Some time ago, we were interviewed by a couple of researchers on social and the value of social business. They asked how we document our claims concerning the potential cost savings and business process efficiencies we have published in our first edition of the Social Business Cookbook.
In the original blog post about the cookbook, we wrote that it was the public excerpt of a more comprehensive internal version, which it indeed is. We still cannot share all the cases, but I would like to shed a bit more light on the cost saving case and also the type of cases which show us how double or triple business process output can be achieved if the process is designed with this ambition in mind.
By the way, if anyone has the slightest doubt; Ambition is the key! Our experience so far is that the lack of leadership ambition in terms of culture and behavior change is the number one factor that defines the limit for a performance boost. So far, I have diagnosed the symptom to a combination of lack of courage to question the ordinary, and a lack of knowledge concerning how social technology works (or should work) in an enterprise. Anyway, back to the cases and our performance measures.
How we came up with a figure on cost saving potentials
Our calculation was done using simple math and conservative estimates of a few important assumptions. If you want to do the exercise yourself, the recipe is the following;
- Define a sample time-period for the analyses (parameter T, defined as a number of months within a year in our case).
- Find the number of cases (analyze on conversation level!) where you identify engagement which has resulted in direct savings (for example we had a case where employees themselves found out that a simple agreement change with a software provider would save the company $20.000) (parameter S).
- Do the same for what we could call cost avoidance. As an example we had a case where employees themselves discovered that one department had the tools necessary to help another department who were potentially ready to spend $30.000+ to get such a tool (parameter A).
- Identify how many percent of your employees are actively engaged on your network (parameter E).
- Estimate the average ‘digital IQ’ of your enterprise or organization (parameter Q: defined as a number <1 in our case). Actually this is an aggregate measure of digital literacy (or skills) and community (or network organization) maturity. If you wish, you can introduce two separate parameters instead of one aggregate.
Naturally, Q is where you introduce bias and subjective judgment, unless you have a maturity assessment or other qualitative and quantitative research instruments in place!
When we did our first estimates we used a Delphi-method approach and asked 6 of the people we considered experts or most knowledgeable to get a consensus measure. In addition, we used knowledge from the first version of the social business maturity assessment we did back in 2013. Right now, we are actually ready to start analyzing the results of our second round of quite well prepared social business maturity questionnaires. And needless to say that we are looking forward to see the results!
We ended up estimating what we call the 1.st level potential savings to $50+ million. By 1.st level we mean that no-one had asked people or teams to work with or look for savings at all! We just tapped into what was going on – but imagine what would happen if Mads or our CFO asked people to do serious jam sessions designed to identify savings or amplify cost avoidance! That could be awesome I think.
Why the productivity of many business processes can doubled or tripled
First, let’s make it clear that there are many different kinds of business processes. A few of the ways to categorize are structured vs. unstructured, automated vs. manual, and simple vs. complex, easy vs. complicated.
The processes that are particularly well suited to improve through social (technology) are those which can be characterized as complex or complicated and somewhat manual. In fact, this is quite a large part of what is going in enterprises today (sales and marketing content development and curation, demand and production planning, sales optimization and CRM, HR onboarding, budget and performance evaluation, business and strategy development or deployment, and so forth…).
Common to many of these processes are that improvement or positive impact rely heavily on human interactions and intelligence focusing on aggregation and exchange of knowledge, as well as speed and transparency.
Some of the cases we have documented are e.g. strategy development and deployment, PIT-productivity (Process Improvement Team) and project management. The typical patterns for these cases are that we increase the volume of contributions by a factor 2-3 and decrease the amount of time needed to collect the relevant information to a third. In theory this gives a productivity boost by 600-900%, and when we from a qualitative perspective subtract the contributions which are not adding value we can comfortably postulate that a 300% process productivity improvement is a conservative and credible estimate. But think once again – what is the value of having more people involved and feeling part of an important project? And what is the value of creating transparency about priorities and key project across organizational boundaries and hierarchy? It’s definitely worth more than we think!
Why all internal events can be executed with half cost and better output
Most events can be planned and executed with a budget of half of what an arbitrary organization has become habituated to set aside for that particular event. We have monitored two cases which represent two internal event archetypes; A small event (launch of a service catalogue) and a very big one (finalization of an executive talent program).
For both events, the key success factors were a willingness to set aside the traditional way of thinking events;
- We need to bring everyone physically together
- Events are limited to one single time slot (in one single time zone)
Basically, if you get your mind away from this way of thinking, you are able to pull off some seriously engaging and cost effective events. They key ingredients are 1] Purpose + 2] Virtual Event planning;
- You can link multiple locations and time zones
- You can facilitate a whole new creative process where multiple sharing streams from multiple platforms is much easier, and generates new ideas. As a side comment, this also allows (and we see it happening) the more introvert human beings to be more active and visible. And funny enough, some of the best input come from these types.
The key take-away
The common denominator in every success we have experienced in Grundfos is a real ambition to succeed from doing things differently and staying super focused on the decided business purpose throughout the entire activity. We see it happen when individuals rally a spirit of courage and willingness to succeed no matter the changed circumstances, and therefore they succeed with applying new technology and new ways of collaborating to reach the desired target.
All in all, the conclusion is that what essentially separates an ordinary enterprise from a successful one is to generate the necessary leadership courage to question the ordinary culture of ‘how we work’.