Don’t Shortcut the Process if You Want Results

Process Improvement Partners was asked to develop and deliver a global cost reduction ideation session for a leading consumer products manufacturer. In early phone conversations with the client, we discovered that prior attempts at this effort had less than desirable results. The next logical step was to visit the client and discuss the approach for the session.

The company wanted to develop a number of cost reduction concepts to be implemented in the current and following years. In past sessions, teams brainstormed cost reduction ideas and then handed them to project teams who were to turn those ideas into reality. Many ideas weren’t fully detailed, and the project teams became frustrated as they tried to understand the meaning of the ideas.

In order to get the proper amount of detail for the ideas, we suggested a two-day session. The client anticipated a half- day session, and his sponsors were only willing to commit that amount of time. It was clear we’d have to be prepared to make our case before requesting more time from the sponsor.

Our principle for an effective cost reduction session is that there should be no risk to safety, customer service, or productivity resulting from the ideas generated and implemented. To accomplish this, the team must understand what is most important to the customer, the employees, and the overall marketplace. During our sessions, the team receives Voice of the Customer, operational, and business information as the basis for their work. Then, the team is exposed to other ways of thinking around their current processes. Brainstorming and prioritization come next, and the highest priority ideas are developed into detailed concepts with logical thinking and financial calculations applied to them.

Once the team enters into the concept development phase, they continue to work until time runs out in the session, working from the highest priority/highest value projects to the lowest priority/lowest value projects. Most teams need two days to get enough projects detailed to meet the desired session objectives.

Once this approach was reviewed with the team leader, he agreed two full days were needed for the session. Now, we had to convince his sponsors to commit to a two-day session.

Fortunately, there was a leadership team meeting later that morning, and the team leader was able to get a 30-minute agenda commitment from them. The team leader introduced me to the leadership team and told them I would be describing the process for the session and asking for a two-day commitment.

This opening statement got the room buzzing. They didn’t feel like they needed two full days as they hadn’t had to do this in past sessions. One of the members of the leadership team commented that prior efforts hadn’t been successful, so maybe they should listen and consider a different approach.

This was my opportunity to talk about prior cost reduction sessions and the results they were able to achieve. I emphasized that the key to these sessions was to provide concepts to project teams that had the right amount of detail and logic, so the teams would have a solid foundation from which to build on. I explained that rushing through these sessions wouldn’t allow the teams to think through the logic and provide the necessary detail.

This got their attention, but they were still skeptical. They were willing to allow one day (a half-day increase from their prior commitment), but this still wouldn’t be enough. Knowing that these sessions were designed to save companies millions of dollars, I asked if they thought two days was reasonable for such a high return on their investment. One of the leadership team members asked, “Why wouldn’t we set a savings target and lock the team in a room until they reached this target?” I explained the team would be less likely to provide quality effort and more likely try to hit this target with “false” savings, in an effort to go home that evening. He seemed satisfied with my answer.

The leadership team members began challenging each other’s thinking and relived many failed attempts at cost reduction. I knew we were getting somewhere, but hadn’t yet gotten agreement to proceed with a two-day session. Finally, the Director of Finance looked at me and said, “What are you going to do that’s different from what we’ve been doing all of these years?” This was my chance. I fired right back, “I don’t really know what you’ve done in the past, but I can tell you what I would do.” From there, I described the full two-day process that had worked for dozens of teams over the years. The team leader supported me during this discussion and by the end of the review, the leadership team agreed on the approach. The Director of Finance even said, “Don’t be so cheap. Let’s give the team two full days for this important effort.”

This was the alignment and agreement we needed. We thanked the leadership team for their support and time and excused ourselves from the meeting.

A month later, we ran our first cost reduction session and the team beat their savings target by more than $10 million. Two more sessions were held in 2018 with similar results. These sessions will now be held annually, following this approach, with a two-day commitment every time.