Efficiency is something we all aim for but taking too narrow a view can lead to unintended consequences. Improving things for one team or area of the business can cause problems for another. Luckily, there are ways of avoiding unexpected problems.
We’ve all been there. Management has found a problem that needs dealing with. A solution is announced, people are trained and the new system or process goes live. And things go wrong. Sometimes, it’s because there wasn’t enough training or the actual problem had been misunderstood. But no single team or area of the business is an island, as they (almost) say, and so changes in one area can affect other areas.
An example from my own experience might help make the point. At one publisher I worked for, the senior management found that we were spending too much on warehousing. Too much money was tied up in stock and too little was available to create new books. Everyone was told to that we were now only allowed to hold enough stock for 9 months of sales. Stock holdings fell, and the business saved money on its warehousing.
A win, yes? Except for those pesky unintended consequences. Because printing costs don’t scale linearly – if you halve the number of copies you print, the price per copy rises. Many parts of the business were fine with this; their print runs were high enough for the effect to be minor.
But, for others (including the one I was in), the extra cost was a big problem because we had a different product type and lower basic print runs. Worse than that, we had to reduce the specifications of some books (artworks, colours, paper quality) to try and restore our margins because we still had to hit the same numbers as before. But a book with a lower specification but the same price is less competitive in the market, so we had fewer sales than projected.
So a well-intended and sensible choice (reducing stock holdings across the board) had the effect of reducing profit, even though it actually delivered its planned result.
When things go wrong, there’s a technique called ‘The Five Whys’ that’s used to try and work out the root cause of the problem. The idea is to keep asking ‘Why?’ until you get an answer that can lead to real remedial action. So, for example:
The idea is that, rather than settling for a shallow answer (“There were late changes”), you discover something you can change to prevent it happening again (creating a system to warn people when critical files are changed).
I believe that a similar set of questions can help to prevent the unintended consequences of business change. I call it ‘The Five Whos’. Whenever you are planning a change to the business, ask who will be affected by it. And then ask who is affected by the first group, and then who is affected by the second group, and so on. You are only allowed to stop when you reach the customer, or after five rounds.
So, let’s take the stock example from earlier and running back ‘up’ the chain of work.
The art here (as with the Five Whys) is to find answers that are both honest and useful. Thinking of the different possible outcomes at each step (and not just the ones you want) is crucial. But by using techniques like this, it becomes easier to anticipate – and this avoid – potential unwanted results.
That’s not to say that you shouldn’t make the original change – it may still be the right choice – but that you should think through the consequences and make plans. For example, you might give different limits to or change the profitability targets of different parts of the business. But the crucial point is to anticipate and plan.