You might have heard this story, but can you truly understand the consideration behind it. To make it more realistic, I have extended the consideration period and increased the amount involved. Below is the story.
There are two jobs waiting for you. Job A gives you $100,000 monthly for the next 36-months. Job B gives you $0.10 for the first month, in the second month, you will receive double the amount for the previous month, and so on for the next 36-months. Which Job will you take up?
For Job A, you will have $3,600,000 at the end of the period. For Job B, you will have close to $6,900,000,000 at the end of the period. I am happy with either job, but if there’s an opportunity to get a higher return, will you want to go for it? Everything we do comes with opportunity cost, but will you want to have a positive mindset at least and believe that you can ripe the maximum benefit?
While this looks like a “no brainer” decision if one pauses for a moment to work out the math, many tend to jump into Job A. Before I was exposed to this lesson and concept previously, I was one of those who opted for Job A. Personally, getting $100,000 versus $0.10 is very clear; I go for the higher amount upfront.
Short Term Mindset
In my opinion, this is the mindset of the majority of the companies, where they want to ripe the most benefit, given the shortest time, enjoying immediate gratification. This is especially so when they are a public company, and people are looking at immediate finance reporting instead of long-term strategic outcomes. Like the short attention period we are giving to our electronic devices, we offer a short investment horizon for whatever initiatives we are taking. If there aren’t returns within a short period, people call for reform, reorganization, and making people responsible.
To complicate matters, many tend to be pessimistic about the potential to get the maximum results when the timeline is extended. There will be a lot of “What if” and demand lots of justification for one to embark on this journey where the upfront return is low. Instead, if one opted for a short-term return and failed to meet it, there will be self-fulfilling reasons why they failed.
Long Term Mindset
Due to my new role, I have been doing readings on Continuous Improvement (CI) and how can I do my job better. However, there are some commonalities between the many online materials from multiple sources.
Start with something simple, easy, and one that you can do within a short period with a minimum investment of resources.
It is a continual mindset of PDCA, and implementing a solution doesn’t mark the journey's end. Instead, the end marks the start of another cycle.
Instead of a “big-bang” change from a small group, it required action from everyone in the organization. To do this, answering the “WIIFM” is crucial.
The tangible financial outcome might not be appealing from the start, but the tangible effect compounds and gets significant.
In summary, the impact is not immediate and might not be obvious. So what has Customer Experience, Process Optimization, or Saving Paper got to do with bringing down costs or increasing revenue?
1. Customer Experience
Giving customers a good experience might not get an immediate return in value. However, a bad CX can erode your business over time.
A good CX can reduce the Customer Acquisition Cost (CAC) in the long term, potentially giving you the additional “ammo” to increase the “firepower” to create a more significant impact. In addition, CX will directly impact the Customer Lifetime Value (CLV), where a loyal customer stays with a brand or company over a long period.
An excellent example of great CX is from Singapore AMEX. Their customer service officer goes beyond the routine engagement model to engage me as a customer—giving value beyond my initial intention of calling them and getting things done. Can you see it? Excellent CX allows customers to share their brand within their circle, engaging in “Word of Mouth” advertising.
2. Process Optimization
Process Optimization enjoys multiple benefits that go beyond immediate tangible benefits. The potential outcome includes additional spare capacity and a happier workforce.
With the additional spare capacity, the existing number of people could perform more work, increasing the throughout with the same number of people. This also improves the Turnaround Time (TAT) and fulfills the customer's obligation earlier.
A happier workforce potentially reduces the team member Turnover Rate. It is estimated that it takes approximately 1/3 of a new hired annual remuneration to replace someone. This excludes the productivity loss and other non-tangible impacts of the loss of existing team members.
3. Saving Paper
How much can we save by saving a ream of paper? Assuming that a ream of paper costs $5.40 and saving 100 reams a year helps save $540. This is insignificant to a company’s revenue. However, saving 100 reams a year could potentially save six trees. What’s the cost of saving six trees?
Can such initiatives be an intangible outcome to the organization, such as Sustainability? For example, if companies are pledging to be more environmentally friendly and reduce carbon footprint, can we convert sustainability into something tangible to encourage companies to take action?
You might doubt if such a company that adopts a long-term mindset exists. It does exist, and I am fortunate to work with one of them that places a long-term mindset and approaches transformation as a CI activity.
The more I find out about CI, the more excited I am. Know that the work I am doing will have long-term benefits for the organization and the potential to contribute to sustainability. However, I am also mindful that I need to manage my expectations as the need for near-term tangible benefit is still the reality.
In my next article, I will share how you can converge your DX, CX, and Innovation activities into CI.