Corporate strategy

In praise of small ideas

March 27, 2014: 5:00 AM ET

Big, transformative strategies create buzz, but a new book contends the real money is in the everyday stuff that most companies overlook.

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FORTUNE -- Early on in Low-Hanging Fruit: 77 Eye-Opening Ways to Improve Productivity and Profits, co-authors Jeremy Eden and Terri Long quote Warren Buffett: "I don't look to jump over 7-foot bars. I look around for 1-foot bars that I can step over."

Those small steps to greater efficiency, and fatter profits, are low-hanging fruit that any company can pluck, the authors argue. "Many managers are convinced that, after years of cost cutting, they picked their low-hanging fruit long ago," they write. Alas, that's often not the case: "Cost cutting often leaves the low-hanging fruit and instead lops off branches without regard to what is left of the tree."

Eden, an erstwhile McKinsey consultant, and former bank customer-service executive Long are now co-CEOs of Chicago consulting firm Harvest Earnings Group. Their lively book distills what has worked for their Fortune 100 clients over the past 20 years. They knock over a few sacred cows along the way.

Take, for example, benchmarking, which the authors contend is "a complete waste of time," since comparing one company to any other, even in what may look like the exact same business, is more often used to "justify the status quo" than to spark change or innovation.

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Another wrongheaded notion, by Eden and Long's lights, is that throwing more technology at a problem will always solve it. One utility company they had advised was ready to put in a pricey software program to schedule teams to trim tree branches away from power lines. Instead, a line supervisor suggested a "simple, no-tech solution: Have crews in the field report when trimming is necessary, because [they] are better at assessing the situation than software programs are." Immediate savings from skipping the software and dispatching tree-trimmers only when needed: $100,000.

Fixes like that are unlikely to spring from getting people together in a room and asking them to come up with problem-solving ideas, the authors write. Instead, they suggest that companies get the people closest to the work to talk about problems you probably don't even know about, and then following up by setting a deadline for solutions.

PNC Financial, for instance, didn't just encourage suggestions but required employees to find and fix inefficiencies. The result: about 2,400 small improvements in the way things were done that added up to $400 million a year in extra profits. After PNC merged with National City in 2008, the companies applied "the same fact-based high-speed rigor" to the new entity, which gave rise to another $2 billion in operating efficiencies -- about double what bank analysts predicted.

Sometimes, of course, the people dealing with small inefficiencies every day are, paradoxically, too accustomed to "the way we've always done it" to spot the low-hanging fruit that's right in front of them. One way to get a fresh take on long-established habits: Ask human resources for a list of everybody who's been hired in the past 12 months, "anyone from the corner office to the mail room," and then ask those newcomers to point out anything they've noticed that you could be doing smarter, faster, or cheaper.

Vendors are another frequently overlooked source of insight. Because they usually know your industry inside out -- including what your competition may be doing more efficiently than you are -- vendors are often "the perfect army of outside observers."

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Want to make sure your employees feel comfortable pointing out areas of improvement? Watch your body language. Eden and Long have observed that some managers, pressed for time, inadvertently send not-so-subtle signals that squelch good ideas. "The first rule is to be careful about gestures, eye-rolling, [and] apparent inattention," they write. "Employees are often looking to read the tea leaves, and body language becomes just as important as the words that are said."

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