In today’s world, many organizations are too focus on cost saving and productivity.
But if you focus on those two measurements, it is more likely you will get them for the SHORT RUN only. In the LONG RUN you might end up with closing business or selling out your company.
Because, the objective for productivity or cost saving are (generally) to achieve this month or this quarter’s number, so the analysts at the stock market won’t yell at you (which could herd the market to depreciate your company’s stock price) or just simply somebody high above at the very top management told you so. Period.
Too much focus on cost saving will alienate your customers and make your employees unmotivated. This is why, companies which too much rely on cost saving will fall into the “doom loop”. FAMILIAR?
So what we have to focus on?
For the answer, I will refer to the great W. Edwards Deming. My recommendation for anybody who’s thinking for future growth and keep competitiveness in the market should focus on the first item on this Deming’s chain reaction: improve QUALITY.
He wrote in his book Out of the Crisis (in early 80s) that “This chain reaction was on the blackboard of every meeting with top management in Japan from July 1950 onward”
But please be warned! It ain’t a short term game, it takes patience and persistence and faith.
Remember,Japan in 1950 was known to produce craps (hence the term “Japs craps” at that time). Japan in the 50s was barely wake up from the defeat from World War II. Their faith in Deming’s (and Juran’s and Sewhart principles) lead them to what Japan today is. But it takes almost 30 years (!) to transform majority of the organizations in Japan. And I still believe, they need another revolution today. The same thing will come to Chinese goods and services. Ten years ago, they were just another cheap craps. Today and especially in the future, China will become the biggest economy of they keep improving their goods and services.
In the nutshell, you have to focus in improving your quality of products, services, continuously. With better quality you will have better productivity, better profitability, and you will have the likelihood to stay in the business and finally provide jobs.
As businessmen, obviously we have to keep our company profitable but also we have the responsibility to provide jobs. Not just thinking for short term profitability and all we do is cutting cost.
As simple as that.