More Money Will Fix Everything – Really?

A recurring solution these days. It seems every organization feels they need more money, and more money will solve all their problems. And over the past several years getting/borrowing money seemed somewhat painless as interest rates were next to nil. So why not? It was a no brainer – a simple solution to the challenges – money.

Times have changed! We are much tighter with our spending both personally, and corporately, and making the right decision for borrowing has become more critical. It is making us think twice about going after more money as the first step, or “go to” solution, in resolving the challenges we are facing. We now need to become more prudent and get back to making accurate business case type decisions. Every dollar we ask for needs to have a “real”, fast, attainable ROI.

Leadership now needs to refocus and ask – How valid is the information and data we used in the business case to calculate the amount needed? And are we truly creating value?

Over the past several decades, we have consistently seen that most processes are filled with more “non-value” activities than ‘value’ activities. The challenge then becomes, how do you build a business case if your processes are broken, or inefficient, and filled with non-value “tasks” and result in inaccurate analysis? How do you calculate your baseline?

Without a realistic understanding of your current potential capacity to provide products and services more competitively, you are going to jeopardize your ability to determine the ‘real’ need for more funding. In most cases, your request will not be a reflection of your actual requirements, and will end up being excessive and wasteful. In the end, it cost you much more, possibly creating more complex new problems, and have less than expected results.

Capital is certainly needed for upgrades, essential changes, and innovation, with client product and service expectations continuously evolving. Leadership’s responsibility, whether they work in public or private industry, should be to limit their request to what is truly needed to take the business or organization to the next level of service required by your clients/customers. And that should be done once the organization (big or small) have maximized the capability and efficiency of existing resources and truly understand their future needs to drive competitiveness, productivity and efficiency.

To accomplish this goal and make every dollar count, is simple. The starting point should be to transform the processes and create processes that are more value than non-value. In that way, you will be maximizing capacity – people, space and equipment. Once you accomplish this, you will be able to use accurate data to develop a “real” credible business case, and accurately determine the amount of funding you require now and in the future. Following this two-step strategy would allow you to create an environment that builds for the future and guarantees a positive impact on the bottom-line and service to your clients. True success!