is fairly common. In an ideal situation, a business could respond to failure by stepping back, learning, and investing more in its problem solving skills. However most businesses do not do this. Instead of taking stock of their problem solving approach, many businesses will respond to failure with defensive mechanisms that allow them to psychologically cope with the failure. One might think of a parent blaming a referee or coach when their child’s team loses a sports game.

When we fail, it can be difficult to first believe that the reason for the failure was that we simply need to improve our performance. Instead it is common for people to blame outside factors for the failure.

In order to protect egoes, an organization may subconsciously decide to believe that the problem is impossible, and can’t be solved to root cause. To deal with the “impossible” problem, the organization creates work-arounds for the problem, buys a new asset, or implements some form of bureaucratic management system to “control” it. The organization gives people lots of work to do, and they feel busy and valued.

But the opportunity is destroyed. When a problem is dubbed “impossible,” the opportunity it locks away is no longer believed to be realizable. The problem is no longer a “problem” as such; it is a fact of reality that cannot change.

Degrading Problem Solving Capability

It is in fact worse for organizations that are persistent about solving hard problems but lack the skills to do so, as they more quickly move problems into the realm of “impossible.”

When this behavior becomes a habit, it degrades organizational problem solving capability by creating a negative cycle. As problems are declared impossible, people’s belief in what is possible narrows, and their expectations decline. When failure is a norm, leaders ask, “why can’t this be done,” which makes it politically and psychologically acceptable to continue to fail. With lower expectations about what’s possible, organizations choose not to invest in the problem solving skills that are required to break through hard problems and realize their most valuable opportunities.

Organizations then fall back on simpler techniques such as benchmarking and simple problem solving methodologies such as 5-Whys, Ishikawa/Fishbone diagrams, etc. They commit their organization to working hard to solve many small, simple problems in the hopes that they can eek out more performance or get lucky and solve something big. Time and resources are increasingly wasted on gathering crumbs rather than solving the big problems. The hardest and most valuable problems continue to enter the realm of “impossible,” and opportunity is continuously destroyed.

 

Suppressing the Abundant Thinkers

What Are Abundant Thinkers?

There are people who believe there is far more possible than others have accepted. They have a knack for seeing conquerable constraints where others see iron-clad restrictions--and they have the tenacity to break through them. We call these special individuals abundant thinkers.

To overcome some of the incentives to hide and sandbag opportunity, an organization needs champions who are capable of identifying, highlighting, and defending opportunities. These champions have a rare mix of technical capability and catalytic leadership skill that allows them to technically identify the opportunity in the first place, and make the case that it is realizable and should be prioritized. They provide the facts and the activation energy needed to rally the resources needed to go solve the problem and realize the opportunity. They can bring opportunity back to life.

Chasing Out Talent

The organizational need for stability and unity can create a culture in which abundant thinkers are suppressed. When abundant thinkers are at their best, they are highly disruptive: they challenge what the organization believes is true. They root around looking for opportunities to improve that can pose a danger to the plans of leaders. The organization resists this disruption.

When abundant thinkers expose new opportunity, they and the opportunity can come under attack from this organizational culture. The abundant thinkers therefore often face constant resistance from the organization. In order to succeed, they need to be nurtured, rewarded for their success, and politically protected from organizational pressure and sabotage. The organization cannot whole-cloth abandon having a culture of planning and stability, but it does need to create a space in which the right disruption--led by great talent--can occur. This form of disruption can re-energize areas of the business that have been long-calcified.

Most organizations fail to do this. They typically fail to identify abundant thinkers in their organization in the first place, much less protect them. When they are not supported, the political interests of the organization will overwhelm them. As their ideas are silenced by authority, they will grow frustrated, cynical, and bored. They will learn to keep their heads down and eventually leave, or they will be politically shot and driven out. Ultimately, they will end up in a highly innovative and entrepreneurial environment, such as a startup, that celebrates and rewards abundant thinking. Talented problem solvers want to solve challenging problems, and they will eventually find environments that support them, or burn out.

 

How Can Destroyed Opportunity be Brought Back to Life?

Bringing the opportunity back into the light--moving your organization from destroying opportunity to unleashing potential--is not an easy fix. It will require time and powerful leadership. There will be real resistance. But the first step on the road of recovery is recognizing that the opportunity has been destroyed and understanding what you’re doing to destroy it. 

After that, you need to commit the resources to re-igniting the belief that opportunity is real, and that you can solve the hard problems which lock it away.