I'll not completely explain the heading of this article this month. You'll have to come back the next three months to see the full picture. Sorry, I just think people have so many preconceived notions about money in business that their ability to think about it can be hampered if they see a sentence or two and think, "I already know that." They escape the exercise of really thinking about the subject in new way.
The first kind of money, and the one we are going to discuss this month, might not be considered money at all. It is, however, and you likely know it by another name: "paralysis by analysis."
Why do some companies seem to move ahead boldly while others in the same grades languish about, never quite grabbing the market share available to them? It is because the former has learned to overcome "paralysis by analysis" and the latter have not.
In my long career, I have seen companies follow both of these paths. Paralysis is the more likely stance that companies take. There are two reasons for this. First, the people who put together the budgets for new projects (be they revisions to an existing asset or an entire greenfield facility) love to analyze options. Be they engineers, schedulers or project accountants, developing scenarios is fun for them. The second is the natural propensity to look for a bargain or, even taking it a step further, being loath to spend money under any circumstances.
Now, I think we should all build projects as economically as possible, but there is a time to stop analyzing and get on with doing. I am convinced I have seen companies fail to optimize long term financial results because they failed to be first (or even second or third) to market with the latest product specifications or the latest economical method of manufacturing a product.
I've told the story many times of the mill I was called upon to visit by a client who had just bought a machine there and was going to remove it from its existing location. A colleague and I went to visit the machine. Originally installed in the mid-1950's, at the time of its installation, it was the last of its type for the grade it produced. Over the years, it had had several rebuilds, and as we could tell from the dates, in each case, the rebuilds were the last of their type before a better technology eclipsed them. Then here we were, in 1989, watching this machine being removed. The new owners got it for free, all they had to do was remove it.
Besides graphic examples like this, there are the many projects that are never done and that could have improved the financial health of the owner, had leadership just been bold and moved forward.
Time is money. Over analyzing a situation wastes time, hence money, and furthermore, allows opportunity to slip from one's grasp. I have seen people agonize over four or five million dollars in a $200 million-dollar project thus letting the competition grab market share that was just waiting to be claimed. They become fixated on the four or five million while they let tens of millions of future revenue slip from through their fingers. This is an extremely short sighted and naïve approach.
Next time you are involved in developing a project, make sure you have your perspective correctly adjusted and know where the real money is.
What is your opinion? Drop me a line at
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