dispatches from the new world of work

Almost a Guarantee:
The 1% Drill

I did an in-company seminar in the UK several years ago, for a mid-sized firm. ($50 million?) A generalist consultant was my co-presenter; to be more accurate, he did the first two-thirds of the day, and I provided the (hopefully) grand finale.

At about 2 p.m. he called an abrupt halt to things, and said, "I want to make sure I cover my full fee today, and then some. We're going to stop and do a 45-minute exercise."

He explained that any operation can at any time cut one-percent of their budget. (We all have flab, regardless of circumstances.) Though I, in general, (vehemently) oppose across-the-board cuts, I have absolutely no problem with the 1% idea. He then broke the group up by function; about five functions were represented, as I recall. He gave the groups just 30 minutes to identify their team's 1%. Then he had the groups report in public for 2 or 3 minutes each—this public recitation, he told me, raised the odds of execution; it also provided others' ideas.

Indeed the groups readily identified their 1% and reported accordingly—there was actually no bitching.

I called and asked him a couple of months later how things had turned out. (He was a regular advisor to the company, and a coach, though the term really didn't exist in business yet, to the CEO. He said there was almost uniform success—and a couple of groups had decided to repeat the exercise on their own every few months. Given his closeness to the CEO, and my more general judgment, I'd guess he gave me an accurate report.

Times are tough as we all know. I want to urgently suggest that, despite recent cost cutting you've probably done, you try this exercise. (For consultants of any flavor that goes double—especially good to provide almost guaranteed value in excess of your fees.)

Tom Peters posted this on 03/09/09.

Comments

Then, the second step - where could you more effectively spend what you're keeping in the budget?

Think BIG M marketing - not small m. (Way out of the box, customer appreciation, etc...versus the same ol' ads, brochures, "industry-leader" PR hoo-ha.)

P.S. That 1% CANNOT include "cutting heads."

Posted by Mary Schmidt at March 9, 2009 10:33 AM

My problem with this approach is everyone only AIMS to save 1% cos that's the 'target' and there is no incentive to save more than 1%. We hit the target but miss the point.

Posted by Trevor Gay at March 9, 2009 2:06 PM

PS - Why is TP Blog so quiet these days? - was it something I said? :-)

Posted by Trevor Gay at March 9, 2009 5:08 PM

I like the idea of asking people to think of the 1% cut by themselves as it gets them thinking like a business owner or CEO.
It is these seemingly small acts that change the human focus - even if it's just for a month, that's great.
I enjoy your stories of conferences.

Posted by Jacoline Loewen at March 9, 2009 5:17 PM

Around here we make 1% seem easy as we weekly round up a few snivling/hooligan front liners & fire their lazy backsides on hidden closed circuit HDTV - perfect for viewing later while at our - bailout Ritz-Carlton resort "morale building sessions". :>)

Posted by C Love at March 9, 2009 6:36 PM

Good to see you back Contraire - I thought for a moment Contrairestan had been invaded and taken over by some aggressive nation. Good to know you are well and as liberal as ever in your views. Good to see also your faith in front liners remains as passionate as before the revolution :-)

Posted by Trevor Gay at March 9, 2009 7:03 PM

Trevor asks: "Why is TP Blog so quiet these days?"
Answer (for me): The demise of the TP newswire. Then I knew there would be something new and interesting everyday. Now, looking in once or twice a week is enough ....

Posted by Mike L. at March 9, 2009 7:15 PM

The 1% exercise has some real added value to it, when done correctly and not used as a way to "cut heads".

Employees enjoy playing "boss", so allowing them to make decisions of what to cut gives them some decisions and consequences that they themselves will have to live with.

The group component of the exercise works well as it really aids employees in taking ownership for their work and allocation of resources. Responsible spending is hard to encourage from a macro level, but the interpersonal relationships built through the exercise and shared vision might do more good in the long term than the 1% saved.

Posted by Andrew at March 9, 2009 7:22 PM

Hi Mike L - Hope you are well. Have you got the comments RSS feed? That's how I keep up with current comments/discussion but I hear what you say about the demise of the newswire - clearly some folks miss that.

Best

Trevor

Posted by Trevor Gay at March 9, 2009 7:27 PM

"Employees enjoy playing "boss", so allowing them to make decisions of what to cut gives them some decisions and consequences that they themselves will have to live with."

I agree Andrew and my question therefore always has to be; why don't we operate like that all the time rather than just when we are in crisis mode?

Front line folks know all the answers. We just don't ask them often enough.

Posted by Trevor Gay at March 9, 2009 7:56 PM

I always wondered how cutting expenses adds to the top line. If people would spend as much time figuring out how to drive top line as they do managing expenses wouldn't many of the profit problems go away? Imagine applying the same 1% principle to driving revenue every month.

Posted by tony cole at March 9, 2009 8:35 PM

Once TPC is taken down to a shell at 1% content "tpc.org" - with a stark Google look & feel - then & only then shall we be free - with the revolution against corrupt & debt ridden front liners - that caused this great recession - advancing to a fever pitch - "...take it to the streets..." as the nefarious John Lennon always ranted. :>)

Posted by C Love at March 10, 2009 6:43 AM

This is a great suggestion. Thank you, TP. Cutting 1% of flab goes directly to the heart of saving. This is something we seem to have lost in most recent decades, personally and professionally. What then will we do with this 1% becomes so important in times of recession. But we at least have it.

After reading the comments, I find it funny how our brains sometimes work. (Or, is our desire to say something of value or our ego?) Often times we miss the meaning of simple things by refuting it. What I try to do is to grasp the full meaning first and then precede to determine other applications. Often times my understanding and response are fuller.

Sometimes I am successful; other times I am not.

Posted by Judith Ellis at March 10, 2009 8:49 AM

@Tony, I think you make a good point here. Only emphasizing cost cutting measures does not a sustainable business make. Why not look for a 1% flab cut and a 1% revenue boost model?

Posted by Dave at March 11, 2009 3:27 PM