Tuesday, 27 February 2018
Tuesday, 13 February 2018
Depending on your outlook, my column last month would either have exhilarated or terrified you. And whether you are champing at the bit, wanting to embrace the new, digital future of your business or terrified at the thought of robots taking all our jobs, you will need to start making some pretty significant decisions this year. These will need to move your organisation forward, but also give you space to be nimble in the face of future seismic shifts, and finally, should avoid painting you into a digital corner you can’t reverse out of. (Betamax video, anyone?)
It’s a decision minefield, and, my suggestion, which I hinted at previously, is don’t avoid the cost of doing nothing jobs. Those are the maintenance, upgrade and incremental innovation projects that don’t deliver an immediate ROI, but are essential for saving you money and ensuring your survival in the longer term.
Counter-intuitively, cost of doing nothing jobs probably won’t deliver you an immediate return on investment. What they will do is maintain and optimise systems and processes, and also help you take the incremental steps that make up innovation to take your company into the future. Yes, they divert time and resources away from other activities today, but they avoid catastrophic failures, future-proof your business, and will save you money in the long-run.
For instance, on a trip last year, soon after I landed in New Zealand, the Auckland Airport was shut down thanks to a fuel line being damaged. As a result, hundreds of planes were delayed at a critical regional hub, and time and money was spent trucking in fuel until the pipeline was repaired 10 days later. A spokesperson explained that the cost of an additional pipeline hadn’t been justified as it would seldom be used. Wait a minute, surely this exactly how you define a backup system?
Unfortunately, it is hard to quantify the cost of not doing these jobs at the outset. You only know the real price tag if disaster strikes, as Auckland Airport found out. This means it is easy to let these jobs slide to the bottom of the priority list.
Let’s look at things from another perspective though, and consider the future-proofing role of cost of doing nothing jobs. These projects that can shift the paradigm for your organisation for innovation, growth and success in the future. Hence the danger of not doing them today. For instance, if you are not thinking about or embarking on a project to move your operations into the cloud, you may find yourself left behind tomorrow when your competitors are offering cloud-enabled services and innovations, and you simply can’t.
Apart from a fixation on short term ROI concerns, there are a number of reasons organisations neglect the cost of doing nothing jobs. In today’s fast-paced world, where we're all running to stand still, it might seem like there is no time to optimise or review your course. Keep your head down and roll with the digital punches. Unfortunately the pace is only going to speed up, so rather consider these projects now.
Some companies are simply risk averse and would prefer to defer a decision and stick with what they know. Indeed, playing it safe is often rewarded in these organisations as short term improvement in the bottom line tends to focus the eye. Unfortunately, in the 1980s it might have been the case that “nobody ever gets fired for choosing IBM”, but today, this thinking could result in your company not being around tomorrow.
Finally, many organisations lack the skills and experience to navigate this new, digital industrial era. Today, you need to hire people that have the skills to adapt, and thrive at doing things that automation can’t, and also have the ability to work with robots. An example is accountants being freed up from crunching data, and instead using their abilities to spot patterns, analyse the data and think strategically about how this informs business decisions and then providing strategic counsel for their clients.
So now what? Firstly, start quantifying the high cost of maintaining the status quo by putting the cost of doing nothing on the agenda. Then, move away from waterfall thinking and learn from agile philosophies and their continuous iteration. This takes the pressure away from being sure you are making the right decision at the outset, to making the decision right for you, through constant improvements and vigilance. Finally, simply decide. Choose a lighthouse project, you may fail but then fail fast, learn and improve.
As published on Accountingweb - January 2018