Relay Race
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16 August 2013 - 22:57, by , in Activity-Based Cost Management, No comments

“Poor Pass Costs Frogs Relay Title”

This newspaper headline recently caught my interest. Texas Christian University’s Horned Frogs 4×100-meter relay team was on its way to a national championship and possible collegiate record. But while leading the final race, the last two members of the team failed to cleanly make the third and final handoff. They dropped the baton and another team won.

The implementation and use of Activity Based Management (ABM) for continuous improvement is very similar to a relay race. It will be won or lost on the handoffs.

There are four ABM handoffs:

  • Senior management starts the race by defining the needs for ABM, providing implementation resources and being visibly supportive of the process. Based on annual surveys of American Management Association workshop attendees, 75% of ABM Pilot Projects never get out of the starting block due to the lack of senior management support.
  • The second leg of the race is when senior management hands off to the ABM Project Leader. Management must hand this person the list of business needs and resources to implement ABM and ABC. Without proper ABM tools (books and software) or trainingthe project leader will likely trip after the handoff. If felt necessary, the project leader may want an ABM coach or consultant to reduce the chance of tripping and prepare for the next leg of the race.
  • The third leg requires the ABM Project Leader to hand off his/her knowledge to the managers of the ABM implementation site. If financial and non-financial managers don’t understand ABM they will “drop it”, e.g. not show up for activity analysis interviews, miss due dates, not use the ABM software reports, etc.
  • The fourth and final leg is the handoff from the ABM Project Leader and managers to all site employees. No one enjoys or wants to be measured using a financial tool they don’t understand. Managers should make transfer of their ABM knowledge and skills to the entire workforce a high priority. If everyone does not understand, use and benefit from ABM, you’ll never win the race.

While working at Motorola during the 1980’s, I experienced first-hand the race towards Six Sigma quality. Motorola management, starting with Mr. Galvin, chairman of the board, made sure that each of the four handoffs of Total Quality Management (TQM) were accomplished. By the time Motorola won the National Baldridge Quality Award in 1990, every employee had received TQM training.

Each ABM handoff also requires special attention to the Five C’s of ABM Success:

  • Convince: Senior management and the ABM Project Leader must have a convincing understanding and faith in Activity Based Management. If they can’t explain ABM, the employees will not follow. Don’t shoot the implementation “start gun” before senior
management can explain ABM to their staff!
  • Consistent: Commitment and faith in ABM must be consistent. If several three-letter acronym projects (TQM, JIT, BPR) have been attempted in the past, employees will be very naturally skeptical that ABM will not last beyond 90 days.
  • Contagious: Excitement about ABM must be contagious. Celebrate activity improvements. Share ABM success stories and articles. Invite other organizations that have ABM experience to make presentations to your staff.
  • Confident:If you’re not sure about ABM or ABC, how do you expect to make other people certain? Fill in your knowledge voids with ABM booksonsite training or expert ABM coaches.
  • Challenge:Run with someone who is faster than you. Use your ABM data to benchmark with other organizations. Be the best you can be.

Based on previous competitions, the relay races of the upcoming Summer 2000 Olympics will likely be won or lost by the last person who takes the baton. As a result, most track coaches put their best runner last. The fourth and final runner is called the anchor because the results of the race hinge on their performance. Don’t overlook the handoffs in your ABM system. Especially the final leg. If all employees don’t understand, use and benefit from ABM, it will be very difficult to win the race in your competitive marketplace. Get ready with an ABM training plan. Get set on your methods. Now go for the gold!

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Tom Pryor
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