19
Sep
09

Does Anyone Know How to Prune Anymore?

Pruning ShearsAll of us need to focus on making our operations more efficient during this downturn. Reducing expenses and making more with less are critical actions. Through all of this downturn, it’s been amazing to me how many smart business people do not know the difference between cutting and pruning: Cutting reduces costs, while pruning makes the organization stronger.

Electric Trimmed TreeCutting focuses exclusively on reducing costs. We’ve all gone through the exercise. Someone demands that costs be cut by a certain percentage and we pull out the income statement and start looking at each line. Through our professional judgment (and good guesses) we find the reductions and reach the savings target. Almost always these cuts leave the organization in a weaker position.

TopiaryPruning takes a different approach to reaching savings goals. Pruning focuses on improving the actions that truly create value by starting with a clear and unvarnished view of how the organization adds value. Knowing exactly what the customer pays for – and what they don’t – makes it possible to attack the efficiency issue in an entirely different way.

Most companies have done all the possible cutting without causing serious damage to the organization. Economic conditions and increased competition have forced managers to cut again and again, with each round of reductions removing more and more of the abilities of these companies to do business in the usual way.

Effective leaders are taking a different approach in these times. They’re pruning their operations by identifying the critical value creation engine(s) in the company and then reorganizing their companies to leverage those capabilities and eliminate the processes and operations that do not create value for the customer.

This approach requires a radical view of the organization and the willingness to change everything. Pruning sharpens the focus of the organization, cuts costs, and makes the company more effective.

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