One of the key aspects in having an efficient business structure and resource allocation is, no doubt, to stop doing. But two questions immediately arise –what must we stop doing? And how can we set our priorities more effectively in order to achieve the desired results?

Nature abhors a vacuum. A gas released in a container will expand until it fills the available space. And it seems organizations act following the same logic –faced with an empty space, work will expand like a gas, adopting the form and volume of the organizational container it belongs to. If there is free installed capacity, enough work will be generated so as to use all the available capacity.

We abhor an organizational vacuum, and that is why there are never truly ‘available resources’, but only resources that ‘can be made available’ in the case of a change of priorities. Then, if the resources are not actually available but can become available, does the company have the correct size?

How to know if our company size is correct

When we are dealing with an organizational redesign, whether our company has an excess installed capacity or it is under- resourced could only be determined in extreme situations, and sometimes when it is already too late.

On the one hand, an excess installed capacity, camouflaged with non relevant task assignments, unnecessary projects and tasks that add no value will be very difficult to detect.

In general, an excess of resources can be detected indirectly by recognizing these symptoms: a decrease in profit margins compared to the industry’s average, lack of agility due to excessive bureaucratic processes and participants, loss of talent and a lack of motivation caused by a failure to perceive a real added value to the business.

On the other hand, in undersized structures profitability can reach a peak on the short term, but this will not sustain over time. Some indicators that are observed in this case are: delays in critical tasks, the need to resort to outsourced services more than would be advisable, salaries below the market average usually associated with under-qualified personnel, high rotation rates and a harsh, highly-demanding and stressful working environment.

Beyond some critical cases where these symptoms become apparent, this situation usually passes undetected unless it is measured effectively and on a constant basis. A good way of doing it is precisely by monitoring the indicators showing the extreme signs, such as agility or response time, outsourced services ratio, profitability variations and the working environment.

What to do when we detect some of these symptoms

Processes to increase capacity tend to flow naturally. The complexity of the investment will be determined by our ability to accurately detect which capacities need to be secured, as well as by the speed with which the adequate human resources are incorporated. If the process runs efficiently, this organizational change should not be very challenging.

On the other hand, with oversized structures the situation poses a more serious challenge. Especially since, as happens with gases, the resources have already been allocated. Everyone will be performing tasks that they consider important and that have been traditionally valued by the company as well. If we want to break out of that inertia we have to stop doing something. The focus here will not be placed on ‘what to do’, but more precisely on determining what we should ‘stop doing’ from now on.

Then, what should we stop doing?

Countless times executives have attempted to focus on what is important and stop doing what is not. At this point it even sounds repetitive and a routine exercise. However, cases where this attempt to abandon low added value tasks actually achieves its goal are very infrequent.

Developing a business strategy and an organizational design that fulfill this purpose, basically means to ask what we will stop doing or what we are giving up to, in order to focus on what will maximize our value. Everything is important, but only by focusing on what has the greatest importance can we make sure our resources are adding the most value to the business.

A method frequently used is to measure the Return on Investment (ROI) of any given task. In some cases, tasks directly linked to strategic priorities or to revenue streams will be easily associated to a specific result. For example, resources related to product innovation, to the development of a specific channel, or even to a production line, will be easily connected to the results coming from that product lines. However, the ROI associated to roles that service multiple revenue streams should be absorbed by the result lines and will be calculated indirectly. In these cases, the measurement will be weak and decisions made based on it will not be strong enough so as to establish if those roles are no longer necessary.

The common mistake when asking what to stop doing is to think in terms of ‘tasks’ or ‘actions’. Quite the contrary, if we intend to be effective and truly stop doing something, we must cease to pursue business goals.

There are three different types of things that need to be abandoned in order to focus on resources:

Abandoning certain business results . Removing a goal from the business entails making difficult decisions. All goals are desirable, but some will have to be prioritized over the others. The question is which one should be pursued first. This depuration process will necessarily imply abandoning elusive goals, but it will result in placing the focus on those goals that will have a real impact.

Abandoning organizational initiatives to build on those capacities. To complete this exercise, those projects and investments destined to building organizational capacities to achieve those goals will also have to be abandoned. Those are capacities that are inherited, and although they may have played a key role in the past, are probably no longer critical in achieving the desired results.

Abandoning routine and time-consuming tasks. Our management routines and personal agendas will have to be synchronized in order to comply with this new prioritization approach. How much importance we attach to prioritizing the activities in our agenda? How many times do we attend low priority meetings? Time is our most scarce resource. However, we find ourselves attending events that are not part of our priorities.

As happens with resources, we fill our agenda as much as possible and sometimes the main criterion for setting the priorities seems to be ‘first come, first served’.

Which meetings we stop attending, which ones we cancel so to give room for most critical ones, or which meetings should come first, all must be decided based on clear prioritization criteria.

As a conclusion, steps taken towards improving the management agenda or prioritizing projects will have to be accompanied by clearly stating which results and goals are not a priority at this particular time. This is what making strategic decisions is about.

Gastón Francese
Partner at Tandem.
gf@tandemsd.com