Too often leaders are forced into tough decisions when times are hard. Rather than constantly reviewing what is working, and more importantly, what isn’t, decisions on cutting back are made in the context of a crisis.
Under these circumstances it is common to see an organisation ‘restructure’, cutting projects, reducing headcount and aligning the remaining workforce for ‘efficiency’. This is completely the wrong approach.
The best time to make tough decisions is when things are going well and there is the time to consider implications, understand consequences and plan for transitions.
If this becomes part of ‘business as usual’, it will be more likely that not only will crises be better managed, they will be averted completely.
Having worked with a number of clients who were struggling to transition their organisations to a desired new strategy, we have seen how not asking three simple questions has caused issues.
Generally financial and / or human resource crunches occurred because of over-stretching available resources in a desire to do more and thereby reducing the ability to absorb shocks.
Avoiding this can be as simple as asking the following three questions:
Laid out like this, these sound obvious. Many of you may be asking yourselves right now “who wouldn’t ask these questions?”
Think back to your last budget round, were these questions intentionally asked by managers across the organisation? Did you have measures and systems in place to enable comparative analysis of where resources were best placed to deliver maximum impact?
My guess is the honest answer would be a resounding no.
If your budget process didn’t have these three questions at its core then you are not impact focused.
Maximising impact requires the agility to make informed decisions at any time. To enable this agility it is crucial that there are impact assessments in place for all of the organisations activities that enable an understanding of what is or is not working. Allocating finances and staff on the basis of hunches and gut feel, or even on the basis of supposed industry standards, leads to ineffective projects being continued and contributing ones being cut, especially in times when things are tight and the biggest temptation is to ‘attack’ the biggest cost items without questioning their contribution to impact.
Shaping an organisation for the future, where it can deliver maximum social impact, is not a process of applying theory and hoping for the best. It is an intentional and deliberate process of constant assessment of current, proposed and possible activities to enable informed decisions on where scarce resources can be applied.
Building this discipline into an organisation can start with the three simple questions above, and a good process to assess activities against these. To take the emotion and bias of management and boards out of the equation the first time this is done it can be extremely useful to have a third party do the assessment and make the initial recommendations. If they are any good, the results of their assessment and recommendations should be enough to convince all concerned that a more impact oriented, process driven approach is far better than whatever model has been used to date. This will be the first step in creating a culture of impact maximisation and accountability for impact returns.
All this said, if you are reading this and thinking your organisation has never faced tough times and hard decisions then you may well be onto something spectacular. More likely though, it means you are operating too far inside your comfort zone to be maximising your impact. But that is another issue….