Seven Vital Resources And The Big Twins
Look around your organization. What do you see? Basically, you see people, things, and activity. Hopefully you see the people employing the things to create efficient and productive activity.Ah, there are a couple of interesting words: efficient and productive. I call them the Big Twins - the two concepts found in abundance in any successful organization. The best way to get the Big Twins working for you is to identify and understand the relationship between what our friend,Steve Martin, calls The Seven Vital Resources Of A Cost-Effective Organization, which are: Financial, Material, Space, Time, Energy, Knowledge, and People. Steve is a valuable member of our Brain Trust, and President of Business Solutions - The Positive Way.
In his book, Creative Approaches To A Cost-Effective Organization, Steve points out that every organization, whether productive and efficient or not, has all of these resources. So if these resources are essential to success, and everybody has them, why aren't all organizations successful? Well, believing the Big Twins are important to success, and getting them installed in your organization, can be like knowing you need to lose weight and actually doing it. And just as there are as many dieting results as there are people on diets, there are as many variations of managing The Seven Vital Resources as there are companies.
Let's take a look at The Seven Vital Resources, and as we consider each one individually, also notice how they relate to each other.
Financial
Along with the economic tables and written language, the other most important development in human history, as Adam Smith proposed in The Wealth Of Nations (1776), is money. I think Steve Martin places "Financial" first on his list because an organization that can't manage its financial resources effectively probably won't get to manage the other resources for very long. And as you will see as we talk about the other resources, you never get far away from how they relate to your financial resources.
Smith also points out that money has no value in use, only value in exchange. Steve and I encourage you to diligently monitor how you exchange your cash for goods and services. But the exchange activity, spending money, is the easy part. Unfortunately, operating for profitability and understanding cash flow is not so easy for many entrepreneurs. Therefore, be sure you establish a disciplined plan for acquiring current and accurate financial information about the operation of your business. Long term success without such information is virtually impossible.
Material
Material is anything that you can store, hold, kick, paint, clean, move, count, or sit on. Steve says it's the stuff you bought for your organization to use or sell. The best way to make sure you manage material resources well is to understand the full impact that the acquisition, storage, and use of material has on your organization.
While Steve encourages us to closely track the acquisition of all material, he also reminds us that the impact buying and holding material has on your company's financial success is often underestimated. Read the list in the first sentence in the paragraph above again. Notice all of the things that you can, and often must do with material, which requires the involvement of the other six resources. Recognizing that buying stuff is a multi-faceted consideration will help you make better use of the Big Twins.
Space
Steve says space represents money. Whether rent or mortgage payments, you pay for space. But like all resources, the space you need shouldn't cost you anything, it should make you money. The problem with space is when you buy too much, or too little. Be careful that your ego doesn't get in the way of prudent space decisions. Too much space is wasted money, and too little space will negatively impact your ability to install the Big Twins.
Time
Think of your business as a leaky bucket. It's okay, even the very best organizations have leaks. One of the biggest leaks that can never be plugged is the one called "Time". Every tick of the clock is a drip of resources out of your company. Some holes in your "bucket" can be plugged, but the only way to deal effectively with the time leak is to manage your time so well that the opportunity you create is greater than the effects of the ticking of the clock. You can fix some leaks in your organization by installing and employing the Big Twins, but remember, you can only manage those other twins, time and tide. Tick, tick, tick...
Energy
Electricity, gas, water, fuel, George. That's right, you have to be a good steward of your employees' energy, too. Energy consumption is an example of the most insidious erosion of resources. Over a year's time, poor monitoring of energy resources we often take for granted, lighting, heating and cooling, for example, can suck cash out of your company and profits off your bottom line. But the big energy issue for many businesses is fuel for vehicles.
Over the past year, gasoline prices have increased significantly, and there is no reason to expect lower prices in the near future. Review delivery schedules and routes to minimize fuel consumption. Contact distributors to negotiate contract fuel rates and direct billing rather than retail pump prices. Just because the U.S. government doesn't have an effective energy policy doesn't mean you shouldn't have one.
Knowledge
Steve says that we will ride knowledge into our future. What that future looks like depends on our ability to create and harness knowledge. But knowledge also has to be managed. Where do you keep what you know? Can you get to it when you need it? When you find it, can you use it efficiently and productively.
You can hire smart people and train your staff, but if your information management systems are inefficient, you've got what some of my old mentors used to call "a dollar waiting on a dime."
Information well managed becomes knowledge. Knowledge well managed creates fertile soil in which to grow the Big Twins.
People
I would never bore you repeating old clichés like, "Your people are your business," or "Your employees are your most important assets," or "Take care of your people and they will take care of you." But I'm not above giving you one of my new clichés: In your small business there are always more hats to wear than there are heads to put them on. As you know very well, everyone in your business has to wear more than one hat.
But it's not enough to hire good people who can pull off the hat trick, you have to be a good steward of this most valuable resource. Steve says that 85% of resignations and terminations are a result of relationship issues with someone inside the company. A relationship issue is one that, as a manager, you can fix before it gets out of hand.
Even today, we operate our businesses in an employee's market. Believe me, you can't afford to lose even one employee because they feel unappreciated. Steve says the human energy in your organization should be focused on improvement and success, not conflict, errors, or misdirection. Poor performance is a justifiable reason for parting ways with an employee. Poor management of that employee is not.
One of the best ways to be a good steward of personnel resources is to assume the attitude that your success will result from the success of each of your staff, and the teams in which they operate. Subordinate your ego to feed the egos of your employees. Feed your ego by knowing that when your people are successful, you will be, too.
Finally
The best way to be successful in business is to install and employ The Big Twins: Efficiency and Productivity. The best way to do that is to effectively manage all of The Seven Vital Resources. Effective management happens when you create a strategy for each resource, then execute that plan.
Write this on a rock... When you effectively manage The Seven Vital Resources, and successfully install the Big Twins, dollars will come and play in your back yard.
