All companies want to make more money but as they grow it becomes more difficult. There are lots of reasons why it is so difficult. Yet there is one thing that a company can do which will see them make more money.
In 1996 a company in America lost $816 million and then in 1997, their losses went up to $1 billion. Had this company not turned things around then they would not be here today and be the success that they are. It is surprising when you know who this company is that they could ever not be making a profit.
In this article, you will see what this company did to turn things around and make more money. You will also learn how you can put this approach in place at your company.
The first thing we will look at is the problem and the impact that it has. This is then followed by what you can do about it. You will also see what the company in our example did. Finally, the article will finish on the steps you can take at your company.
The good news is you do not need to be making losses for this approach to work. It is even better if you do this when your company is in profit. If you do then your company will make more money.
How to Make More Money
The problem is as companies grow it becomes more difficult to get projects done. Projects take longer than they should to get finished. The result is they end up costing more than the original budget. Projects get stuck and there is a lot of frustration. This is from both those in the project team and the company senior management.
The impact to the company is the cost of doing the projects goes up. A lot of this cost is actually hidden inside the company staffing costs. The problem is when people are working on a stuck project they are often waiting around for someone else. Often the reason is that they have to wait for them to complete a task before they can make a start on their task. Instead of making money the project is costing the company money.
The biggest impact to the company is the projects not getting done. A project exists to make something better. It can be anything from a new product through to making part of the company more efficient. With this project not delivered the company can not make more money buy selling the new product. Or if the project is about efficiency then the company will not feel the benefit of these savings. There will no reduction in company costs. Successful delivered projects mean the company will make more money.
So if a company wants to make more money they need to stop the projects from getting stuck. There are many reasons why a project can get stuck. But there are three main reasons that come up time and time again that cause projects to get stuck. These three reasons are around project resourcing. The good thing is this is something that can rectified by senior management. By focussing on the resourcing of the project it will lead to less projects getting stuck. This will also reduce the frustration that individual team members experience. Unstuck project equals happy people.
By delivering the projects as quick as possible then the company will not be waste money. Staff will be more efficient not waiting for projects. The sooner the project delivery the sooner a company can realise the benefits. The result will be it will make more money. There is no point doing a project that will never get used, it is a waste or time, money and resources. It is also true that all projects must deliver a benefit to the company. There are some projects that that a company must do for legal reasons. There is still often there a financial benefit to the company. For example avoiding a fine.
In our example of the company above they focused on getting their projects done. They sorted out their project resourcing overnight. This was all triggered by the appointment of a new CEO. With the company profits the result was immediate. In 1997 the company lost $1 billion and they appointed a new CEO in September of that year. The following year the company made a profit of $309 million. What a turn around. A $1.3 billion turn around within a year.
What You Can Do Today to Get Your Projects Done
While there are many reasons why a project will get stuck there are three main ones that come up time and time again. There is something you can do straight away that will stop these problems from occurring.
There are lots of projects going on at once with company resources stretched across all them. By having too many projects on the go there will often be times when projects have to stop. They have to wait for resources with the right skills to become available. This is an unnecessary delay to the projects. Then once they have completed their task the project then has to wait for the next person.
With lots of projects going on there is often no priority for which project to do first. In the absence of priority people make up their own mind about which project they should do. Often this leads to them doing the project for whoever is shouting the loudest. With everyone setting their own priority lots of bits of different projects get done. The problem is no whole project will be complete. The end result is lots of activity but very little to show for it.
The project resources do not work full time on the project. They have day jobs which have sudden urgent tasks that need doing so they stop the project work. The project then has to wait around for the people to become available. This mixed with the resources problem above will lead to a project grinding to a halt.
The company in our example if you have not guessed it already is Apple. In 1997 they suffered their largest ever profit loss. In September 1997 the original co-founder Steve Jobs returned to the company as the CEO. One of his first actions are now legendary in that he stopped 70% of the current projects. His reasoning was to focus on a few projects and make them great. This is rather than having resources spread thin across lots of projects. This is something all companies should do. Focus on a high quality few rather than deliver lots of poor quality which has little benefit. There is no reason why you can not do the same thing now and make more money.
To stop these three problems from happening in your company take the same approach as Apple. Cut the number of projects that you are doing. I would recommend that if you are struggling to get any projects delivered that you go one step further. Focus on doing only one project. The advantage of doing only one project is everyone knows what the priority is. With everyone working on the same project they are all pulling in the same direction. Then once you have this mastered add a second project. But make sure that everyone knows which project is the most important. The reason to not stick with one project is you will find resources are waiting around. They will be waiting for other resources to complete their tasks before they can start. With a second project resources can work on the lower priority project while they wait. Also as part of focusing try where possible to have people dedicated to doing projects. When people have another job to do when they become busy and the project will be the first to suffer.
In summary the way to make more money is by focusing on one or two rather than lots of projects. If you have lots of projects on the go at the same time you will have problems. Resources become stretched and people will become frustrated. There will be confusion over what the priority is. People will be working on whatever project they think is the right project to work on. The end result will be lots of project activity but nothing to show for it. A project that is not complete is not worth anything. It is a waste of time, money and resources. Be like Apple and cut the number of projects you are doing. Even better go one step further and focus on one project to begin with and get that project done. If you do this you will end up not wasting money and instead make more money by having delivered projects.