In praise of small ideas: Big, transformative strategies create buzz, but a new book contends the real money is in the everyday stuff that most companies overlook

In praise of small ideas

By Anne Fisher, contributor March 27, 2014: 5:00 AM ET

Big, transformative strategies create buzz, but a new book contends the real money is in the everyday stuff that most companies overlook.

FORTUNE — Early on in Low-Hanging Fruit: 77 Eye-Opening Ways to Improve Productivity and Profits, co-authors Jeremy Eden and Terri Long quote Warren Buffett: “I don’t look to jump over 7-foot bars. I look around for 1-foot bars that I can step over.”

Those small steps to greater efficiency, and fatter profits, are low-hanging fruit that any company can pluck, the authors argue. “Many managers are convinced that, after years of cost cutting, they picked their low-hanging fruit long ago,” they write. Alas, that’s often not the case: “Cost cutting often leaves the low-hanging fruit and instead lops off branches without regard to what is left of the tree.”

Eden, an erstwhile McKinsey consultant, and former bank customer-service executive Long are now co-CEOs of Chicago consulting firm Harvest Earnings Group. Their lively book distills what has worked for their Fortune 100 clients over the past 20 years. They knock over a few sacred cows along the way.

Take, for example, benchmarking, which the authors contend is “a complete waste of time,” since comparing one company to any other, even in what may look like the exact same business, is more often used to “justify the status quo” than to spark change or innovation.

Another wrongheaded notion, by Eden and Long’s lights, is that throwing more technology at a problem will always solve it. One utility company they had advised was ready to put in a pricey software program to schedule teams to trim tree branches away from power lines. Instead, a line supervisor suggested a “simple, no-tech solution: Have crews in the field report when trimming is necessary, because [they] are better at assessing the situation than software programs are.” Immediate savings from skipping the software and dispatching tree-trimmers only when needed: $100,000.

Fixes like that are unlikely to spring from getting people together in a room and asking them to come up with problem-solving ideas, the authors write. Instead, they suggest that companies get the people closest to the work to talk about problems you probably don’t even know about, and then following up by setting a deadline for solutions.

PNC Financial, for instance, didn’t just encourage suggestions but required employees to find and fix inefficiencies. The result: about 2,400 small improvements in the way things were done that added up to $400 million a year in extra profits. After PNC merged with National City in 2008, the companies applied “the same fact-based high-speed rigor” to the new entity, which gave rise to another $2 billion in operating efficiencies — about double what bank analysts predicted.

Sometimes, of course, the people dealing with small inefficiencies every day are, paradoxically, too accustomed to “the way we’ve always done it” to spot the low-hanging fruit that’s right in front of them. One way to get a fresh take on long-established habits: Ask human resources for a list of everybody who’s been hired in the past 12 months, “anyone from the corner office to the mail room,” and then ask those newcomers to point out anything they’ve noticed that you could be doing smarter, faster, or cheaper.

Vendors are another frequently overlooked source of insight. Because they usually know your industry inside out — including what your competition may be doing more efficiently than you are — vendors are often “the perfect army of outside observers.”

Want to make sure your employees feel comfortable pointing out areas of improvement? Watch your body language. Eden and Long have observed that some managers, pressed for time, inadvertently send not-so-subtle signals that squelch good ideas. “The first rule is to be careful about gestures, eye-rolling, [and] apparent inattention,” they write. “Employees are often looking to read the tea leaves, and body language becomes just as important as the words that are said.”

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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