Build or burn?

Prioritisation – what are you going to stop doing?

Prioritisation means stopping doing things that you previously did.  It is very hard to do.

No one ever pitches a great idea of what they are going to stop doing.  It’s always new projects.  The proposed action is always pressing and it always costs money, at least in the short term.  This is the case in business but especially so in the public realm when newspapers and commentators excoriate the government for not doing more to [fill in the cause of your choice].  Always more must be done.

The whole of economics is based on a single truth: that resources are limited.  There will always be worthwhile projects; there are always improvements that can be made; and there is one simple way to find the resources to do them: prioritisation.

Let’s assume that everything everybody does at present is worthwhile.  Perhaps there are people with completely duff jobs that involve digging holes and filling them back in, or adding up phone directories, but it’s a reasonable assumption that every task presently being done has some value.

Considered in isolation then, nothing should be stopped because everything has value.  But now write down everything that is done ranking the most valuable at the top to the least valuable at the bottom.  Prioritisation means stopping doing the things at the bottom of the list.  Hey presto! We have made resources available for any new priority that comes along.

This is how cost-cutting works.  It can be strange the looks on people’s faces when you see them contemplate stopping something that has always been done.  It is disorientating for some, liberating for others.

Every corporation has 10% of fat that can be cut easily.  Really, all you are doing is putting a stop to the profligacy that can creep in when businesses are run by managers rather than owners.  After the collapse of the oil price in 2014-15 the oil industry cut out huge chunks of fat which had been allowed to be over-looked when oil was $115.  Cutting harder that 10% requires prioritisation.  Remember however we assumed everything being done now has some value.  That means stopping things will hurt and those affected will complain.

When cutting costs, it’s difficult to tell whether those complaining are just defending their turf or coming up with legitimate complaints.  If you don’t trust your managers then it can be effective just to keep squeezing.  Eventually when the volume of complaints reaches a certain pitch, you know the pain is genuine.  It’s blunt but effective.

It is easy to stay stop, but it is rarely a question of literally stopping doing something today that you did yesterday.  More often it involves working out how to deal with the consequences of stopping, or finding alternative approaches that will allow you to just stop.  This sort of work is hard, unpleasant and time-consuming.

Newspaper leader-writers are not responsible for running things.  That’s not their job.  They can get away with just advocating action with no care for how it will be implemented, but managers do not have that luxury.  They are responsible, or should be.

Every day in newspapers and boardrooms across the land there are people advocating for more money so that they may do something good or worthwhile.    Faced with these pitches, leaders should respond ‘That sounds great.  Now tell me what you propose we are going to stop doing’.

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