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Hello,
Big problems may seem to suggest equally big actions. In my experience, however, a "small steps" approach to tackling large, complicated issues is more effective.
This month's newsletter explains why "small steps" works and offers suggestions on how to use it in your business.
Your comments are always welcome. Just click "reply" to send them to me.
Regards,
Charlie Goodrich
Founder and Principal
Goodrich & Associates
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Small Steps for Big Changes - How to work with large, complicated, high-stakes problems
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Back in the early 90's, I suddenly found myself in the rent-a-car business. Budget Rent-A-Car had just gone from a pure franchise company to one in which 70% of system revenue was brought in-house and managed by corporate. I was hired to consolidate all finance, accounting and insurance - from the Florida border to Canada, on the East Coast. When I arrived it was a mess:
- I inherited 7 accounting centers that had been reporting to 7 general managers who, until recently, were franchise operators.
- The company and my region were losing lots of money.
- Much of the staff had quit (for the most part, those who hadn't left, stayed because no one else would hire them).
- Each accounting center used a similar but different computer system. So revenue wasn't revenue, etc., depending on location.
In short, I needed to consolidate everything as fast as possible, before the place blew up. I knew immediately that the task at hand was too big, too complicated, and too filled with unknowns to merit a detailed, planned approach. And so instead, I decided to take many quick, small steps, all generally headed towards the end goal. It worked. Nine months later, everything was consolidated and functioning, at a time when other regions of the country were just beginning to take action. Small steps towards the goal The "small steps" approach when faced with large, complicated problems looks like this: - Little steps. The reason for little steps in a situation such as this is that many of them are certain to be wrong. Large wrong steps can be fatal; small wrong steps rarely are.
- Rapid steps. If the steps are small and the goal is large, lots of steps are necessary. As a practical matter, therefore, you need to take them in quick succession.
- Parallel steps. You don't have time to simply do one thing after another. Instead, work in many directions at once - in parallel.
Is that all there is to it? Sorry, no. There are other important things to keep in mind as you work to solve large, complicated problems:
- Have a rough idea of where you want to end up. When I consolidated accounting operations, for example, I knew I was going to consolidate rather than "fix" broken local accounting functions.
- Get quick assessments, if possible. When I arrived at Budget, I called in the internal auditors early on - they came back with an audit report the size of the Manhattan phonebook. This provided details of what was working and what was not.
- Listen along the way. After all, how do you know if the step you made was a wrong one? This can be tricky, because the people who tell you the step was a misstep may well be the naysayers who were against that step in the first place.
This is the "art" part of management. By developing rapport with those in the organization and quickly acknowledging mistakes, you'll build credibility, support and get better feedback sooner.
A few final thoughts In practice, the "small steps" approach can be used any time the path is unclear and, practically speaking, unknowable (see the next section below for when you shouldn't use this approach). This may include entering new markets, developing new products or even new businesses (I mean really new, not line extensions, neighboring businesses and so forth). As time progresses, your knowledge increases, and confidence in your feedback system grows, you can begin taking larger steps. It's likely as well that a critical path will begin to emerge, allowing you to get to your goal sooner.
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When Not to Use the Small Steps Approach
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The approach described above is not a good solution in all situations. Two situations, in particular, stand out in this regard: - When mission critical things are involved.
In the case of Budget, for example, I fundamentally did not touch how the business operated from a marketing, fleet or operations perspective. The computer systems uses by operations were not changed at all.
- When the problem at hand is similar enough to others already solved.
In these cases, you can leverage existing expertise. When I work with companies that have run out of money, for example, and although management is generally desperate and unsure what to do, I'm not, because I've seen similar situations before.
In these cases, much larger steps can be taken with less risk. (A good reason, by the way, to enlist the help of an outside expert.)
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Heard on the Street
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Much has been said about the jobless nature of the current economic recovery. Many theories with proposed cures abound. Maria Canon and Elise Marifan, Economist and Research Analyst respectively with the Federal Reserve Bank of St. Louis, recently summarized the argument, that the current high unemployment is a result of job polarization. This polarization leaves middle-skilled workers out in the cold. For those with extensive experience in manufacturing and administration, these trends won't come as a surprise. You can read the 3-page article here.
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| About Us | |
Goodrich & Associates is a management consulting firm. We specialize in helping our business clients solve urgent financial problems. Our Founder and Principal, Charlie Goodrich, holds an MBA in Finance from the University of Chicago and a Bachelor's Degree in Economics from the University of Virginia, and has over 30 years experience in this area.
To ensure that you continue to receive emails from us, please add charlie@goodrich-associates.com to your address book today. Goodrich & Associates respects your privacy. We do not sell, rent, or share your information with anybody. Copyright © 2013 Goodrich & Associates LLC. All rights reserved. For more on Goodrich & Associates and the services we offer, click here.Newsletter developed by Blue Penguin Development |
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