Forget about cost reduction: Increase focus to double productivity

Antonio Nieto-Rodriguez
I
6
min read
Forget about cost reduction: Increase focus to double productivity

Lack of focus is one of the biggest hindrance organisations face in achieving their strategies. This issue is magnified by the fact that human beings tend to disorder and procrastinate.

In this article I will demonstrate the consequences of this lack of strong decision making and attention on what really matters, and the impact it has on the overall productivity of an organization as well as on the happiness and engagement of the employees.

1. Prioritization and focus starts at the top with the executive team

Without focus, a company cannot achieve an execution culture. Unfocussed companies pursue too many objectives and have too many initiatives. During the workshops I conducted with senior managers, I asked them to list their company’s top three objectives. There was never a unanimous list. If top management is unclear about the initiatives in which to focus the company’s efforts, then staff will never know where to invest their time. The greater the number of strategic objectives and priorities, the more unfocussed the employees become.

Alternatively, if top management is more focussed, the employees and departments have a clearer understanding of what they need to do on a daily basis. When priorities cascade down the organisation, the result is often a distorted focus. Frequently, there is a significant distortion of focus when priorities are cascaded down to the organisation. The situation might be similar to that shown in red.

Another significant consequence is that lack of focus leads to lack of discipline in executing organisational objectives. Focus imposes discipline because employees at any level know what to do at any point.

A final sign related to the lack of focus and execution culture is when companies brainstorm the same new ideas again and again. Decisions are either not made; or when they are made, they are continuously refined before they are carried out. I am not arguing against brainstorming. On the contrary, it is a positive way to involve the entire organisation in decision buy-in or in obtaining broader points of views. But brainstorming on a new initiative or on the overall strategy should not take longer than a few weeks. Afterwards, management is responsible for making decisions.

2. By nature, "we" human beings tend to disorder and love procrastination

A recent study from Harvard University’s happiness experts, Mr Daniel Gilbert and Mr Matthew Killingsworth, shows that human beings are by nature unfocussed. At any point, an average of 50 per cent of the population is not focussed on what they are doing. In addition, 30 to 40 per cent of an employee’s time in the workplace is spent tending to unplanned interruptions and then reconstituting the mental focus that the interruption caused. This was not the case 20 years ago, simply because the tools of interruption were not so plentiful.

3. Impact of lack of focus on productivity

It is difficult to estimate the waste that is created by unfocussed companies and employees. To come up with a rough calculation, I took a simple measurement of labour productivity, such as the ratio of the real value of the company’s output to the input of labour (hours worked). To keep things simple, I excluded the qualitative aspects of labour productivity, such as creativity, innovation, teamwork, and improved quality of work.The following is the sample productivity calculation, which applies primarily to run-the-business activities:

  • Units produced: 10,000
  • Standard price: 80€/unit
  • Labour input: 1,000 hours

In a focussed company, the work is done in half the time, thus 500 hours.

  • Cost of labour: 40€/hour
  • Cost of material: 2,000€
  • Cost of overhead: two x labour input

Improved focus will double productivity by:

  • Significantly decreasing the company’s projects (cost reduction),
  • Improving the selection of those projects that will bring the highest return to the business,
  • Adjusting the organisation to facilitate the execution of projects, and
  • Helping the allocation of the best people to the most strategic and important projects, which increases the probability of achieving results and attaining them more quickly.

4. Unhappy, unengaged and unmotivated staff


One of the most dramatic consequences of being an unfocussed company is the impact on employees. The lack of clear direction and priorities causes employees to be unhappy with what they do, because they do not understand how their work contributes to the company’s goals. Employees who are working on projects feel that management disregards their issues or achievements. They choose to work only the number of hours stipulated in their contracts, or they might even start to be absent regularly. Consequently, unfocussed companies do not get the most out of their staff.

The key for success and productivity : Focus and discipline

If top management does not encourage their staff to focus or even impose focus on key tasks and priorities, the chances are very high that the employees’ minds will wander during their working hours. They may work on tasks that they think are important, which often are the easier tasks; may respond to E-mails; and may spend most of their time in meetings.

As mentioned above, nature tends to disorder, and being focused requires discipline and order. Focus requires energy and effort. We humans have mixed feelings about expending energy, even if we know it will bring us pleasure. For example, in the Harvard study, the second-highest-rated activity in terms of providing happiness was physical exercise.

Let’s be honest, how many of us avoid that?

This post is an extract of an article I originally published in Singapore Institute of Management Today’s Manager magazine.

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