In many organizations, dangerous beliefs destroy almost all opportunities for improvement. In this article, I will expose some of the worst beliefs to avoid and explain ways to avoid all dangerous beliefs.
When the CEO Speaks, People Take Action
Management authority Peter Drucker told me that one of the most dangerous beliefs in organizations is that an increase in brains comes with being promoted. Here’s verification of that observation: Executive assistants at well-run companies were asked what was the single, most important thing their CEOs could do better. The aides spoke almost as one in reporting that anything the CEO said was treated as gospel. Underlings, for instance, scramble to make changes even when the CEO was only asking an innocent question. The CEOs assume that the response would come at little or no cost from someone who already had the answer. Some executive assistants estimated that 25 percent of executive and managerial time in their companies was taken up with answering such casual inquiries and making changes that hadn’t, in fact, been requested. The assistants wished someone would advise their CEOs to stop asking casual questions and making off-hand comments because the rest of the organization operates on the misconception that these words are major priorities on which careers will rise and fall.
I’d Rather Do It Myself
Imagine you are taking a walk and stop to pick up a dime. While you are focused on that one-tenth of a dollar, a five-dollar bill floats by. Someone else grabs the five-dollar bill. Grabbing that dime cost you $4.90. Ignorant of what they are missing, organizations regularly incur such large opportunity costs because these lost profits don’t show up on the accounting statements. As long as an activity ekes out an apparent accounting profit on its investment that’s above the interest rate on U.S. Treasury notes, corporate financiers are happy. That misconception keeps many enterprises busy with tasks that can be much better performed by others, albeit at a higher out-of-pocket cost. But who cares if the out-of-pocket cost is higher if the resulting returns are also higher?
Peter Drucker has gone further in observing that outsourcing should be used to reduce the tasks that management must do so that more management time can be spent on the few tasks that add the most value to the firm. The actual cost of the outsourcing, he has stated, should be a secondary consideration.
Cutting Costs Can Slash Profits Instead
Cost reduction seems like something you should pursue whenever possible. But that focus can be a profit-reducing trap. Minimize costs in one part of a process, and costs will swell in every other part of the process. For example, if you run an expensive machine as little as possible, you may have to pile up inventory in the rest of the production process to adjust for the sporadic use of the machine. Equipment used to further process what the machine produces will also be idle when waiting for more semifinished materials. The ultimate irony is that organizations that pride themselves on cost cutting usually show little or no volume growth. Equal energy put into providing new offerings that are superior in their benefits might, by comparison, expand profits by as much as many decades of normal cost cutting.
“We Use All the Most Up-to-Date Practices”: Hardly!
Almost every organization I have ever visited was filled with people who prided themselves at being the best in the world at what they were doing. Why were they so confident? It’s pretty simple in most cases. These braggarts had little knowledge about what anyone else was doing. I’ve come to realize that such statements are signs of ignorance, marking a sizeable misconception stall.
Encourage Unmasking False Assumptions
A company had assumed for decades that advertising would work only when demand was highest for its seasonally consumed food, yet others promoted similarly seasonal foods all year around. Eventually, an advertising test was run during the lean part of the year, and sales promptly took off.
Here are questions to help you avoid making such false assumptions:
What are the things that your organization assumes will almost always work?
What are the things that your organization assumes will seldom or never work?
What do your managers assume will probably happen?
What are the things that your organization assumes will be unlikely to happen or will never happen?
On what beliefs are these assumptions based?
Have those beliefs been checked recently?
Are those beliefs still true?
Identify the False Assumptions That Need to Be Immediately Challenged
Some misconceptions require more immediate correction than others. Here are questions to help you set priorities for where to turn your attention first:
Which false assumptions have large potential consequences?
Where can your organization’s actions make the largest difference in offsetting false assumptions?
When would you need to act to get the most benefit or avoid the most harm?
What is the minimum evidence to indicate that you should act immediately?
Use Assumptions That Reflect Actual and Critically Sensitive Conditions
In most cases, no one will know what’s going to happen in advance. In the same way that the Titanic’s designers didn’t think about sideswiping an iceberg, no one will forecast such unusual events. You can only prepare by being humble in assuming that many things can go wrong and work on scenarios to prepare for those improbable, but highly significant, events.
Open your mind to new ways of thinking about a volatile, unpredictable future with these questions:
What assumptions have worked best in the past for organizations that operated in circumstances somewhat like yours?
Which of these assumptions fit your organization’s values and style?
Which of these assumptions would be received most enthusiastically by users of your offering, customers, employees, partners, suppliers, shareholders, lenders, and the communities you serve?
With these new perspectives, you can contain and eliminate dangerous beliefs that deny you and your organization your full potential to accomplish 20 times more with the same time, effort, and resources.
Copyright 2007 Donald W. Mitchell, All Rights Rreserved