Success versus Significance
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17 August 2013 - 22:54, by , in Activity-Based Cost Management, No comments

In his highly acclaimed book Halftime, Bob Buford says that most successful men and women go through a soul-searching period at mid-life. They begin to ask the question that singer Peggy Lee made famous: “Is that all there is?”

Most of us spend the first half of our life focused on success. Achieving a successful career, a successful marriage and the like. Mr. Buford recommends that we spend the second half of our life focused on significance. e.g. What will be your epitaph? What do you want to be remembered for? Most Activity Based Management (ABM) implementations experience a similar mid-life, halftime crisis.

Halftime in an ABM project usually occurs right after the implementation team has successfully defined the activities and loaded the ABM software with costs, workload measures and non-value labels. As ABM software reports come spewing out of the printer, the team often looks at the project leader and asks, “Is that all there is to ABM?” The answer to that question and the decisions made at halftime determine whether ABM will have a significant financial impact on an organization.

How do you transition from the successful creation of an ABM software model to the significant benefits your organization desires? You have four choices at ABM halftime. Only two will provide the significant benefits that your organization likely desires:

  • A small change to a small activity is a waste of time.
  • A big change to a small activity is an illusion of progress.
  • A small change to a big activity is the embodiment of continuous improvement.
  • A big change to a big activity is a big payoff.

What is the best choice for your organization? In an organization that already practices continuous improvement techniques, option #3 will significantly convince employees that ABM is a valuable tool that supports, optimizes and sustains cost improvement. On the other hand, organizations that need a big wow should choose option #4. This option will significantly impress any employee who is cautiously optimistic about the potential benefits of ABM. Both #3 and #4 will have a positive impact. Your senior management and employees will be the jury that determines if the activity change was big enough to be judged significant.

Halftime in any sporting event is used by the players and coaches to assess the positive and negative events of the first half. Before the second half begins, a consensus plan is developed outlining the changes and adjustments necessary to win the game. Take a personal and professional halftime this year to make sure your legacy is significant.

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Tom Pryor
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