Happy Anniversary… Don’t Divorce ABM
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8 August 2013 - 23:43, by , in Activity-Based Cost Management, No comments

“Almost 80% of couples who were ‘very unhappy’ in their marriages and agreed not to divorce described themselves as ‘happy’ five years later, a new study finds. Of those who divorced, only half were ‘happy’ five years later.” (1)

The preceding research published in The Wall Street Journal is a timely reminder that marriages which work out their problems end up happier than those who walk out. On December 31, 2002, I got a phone call from John, a manager in a large organization. He had read my article on Improvement Keepers, the ten habits of the ten percent who successfully sustain continuous improvement and Activity Based Management (ABM). John said, “Tom, I need to visit and talk with a ten-percenter as soon as possible. Can you give me some people to contact? If we don’t figure out what we’re doing wrong, our management is prepared to abandon the Activity Based Cost system we implemented in 1999.” After four years of “marriage”, John’s senior management is prepared to “divorce” ABM.

When it comes to fulfilling New Year’s resolutions, it’s easier to stall than to start. And when it comes to marriage, too many people are more inclined to stop than sustain. I provided John the names of several organizations… Federal Express, U.S. Patent & Trademark Office, Ralston-Purina to name a few… that have many ABM anniversaries to their credit. When he has completed several visits, John will learn the marriage of ABM to each “Improvement Keeper” organization is unique. But if he listens carefully, I believe John will also find a common theme in each of these lasting ABM “marriages”… partial surrender is no surrender at all.

Half-baked attempts at improvement typically fail. Full surrender to a commitment is required for sustained success. For example:

  • You can’t lose weight dieting at home but overeating at work.
  • You can’t be ethical being heavenly on Sunday and a heathen Monday through Saturday.
  • You can’t be successful using goals at work but no goals at home.
  • You can’t be a good money manager with a budget at work but no budget at home.
  • You can’t be fully committed to Activity Based Management if you focus on managing activities at work but disregarding activities at home.

Why is it difficult for people and organizations to sustain commitments to improvement? Why are sound business practices such as Activity Based Costing, Total Quality Management, Continuous Improvement, Six Sigma, Lean Manufacturing and Process Re-Engineering implemented and then abandoned? I believe one reason for abandonment has been heretofore overlooked. Employees have been taught how the principles of each improvement method apply to the organization but not them personally.

I believe that we must teach people how to use the principles of ABM at work and at home. My opinion is shared by several experts in the field of change management:

  • “People change what they do less because they are given analysis that shifts their thinking than because they are shown a truth that influences their feelings.” (2)This statement from their new book, The Heart of Change, Harvard Business School’s John Kotter and Deloitte consultant Dan Cohen remind us that managers will not embrace Activity Based Cost facts until they understand how the new data influences their feelings. “The flow of see-feel-change is more powerful than that of analysis-think-change.” (2)
  • The author of The Fifth Discipline, Peter Senge, has been asked by many companies, “How do we sustain momentum?” He answered their question in a new book titled The Dance of Change. Mr. Senge says, “In this book, we use the term ‘profound change’ to describe organizational change that combines inner shifts in people’s values, aspirations, and behaviors with ‘outer’ shifts in processes, strategies, practices, and systems.” (3)If employees don’t understand and embrace the principles of ABM, ABC, Continuous Improvement, Total Quality Management or other improvement tools in every aspect of their life, the tool will likely be abandoned. If people feel the principles of ABM are inconsistent with their personal values, divorce will be the destination.
  • “In his book Freedom to Learn, Carl Rogers states that the only learning which significantly influences behavior is ‘self-discovered, self-appropriated’ learning. Only when subject matter is perceived as being relevant to a person’s own purposes will a significant amount of learning take place.”(4) Using personal examples helps people understand and embrace the principles of Activity Based Management. For example, if remodeling a home, you will need to identify the Bill of Activity, i.e. Architect 20 hours at $100/hour + Contractor 10 hours at $25/hour + Plumber 8 hours at $45/hour + Carpenter 20 hours at $40/hour + Painter 12 hours at $15/hour = $23,500 total cost. Offering personal examples of ABM often leads to understanding, sustained use and permanent marriage of ABM to an employee’s professional life.

Change in any organization happens one person at a time. Most people desire to be a part of something bigger than themselves. Providing ABM training that impacts each person builds strength through the power of multiplication. Therefore, don’t exclude any person that desires to contribute to the cause of improvement. Include them. Help people participate.

To develop a strong marriage between ABM and your organization:

  • Teach people how the basic principles of ABM can apply to both their professional and personal lives.Otherwise, they may think ABM is a waste of time. ICMS offers a half-day, onsite workshop. For more information, send an e-mail to tompryor@icms.net.
  • Teach people how to read, interpret and use ABM reports. Anything new can be intimidating. ICMS offers a one-day, onsite workshop using your actual ABM data. For more information, send an e-mail totompryor@icms.net.
  • Teach people how they can do their jobs better using ABM information. People embrace things that make their life easier. For ideas and help, send a request to tompryor@icms.net.

The success and sustainability of ABM requires big and small steps. John MacArthur says in Twelve Ordinary Men,“Some people see the big picture more clearly just because they appreciate the value of small things.” (5) Casting a vision and setting measurable improvement goals are important tasks for a leader. But leaving no one behind is equally important if those goals are ever to be achieved. Sustained success requires a big goal accomplished by little people.

Regaining a balance between my personal and professional life several years ago has provided numerous benefits, including three important anniversaries that take place this month. During January 2003 my wife and I will celebrate our 34th wedding anniversary, ICMS celebrates our 15th year of business and ICMS celebrates the 10th service anniversary of our terrific marketing manager, Christine Nola.

If you feel out of balance or contemplate “divorce”, be like John. Please give me a call – 817-475-2945. Lets develop and implement a plan to bring a personal and professional balance to your Activity Based Management system as well as your life. People, organizations and improvement systems that stick together through thick and thin are the happiest. I look forward to calling you to say, “Happy Anniversary”.

(1) “Divorce Makes a Comeback“, Jeffrey Zaslow, The Wall Street Journal, Jan. 14, 2003
(2) The Heart of Change, John P. Kotter and Dan S. Cohen, Harvard Business School Press, 2002
(3) The Dance of Change, Peter Senge et al., Doubleday, 1999
(4) Information Anxiety 2, Richard Saul Wurman, Que Publishing, 2000
(5) Twelve Ordinary Men, John MacArthure, Word Publishing, 2002

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Tom Pryor
TomPryor@ICMS.net
(817) 475-2945

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