Stop Doing: Managing Resources for Greater Efficiency
Efficient business structure and resource allocation require one crucial element: knowing what to stop doing. However, two immediate questions arise: What activities should we cease? And how can we effectively prioritize to achieve desired outcomes?
Nature abhors a vacuum, just as a released gas expands to fill available space in a container. Similarly, organizations tend to expand work to match the available capacity within their organizational structure. Free installed capacity leads to the generation of additional work to utilize all available resources effectively.
Within an organizational context, there are no truly “available resources,” only resources that can be made available through a change in priorities. This raises the question: Does the company have the correct size if resources are not readily available but can be made so?
Determining the correct company size
When undergoing organizational redesign, it’s challenging to ascertain whether a company has excessive installed capacity or is under-resourced, especially when extreme situations arise or when it’s already too late.
On one hand, detecting excessive installed capacity can be difficult, as it often hides behind irrelevant task assignments, unnecessary projects, and valueless tasks.
Common symptoms of excess resources include decreased profit margins compared to the industry average, lack of agility due to excessive bureaucracy, talent loss, and demotivation caused by a failure to perceive added value to the business.
On the other hand, undersized structures may experience short-term profitability but are unsustainable in the long run. Indicators of an undersized structure include delays in critical tasks, excessive reliance on outsourced services, below-market average salaries indicating under-qualified personnel, high turnover rates, and a demanding and stressful work environment.
In most cases, these situations go undetected unless they are consistently and effectively measured. Monitoring indicators such as agility, response time, ratio of outsourced services, profitability variations, and the working environment can provide insight into these extreme signs.
Processes to increase capacity tend to flow naturally. The complexity of investment lies in accurately identifying which capacities require reinforcement and swiftly incorporating the necessary human resources. With efficient execution, this organizational change should not pose significant challenges.
In the case of oversized structures, however, the situation becomes more demanding. Resources have already been allocated, and individuals are performing tasks they consider important and that have traditionally been valued by the company. To break free from this inertia, it’s necessary to stop doing certain things. The focus shifts from “what to do” to determining precisely “what should be abandoned” from now on.
So, what should be stopped?
Many executives have attempted to focus on what truly matters and abandon low-value tasks. However, achieving this goal is rare in practice.
Developing a business strategy and organizational design that fulfill this purpose entails asking what we should stop doing or give up to maximize our value. While everything may seem important, true value comes from prioritizing the most significant aspects.
One frequently used method is measuring the Return on Investment (ROI) of each task. Tasks directly linked to strategic priorities or revenue streams can be easily associated with specific results. For example, resources allocated to product innovation, specific channel development, or a particular production line have clear connections to the results derived from those areas. However, roles that service multiple revenue streams have their ROI absorbed by the result lines and must be indirectly calculated. In such cases, measurement becomes weaker, and decisions based solely on ROI might not be strong enough to determine the necessity of those roles.
The common mistake when considering what to stop doing is thinking in terms of individual “tasks” or “actions.” To be truly effective in stopping activities, it is essential to cease pursuing certain business goals.
To focus resources, three types of things must be abandoned:
Abandoning certain business results. Prioritizing goals necessitates making difficult decisions. While all goals are desirable, some must take precedence. This process of refinement involves abandoning elusive goals and focusing on those that will have a real impact.
Abandoning organizational initiatives. To achieve these goals, projects and investments aimed at building organizational capacities must also be abandoned. These inherited capacities, which may have played a crucial role in the past, are likely no longer critical to achieving the desired results.
Abandoning routine and time-consuming tasks. Synchronizing management routines and personal agendas is crucial to this new prioritization approach. How much importance do we attach to prioritizing activities in our agenda? How often do we attend low-priority meetings? Time is our scarcest resource, yet we find ourselves attending events that are not aligned with our priorities.
Similar to resources, we tend to fill our agenda as much as possible, often prioritizing based on “first come, first served.”
Decisions about which meetings to stop attending, which ones to cancel in favor of more critical ones, and which meetings should take precedence must be made based on clear prioritization criteria.
In conclusion, efforts to improve management agendas or prioritize projects must be accompanied by a clear declaration of which results and goals are not currently a priority. This is the essence of making strategic decisions.
Partner at Tandem.