How to grow profit by pruning waste

In our search for profitable growth we often focus on the exciting stuff such as innovation and strategy or big ticket wins such as a major operational overhaul. But there are lots of little things that can contribute to profitable growth and one of these is watching the waste.

 

When I talk about waste I don’t mean the big projects or purchases that latterly turn out to have been a poor decision. These are experiments and are not waste as such (provided you learn from them).

No the “waste” I mean is the insidious frittering away of time and money. It’s the little stuff lost through carelessness and inefficiency that goes unnoticed because nobody measures it.

Here’s a little example. The time wasted when people are late to meetings.

You know how it works. The meeting is scheduled for 11am and the prompt people are in the room on the dot waiting for the others. The majority stroll in five minutes late and the meeting begins, after general chitchat, at 11.10am. Then, at 11.25am, in flies Mr Habitually Late. He’s been caught up on something ‘very important’, but now he’s here the rest of the attendees have to sit through a recap of the meeting so that Mr Habitually Late can get up to speed. 

It’s 11:35am and the meeting is finally restarted. For a meeting of 10 people, that’s as good as five wasted hours.

In a year, with one such meeting every day, the total waste is 1,300 hours: That’s 68% of a person!

If you want to start watching the waste you need to first of all identify where waste may be happening. A good place to start is by asking employees. You can ask a simple question like, “On any day, where do you think your time is wasted?” It opens up all sorts of little ‘waiting’ problems like the meeting example above or “waiting for the printer”. If you probe a little deeper you might get “preparing the X report” (which it turns out no one actually reads) or “replying to Y type emails”.

Once you’ve found where waste is occurring you need to have a go at measuring it. It doesn’t have to be an exact measurement; in fact, fun measurements – like “days lost in meetings” – are far more meaningful.

Some of the waste, when measured, is simply not big enough to make a fuss about. Ignore those areas and focus instead on the bigger ones. The very best ‘wastes’ to pay attention to are those, such as meetings discipline (as discussed above), that are pervasive in your business.

Once you have decided what to focus on, you then need to set a goal for improvement. This is “waste saved”. It should be fairly easy to set a target as you’ve already done the hard work with the initial measurement.

Finally, it’s onto making the actual improvements. You can make this a challenge to your employees. Undoubtedly, they will have lots of good ideas, as it’s their time that’s been being wasted!

Julia Bickerstaff’s expertise is in helping businesses grow profitably. She runs two businesses: Butterfly Coaching, a small advisory firm with a unique approach to assisting SMEs with profitable growth; and The Business Bakery, which helps kitchen table tycoons build their best businesses. Julia is the author of How to Bake a Business and was previously a partner at Deloitte. She is a chartered accountant and has a degree in economics from The London School of Economics (London University).

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