“I wish there was a Waze app for navigating my business and career.“

When driving I use the Waze app on my cell phone because:

• It offers me alternative routes to my desired destination.
• It routes me around unexpected obstacles, like accidents.
• It re-routes me to my desired destination if I make a wrong turn or mistake.

Someone recently asked “Is there something like Waze for my business?”

I answered “Yes, there are three versions. Mentor, coach or business advisor.”

Instead of you looking at a screen they look you in the eyes. A mentor, coach or business advisor ask great questions. They listen. They help you decide.

Like Waze, these three business applications offer alternative routes to your desired business or career destination. And using their personal experience, skills and wisdom, a mentor, coach or business advisor guides you away from obstacles and picks you up when you’ve made a mistake.

If you or your business needs a Waze, download me at TomPryor@icms.net .

• You didn’t realize the importance of having an accountability partner;
• You don’t want to be held accountable;
• You don’t know who to ask to be your accountability partner;
• You don’t know what to do when you meet with an accountability partner; or,
• You see the need for accountability but are procrastinating.

I have had one-on-one accountability several times in my life. Each time was an apex of both professional achievement and spiritual growth. I was very fortunate to have mentors during most of my ten years with Johnson & Johnson. Both John and Ron coached and counseled me on what to do and what not to do. And more importantly, they walked their talk. Good accountability partners lead by example, not by just words, e.g. Do as I say, not as I do.

Today Brian is my primary accountability partner. My wife has a say as well! As chairman of the elders in our church and controller of a large law firm, Brian holds me accountable, both personally and professionally, to God’s standards. And vice-versa. It’s a mutual covenant. We challenge each other to improve. And we pray for eachother’s needs.

Do you need and want an Activity Based Management (ABM) accountability partner?

Here are three questions to consider, whether it be for your ABM system or your personal life:

1. Who should I ask? 

No matter whether you already have an ABM system or are simply contemplating implementation, spend a few days creating a potential list of names. The more the better. While it would be best for this person to be nearby, don’t overlook qualified partners that are only a phone call or E-mail away. If you need ideas, E-mail me atTomPryor@ICMS.net. Contemplate the names. One or two may surface as the best candidates. Then interview them. Tell them that you’re looking for someone to meet with regularly. Either monthly or quarterly, depending on what works best. Share with them your written goals. Ask them if they feel qualified and interested in (a) holding you specifically accountable for achieving your written goals and (b) generally accountable to a pre-defined list of ABM Accountability Questions e.g. “Have you taken time to celebrate activity improvements during the past quarter?” or “Have you exaggerated ABM-driven cost savings?” For a FREE copy of the complete list of ABM Accountability Questions, send an e-mail to tompryor@icms.net.

2. What should I do? 

Accountability meetings are simple. You don’t necessarily need an agenda. Your accountability partner should ask you three types of accountability questions:

1. Goal Accountability … How are you doing in meeting your list of written goals?
2. Specific Accountability … Is there a specific event or issue you would like to discuss? Use a pre-defined list of ABM Accountability Questions to specifically target new issues. The questions also can serve as an icebreaker and roadmap.
3. General Accountability… Are you concerned about anything in general?
4. When should I do it? 

Maybe you already know who to ask and what to ask. If so, then why haven’t you started your accountability meetings? The most common excuse is procrastination. You have the best intentions but you haven’t gotten around to doing it. If that’s the case, then you’ve just made the best argument as to why you need an accountability partner. Procrastinators need accountability. It’s time to change all that. Start today! Create your list of accountability partner names and accountability questions. If you need ideas for both, send an E-mail toTomPryor@icms.net.

The difference between ordinary and extraordinary is that little “extra”. An accountability partner can help you achieve that extra. Has your organization committed to implementing Activity Based Management this year only to forget the goal within a few weeks? Or, has your management team set an objective of expanding ABM continuous improvement training to include all employees but you don’t know who to call or what to do? You need an ABM Accountability Partner. The benefits of ABM and ABC are lost every day you defer implementation and improvement. Are you ready to make an ABM commitment? If so, give me a call. I’ll hold you accountable.

The recipe for faltering or failure in today’s fast-paced global economy is to be content with your own knowledge. Traditional cost systems that account for actual spending by resource type on a monthly basis were primarily designed to meet external reporting requirements. They were not designed for holding managers and employees accountable for effectiveness and efficiency of performance and decision-making.

Measuring actual spending versus a budget or standard cost could be construed to be a form of accountability. Yet the typical material, labor and overhead budget and/or standard is typically developed by looking at the past accounting records coupled with some measure of management commitment to improve in the future. Does accounting for actual spending versus budget qualify as a form of accountability? If senior management dictate negative or positive consequences based on performance to budget, then I would answer this question as yes e.g. my boss is holding me accountable. However, is this singular form of accountability adequate to meet every organization’s needs?

In today’s competitive marketplace, the most important ability is accountability. Accountability precedes improvement. Continuous improvement is an absolute requirement that all manufacturing, service, educational, not-for-profit and governmental organizations must achieve to survive and thrive. Previous articles on the ICMS.net web site, The Journal of Cost Management plus many other magazines have proposed ideas and portrayed case studies documenting the need for improved accounting systems.

Traditional cost management systems fall short on accountability. But to be held accountable, managers need accounting systems. To insure that their accounting systems support continuous improvement, managers should consider the following three forms of accountability:

• Traditional cost systems measure “how much did we spend?” Activity Based Management (ABM) systems measure “what did we do with what we spent?” ABM cost systems raise one-on-one accountability to a multi-dimensional level by measuring activity, output and value.
• Traditional cost systems are inward focused e.g. actual versus budget. ABM systems are outward focused e.g. activity cost benchmarked to global best practices. ABM systems open the door for mentor accountability. Traditional systems simply document what costs have been or are today. Activity benchmarks document how good an organization can be at practical capacity or should be with best practices.
• Traditional cost systems measure cost vertically e.g. by cost center. ABM systems measure cost horizontally e.g. activity cost by business process. ABM systems open the door for group accountability. A group of people focused on working together to perform a business process is a powerful method to help everyone be accountable for their cost, cycle time and quality improvement commitments.

One of the hardest things in the world is to accept criticism and turn it to your advantage. I encourage you to use the past, current and future articles of ICMS and other authors as a form of accountability to challenge your own opinions and organization. Conversely, we here at ICMS are also accountable, to you our readers. Please send me your constructive criticism via E-mail TomPryor@icms.net. We’ll all be better for it.

• Diets and exercise are easy to start or stop. Keeping a healthy lifestyle is difficult but worthwhile.
• Joining a church is easy. Staying home is easier. Keeping a daily commitment to Bible study, prayer and living a holy life is difficult but worthwhile.
• Starting Activity Based Costing (ABC) is easy. Stopping ABC is even easier. Keeping an ABC system running is apparantly not easy but worthwhile.

People are often surprised when I inform them that 90% of the organizations that implemented ABC during the past 15 years have abandoned the system. Dr. Annie McGowan of Texas A&M University confirmed this statistic in a study she published Summer 2001. But when I recently re-read the study and it’s abandonment headline, I noticed that all the organizations studied had experienced measurable benefits (1).

I asked myself “Why did organizations that benefited from ABM stop it?” I came up with three primary reasons:

• Some organizations abandoned ABM because that was their plan all along.They never intended to convert to ABM/ABC. Instead, ABM/ABC was intended to be a one-time project to address a specific business need, i.e. identify $100,000 cost savings, confirm a product line profitability strategy, re-engineer a process, etc.
• Some organizations simply lost interest, focus or attention.They did not make a decision to stop ABM. Instead, it just happened. “Just as attention deficit disorder is diagnosed with increasing frequency in individuals, organizations can suffer from ‘organizational ADD’.” (2)
• Some organizations abandoned ABM because their managers did not know how to sustain improvement.No one had compiled a list of what the 10% do to successfully sustain the benefits of ABM, ABC and other continuous improvement tools.

Instead of continuing my guessing, I interviewed people who have sustained ABM/ABC in a wide variety of industries. The lengthy list of interviewees included truck manufacturer Navistar, also a user of Six Sigma. I talked with healthcare distributor Owens & Minor and book distributor Amazon.com. I benefited from discussions with overnight carrier Federal Express, shared services firm Exult, the U.S. Patent & Trademark Office plus many others, some of which I will quote later in this article.

I’ve named the people and companies I studied “Improvement Keepers”. From them comes the following list of best practices that I call the Ten Traits of the Ten Percenters.

• Improvement Keepers are leaders, not just supporters of change. When I started ICMS in 1988, I emphasized to my customers the importance of top management support. I have since learned that “support” is a passive verb. Sustained success needs active verbs coming from top management such as “follow” me.
Management “support” is characterized with the approval of the ABM Project, signing a purchase order for ABM software or telling employees “I’m behind the project 100%.” Those are all well and good tasks, but you can’t lead if you’re bring up the rear. The 90% who abandoned ABM had passive management. The 10% who are Improvement Keepers have passionate leaders.
Passive supporters are willing to give up something good to move on to something else. Ten percenters, on the other hand, are active. Improvement Keepers will not let go of a good thing, a significant trait of lasting success.
Eileen Morrissey of Merck says one of the best examples of an active, passionate leader of ABM is Mr. Larry Bossidy, CEO of Honeywell. Larry led the use of ABM at Allied Signal and now Honeywell. As Mr. Bossidy explains in his new book titled “EXECUTION“, success is not achieved with talk … instead it’s achieved with walk. Mr. Bossidy clears a wide and straight path for his employees to walk the talk of ABM, Six Sigma and continuous improvement.
• Improvement Keepers have a servant’s attitude. In Jim Collins’ book “Good To Great“, he lists seven traits that separate good companies from great companies. Mr. Collins’ research found great companies have humble, servant leaders. I found the same trait when I interviewed Improvement Keepers.
When ABM is successful, humble leaders look out the window and say, “All these people helped accomplish the results.” If ABM is not successful, humble leaders look in the mirror and say, “I’m the reason ABM failed.” If someone grabs the glory solely for personal gain, the organization is left with a void and the ABM system usually fails. According to Mr. Collins, servant leaders are low-key, bullheaded determined to get the job done and humble when the goal is accomplished. Humble, servant leaders have a loose grip on ABM.
To open a recent workshop, I asked a group of 80 business owners to answer the following question … “What would you do in your business if you were guaranteed success?” 
One answer stuck out. The business owner said, “I’d expand the business and let all the employees share in the wealth.” That company has a humble, servant leader. Make sure your improvement effort has a great leader. A person that wants to serve his or her company, to make it better.
K. Tip:An ABC project targeted at solving a specific need does not require a humble, servant project leader. A conversion to ABC does require a leader who is willing to serve.

• Improvement Keepers are committed to making things better.
• 
Mediocrity is becoming the by-word of our times. Every imaginable excuse is used to make it acceptable, hopefully preferred. Budget cuts, deadlines, majority opinion, and hard-nosed practicality are out shouting and out running excellence.
If you go to fish market, look for a basket of crabs. Notice that fisherman don’t have to put a lid on the basket. When one crab tries to crawl out of the basket, other crabs grab hold and pull him/her back. That’s what happens in 90% of the organizations that implement ABC, ABM or other improvement tools. The persons who attempt to use ABM for continuous improvement are often pulled back by other employees who do not want to change. They’re satisfied with mediocrity.
Improvement Keepers are unhappy with mediocrity. They want to make a difference. Continuous improvement is their process. ABM is their tool. Excellence is their goal. While there were numerous examples of commitment to ABM and continuous improvement that came out of my research, three immediately come to mind.
  • The head of Activity Based Costing at Chrysler told me, “ABC fails unless it’s the only system.” Commitment is not characterized by maintaining two systems.
  • Tom Akright, long time head of ABM for Nestle-Purina said, “We are convicted to change rather than committed to change.” If you were accused of doing ABM in a court of law, would you be convicted?
  • During my research I talked with Brian McMahon at Hershey’s. Brian told me “I feel ABM is part of the puzzle in figuring our what makes a company successful versus not. Having said that, we are seeing that ABM/ABC can become a key piece of the decision puzzle. All this work takes time and it requires relentless effort from the top and the bottom of the organization.”
• Improvement Keepers don’t just analyze … they act.
Improvement Keepers don’t just think … they do.
Improvement Keepers don’t just consider … they change.
• 
Superficiality is the curse of our age. The desperate need today is not for a great number of intelligent people, but deep people. People who are deeply committed to using ABM to improve decision-making.
• Improvement Keepers re-produce themselves. My wife and I recently had a group of friends over for dinner. To prove a point and foster discussion, I asked our guests to name the past five Miss America winners. No one had the answer.
Then I asked them to name the last five Heisman Trophy winners. No one had the answer. Then I asked our guests if they could name two teachers who made a difference in their life. Without fail, everyone in the room had an answer.
People who make a difference are not those who have the most impressive credentials or owners of the largest financial portfolios. The real difference makers in life are those who come alongside you to pour a little of themselves in you.
In my ABM Boot Camps, I tell the participants on Day One to “prepare to re-produce yourselves”. I do this for three reasons:
  • First, people pay more attention when they are asked to pass information on to someone else.
  • Second, adults learn and retain more when they teach others. When you teach ABC to someone else, you learn it for a second time.
  • Third, I teach the “Power of Multiplication”. If one person focuses on one activity and defines one plan that results in $1,000 savings for one month, the company saves $1,000. If you multiply two people focusing on two activities each with two improvement plans for each activity at $2,000 each, the company saves $32,000!
• When ABC is re-produced, it rarely fails. If closely held, ABC is typically abandoned.
• Improvement Keepers are accountable. Improvement Keepers get measurable results because the have written goals linked to positive and negative consequences.
ABC is often abandoned if it is used solely to allocate cost. Ten Percenters use ABC to both allocate and account for performance. Information Technology (IT) groups, such as Molly Olson and Rajeev Singh of Intel, allocate IT activities to customers and also use the data for cost improvement. For example, the activity cost of support desk calls is not only charged to IT customers, but IT is also held accountable for achieving the budgeted cost per call. Likewise, IT customers are held accountable for the quantity of calls they consume. Activity accounting without accountability measures tend to fail.
Steve Porter of the U.S. Patent & Trademark Office told me, “I guess the single biggest success factor that I see is that ABC system data has to be used in the budgeting process. If it is not, the business lines will eventually ask themselves, ‘why am I going to all this trouble?’” Migrating from ABC to ABB is an excellent way of increasing accountability in your organization.
The difference between ordinary and extraordinary is E-X-T-R-A … extra. Accountability helps organizations gain the extra results that optimize and sustain financial benefits.
• Improvement Keepers are reliable and trustworthy.
• 
Reliable and trustworthy… now there’s a couple of words we haven’t seen associated with accountants in the Wall Street Journal recently!
Improvement Keepers are straightforward, open and honest in all communications related to change. Sustained commitment to improvement requires honest answers, honest leaders and honest measures. Improvement Keepers know broken promises lead to broken projects.
Because most improvement projects are abandoned, employees of most organizations do not trust three letter acronyms… ABC, JIT, BPR, TQM, CRM. Managers have not reliably finished the improvement projects they started. I repeatedly heard during my interviews with Improvement Keepers that 80% of a good ABC system is better than 0% of a perfect ABC system. Simple ABC systems that are easy to maintain often get more results than complex ones.
Peter Drucker, a supporter of ABC, says, “Innovation is not being brilliant, it’s being conscientious.”To build trust in your organization, reliably communicate and achieve goals, even if they are not lofty goals.
• Improvement Keepers are keepers, not sitters.
• 
I am the proud grandfather of twin two-year old grandsons. Someone asked me recently what I was going to do over the weekend. I was about to say, “Babysit my grandsons”, but something quickened in my spirit.
My daughter and son-in-law could hire a baby sitter. And I’m sure the sitter would do a good job watching the boys. But sitters leave. The role of a grandfather is to “keep” those boys. Keep means to nurture, hold, value, love and guide. Ten Percenters I interviewed were keepersof their ABC systems, not sitters.
Kari Rathjen, ABC analyst for Northwest Natural Utility told me, “I would agree that the world has too many ABC-sitters. We are currently in the process of acquiring the local electricity distributor. The company we are acquiring attempted ABC 7 years ago, used the initial information for some significant decisions, and then let it drop to the wayside. They were ABC-sitters.”
Don’t waste your time babysitting ABC, TQM or Six Sigma for a while. Keep it. ABC is the best cost management method in the world and has been for over 15 years. Nurture it. Invest in it. Hold it. Use it. And watch the results grow!
• Improvement Keepers are joyful.

One of the primary reasons organizations implement Activity Based Costing is to gain wisdom. Solomon, the wisest man in the Bible said, “a joyful heart is good medicine.”(Pro. 17:22) I found during my interviews that joy is a common trait of many Improvement Keepers.
Susi Fryer, leader of Delta Faucet’s continuous improvement department for many years says, “You can spot an Improvement Keeper in everything they are involved in professionally and personally.” Improvement Keepers look forward to change. Improvement is fun. They feed on positive thoughts, not worry. They reward themselves and others for making progress, finding ways to make improvement contagious.
I found three key things Improvement Keepers are doing to make ABM/ABC simultaneously fun and results driven:
  • They do not reward negative peopleon their ABC team or management team. Negative people typically change positive people to negative. Get them off your team.
  • Ten Percenters expect good ABC results,not bad. In Laurie Beth Jones’ book “The Power of Positive Prophecy”, she asks readers to recall a positive prophecy someone once said about them. Most people can list negative prophecies that affected their life, but not positive. If your employees think ABC, Six Sigma or process improvement will fail, you will have a self-fulfilling prophecy. Your attitude determines your altitude. Think positive about ABC.
  • And, Improvement Keepers hang out with positive people. They look for and find other ten percenters. Seek wisdom and joy. You should do the same. If you don’t know any positive ABC people, contact me and I’ll point you in their direction.
• The employees of Southwest Airlines are some of the hardest working people in the airline industry. They are also the most joyful. A recent SWA flight had a “who has the biggest hole in their sock” contest. Like SWA’s employees, have an attitude of joy as you go about the tasks of creating, using and sustaining ABM, ABC and continuous improvement.
• Improvement Keepers are disciplined.
• 
Discipline always produces dynamic results. Let me say that again… Discipline ALWAYS produces dynamic results. Yet only 10% of people or organizations have the discipline necessary to achieve and sustain the financial benefits of ABM/ABC.
Richard Foster, in his book Celebration of Discipline, defines discipline as a focused effort to develop a habit. Managing activities, processes, value, and cost drivers is NOT instinctive. You can’t achieve significant, sustainable financial results by trying ABM. Winning takes trying and training.
Imagine for a second, that you’re sitting on the couch, eating your favorite snack food and the phone rings. It’s someone from the White House. They have an urgent request. The person who was supposed to run the marathon for the U.S. Olympic team has fallen sick and your country needs you to run the race. You picture yourself running in front of millions of people. But then it dawns on you… right now you cannot run to the kitchen, much less a marathon.
Disciplined ABM’ers are not highly systematic, rigidly scheduled, report makers. Instead, they do the right thing at the right time in the right way for the right reason. A great example of that trait is Health-E-Quip’s Velma Goertzen. Velma purchased an ABM Toolkit from ICMS and self-implemented in 1997. She updates her activity costs every three months, using it to help her home health company thrive. Velma is a disciplined Improvement Keeper.
ABM’ers should be some of the most disciplined people in the world. Ten Percenters continuously improve themselves and their organization. They are decisive, focusing on achieving daily, weekly and monthly goals. Without the trait of discipline, all other traits are dwarfed.
• Improvement Keepers are non-conformist.  Improvement Keepers transform outdated practices, processes and procedures. They challenge the status quo, not afraid of being different. They “color outside the lines”.
Walt Disney, arguably among the most creative individuals America has ever produced, was drawing flowers in his elementary-school classroom. His teacher looked at his paper and said, “Walter, flowers do not have faces!”

• Walt answered,“Mine do!”

• The genius of non-conformance is captured in a single, simple word… AND. “And” is a rejection of “Or”. Nonconformist figure out ways to have “A and B”, not “A or B”.
Improvement Keepers creatively define ways for Activity Based Costing to serve long AND short-term needs, serve internal AND external customers, and to serve external AND internal reporting requirements.
To be a Ten Percenter, use the word AND, not OR!

CONCLUSION

“Looked at from a distance, it’s easy to think that management is only about economics and engineering, but up close it’s very much about people.” (3), says Joan Magretta in her new book, What Management Is. Chuck Swindoll, in his old book Living above the level of Mediocrity says, “Everyone I know who models a high level of excellence has won the battle of the mind and taken the right thoughts captive.” (4) New and old alike agree that achieving and sustaining improvement, including Activity Based Cost Management, begins and ends with people.

Howard Hendricks once said, “Where there’s light, there are bugs.” (5) The better and brighter the light, the more bugs you’ll attract. When you shed light on the cost, quality and cycle time of your organization’s activities, process and products, the “bugs” who don’t want to change will come out. I encourage you to use the Ten Traits of the Ten Percenters to keep the continuous improvement light burning bright in your organization.

(1) Activity-Based Change Management: A Literature Search, Prof. Annie L.McGowan, Texas A&M, 2001
(2) The Attention Economy by Thomas Davenport and John Beck, Harvard Business School Press, 2001
(3) What Management Is, Joan Magretta, The Free Press, 2002
(4) Living Above the Level of Mediocrity, Charles R. Swindoll, Word Publishing, 1987
(5) “Where there’s light, there are bugs.” “Paul”, Charles Swindoll, W Publishing Group, 2002

On September 9, 1990, Dallas Cowboy Emmitt Smith gained 1 yard in his first NFL rushing attempt before being tackled by San Diego Charger Martin Bayless. On his next attempt, Emmitt gained 1 more yard, finishing the game with 2 yards in this his professional debut. Fast-forward twelve years. On October 26, 2002, Emmitt Smith surpassed Walter Payton’s 16,726 yard rushing record. Smith started slowly but never grew tired of doing good.

Are you or your organization tired of doing the right thing? Are your thoughts leaning more and more towards, “I think I’ll just skip _____________ (fill in the blank) this week”? What’s the blank for you? Are you tired of updating your Activity Based Cost model? Do you feel like skipping the process improvement team meeting? Are you growing tired of exercise or eating the right foods? Or maybe it sounds appealing to skip church, tithing or serving the needy for a while.

People and organizations get tired of doing good. Curtailed continuous improvement is an oxymoron of our times. Our culture does not promote long term, unending commitment. Instead, companies offer early retirement. Over 50% of the couples who say, “until death do us part” get a divorce. Parents hire babysitters instead of keeping the kids. Leaders announce continuous improvement initiatives, thereby inferring to employees, whether they mean to or not, that Total Quality Management, Activity Based Management or Six Sigma will have a beginning and an end.

People regress, resign or retire. Companies decline, disassociate or dissolve. All too often because they simply get tired of doing the right things.

Why did Smith break the record and not someone else? It wasn’t his physical prowess. In fact, coming out of college Emmitt was smaller and slower than many running backs. I believe the primary reason Emmitt Smith achieved what hundreds of others failed to accomplish can be directly attributed to his mental prowess. Emmitt never allowed himself to grow tired of doing good. He ran the ball towards the goal line week after week after week.

What can we do to not grow weary of doing good?I found ten things in Emmitt Smith’s career that we can use to sustain instead of succumb:

• Have long term vision…“Some who coached him through the years say Emmitt Smith’s vision helped him gain yardage other couldn’t and spurred his chase to surpass Walter Payton’s NFL rushing record.” (1) His vision was not only physical, it was also mental. Emmitt began his career with a desire to be the best running back of all time. Without a long term desire of being the best you can be you’ll grow tired of doing good. Coach Norv Turner said of Smith, “It wasn’t the play that generated the yards. It was Smith’s vision that made those plays go. He didn’t always run the plays the way they were drawn up.” If you have vision, obstacles will never stop you.
• Have written goals… At the beginning of every football season, Emmitt Smith prepares a list of written, measurable goals. Without goals, we lose focus. “Those who are victorious don’t let the opposition throw them off their game plan.”(2)
• Be willing to change and adapt… During the past 12 years Emmitt has made several changes to his lifestyle. He began using a chiropractor to keep his body flexible and free from injury. He rededicated his life to Christ and became an active member of T.D. Jakes’ ministry.
• Pace yourself… Most NFL running backs burnout physically and mentally in 4 years. Emmitt and his coaches paced his performance to prevent burnout. Coach Jimmy Johnson let Emmitt take naps while other players practiced. It’s a “road to victory”, not an overnight trip.
• Provide value… Emmitt never takes the field without giving his all. He wants to win. Wasting time leads to end of times. Compromising commitment to quality leads to curtailment and quitting.
• Celebrate… It’s good to jump up and down occasionally in joy. As of this writing, Emmitt Smith has scored 150 touchdowns, more than any other running back. He and those around him celebrated every single time. Celebration energizes you and those around you.
• Be part of something that grows… “By chance or accident, Smith came to a team prepared to support him with every necessary ingredient: lineman, passer, receivers, defense and coaching. The rest was up to him, a challenge Emmitt accepted with relish. You can say he ran with it”. (3) A person who sets out to enrich the lives of others enhances those around him/her as well as themselves.
• Have physical and financial margin… Margin is your limit minus your load. “Margin is the opposite of overload. Margin is the gap between rest and exhaustion, the space between breathing freely and suffocating. It is rare to see a life prescheduled to only 80 percent, leaving a margin for responding to the unexpected that God sends our way.” (4)Emmitt maintains margin in his personal and professional life.
• Eliminate fear… Fear runs down your battery. It drains you physically, emotionally and spiritually. Emmitt never took the ball in fear of being tackled. He knew that would happen. He was prepared, never doubting his ability. He eliminated fear by trusting the coaches, trainers and players around him.
• Surround yourself with encouragers… Emmitt’s career, like our own lives, has not been one of total positives. Disappointments happen. Emmitt had teammates who were there to celebrate the victories and pick each other up after defeats. One of the most moving moments captured on TV after breaking the record was Emmitt embracing Daryl Johnston on the sideline. Johnson, now retired, blocked for Emmitt most of his career. They relied on each other. They encouraged one another. A bond that goes unbroken.

Like Roberto Duran who, in the middle of a championship fight with Sugar Ray Leonard relinquished his WBC welterweight title when he ended the fight saying, “No mas” (Spanish for “no more”) and refused to come out of his corner, most of us have moments when we feel like quitting. Whether the foe has been our job, family relationships, or other difficult circumstances, we’ve been smacked in the nose too many times and we want to cry, “No more!”

While it won’t be Martin Bayless, every one of us will be tackled during our personal and professional lives. If we allow it or accept it, people and circumstances have the potential of stopping our progress. Emmitt Smith did not quit when tackled. He got up. So should we. Emmitt never lost the desire of doing good. Neither should we. Don’t give up on your dream, your purpose in life, your calling, your organization, your goals, your principles, your family, your company or your church. Never, never give up doing good.

(1) The Dallas Morning News, Rick Gosselin, Oct. 26, 2002
(2) The Victorious Christian Life, Tony Evans, Thomas Nelson 1996
(3) The Dallas Morning News, Frank Luksa, Oct. 26, 2002
(4) Margin, Dr. Richard Swenson, Navpress, 1995

In John Maxwell’s new best seller “FAILING FORWARD“, he lists six traps that cause people to pause instead of pursue change:

• The Embarrassment Trap… they are afraid of looking bad.
• The Rationalization Trap… they figure that if they spend sufficient time confirming the need, they can procrastinate and hope the need disappears.
• The Unrealistic Expectation Trap…they quickly give up when they realize that achievement will take some effort on their part.
• The Fairness Trap…when asked to participate in an improvement project they say, “Why me? I shouldn’t have to be the one to do this.”
• The Timing Trap…they wait until the perfect time for change, which never comes.
• The Inspiration Trap…they wait for inspiration before starting. They don’t realize that you have
• to act your way into feeling instead of feeling your way into acting.

Based on my recent experience working on the supply chain cost reduction workgroups of the food industry (ECR) and healthcare industry (EHCR), I would add a seventh trap:

• The Trust Trap…supply chain partners who refuse to share their Activity Based Management
• information because they don’t trust their customers and suppliers.

Trust is defined as “confidence or reliance on the truthfulness of something or someone.” Based on favorable results, thousands of organizations worldwide are now confident that ABM and ABC are best practice costing methods. The automotive, personal computer, semiconductor, food and healthcare industries, to name just a few, have entrusted ABM to be their standard costing method. But too few of the organizations in these industries are sharing ABM information to achieve supply chain cost reduction.

In “WHEN LEAN ENTERPRISES COLLIDE”, Robin Cooper writes, “The pressure to become more efficient has caused many firms to increase the efficiency of supplier firms through interorganizational cost management systems. These systems have emerged because it is no longer sufficient to be the most efficient firm; it is necessary to be part of the most efficient supplier chain.” A 1997 study of the healthcare industry supply chain of manufacturers, distributors and providers identified 48% waste. While an individual hospital might contain only 25% non-value added cost, unnecessary duplication of activities between supply chain partners doubles the waste to almost 50%.

If industries need to reduce costs and the members of the industry agree that ABM/ABC is a best practice method, then what can be done to foster trust and achieve mutually beneficial results? I have seen success with the following three steps:

STEP 1:
Begin building trust and supply chain improvement by simply sharing the names of activities with your customers and suppliers. I am a huge Diana Krall fan. On one of her CD’s she sings “I know a little bit about a lot of things, but I don’t know enough about you.” If you’ve implemented ABM, you now know a lot about your organization. To build trust and improve processes, ask your suppliers and customers to implement ABM. Ask them to compare order fulfillment activity lists with you. Determine if you are duplicating any activities or performing unnecessary non-value added activities. Determine if they share your feelings as to which activities add value in the supply chain. Sharing activity lists lays a foundation of trust.

STEP 2: 
As trust builds, begin to share the workload quantities of the supply chain activities, e.g. “Number of Receipts”, “Number of Inspections”, etc. For example, if you perform the activity “Receive Order”, determine how many of the receipts were performed for a specific supplier. Ask that supplier if this number synchronizes with their activity workloads. Mutually determine if unnecessary output of value activities is being performed. Share improvement ideas. One ICMS customer, for example, showed their key customers that the workload of the activity “Issue Invoice” was numbering in the hundreds each month because an invoice was issued for each shipment. The customer agreed that this practice increased their activity workloads, e.g. “Process Accounts Payable”, etc. As a result of sharing activity output quantities, they mutually agreed to change the billing process from invoices to monthly statements.

STEP 3:
When trust is achieved between supply chain partners, then you can begin to benchmark the cost per output of specific activities. Sharing financial information requires trust. Sharing activity cost also requires mutual benefit. Identify activity and process cost best practices with suppliers and customers. Exchange improvement methods. Compare and share the ABC transaction cost of dealing with your Top 10 supply chain partners. Define mutually beneficial cost improvement goals and celebrate achievements.

In their book “THE SIGNIFICANCE PRINCIPLE”, Les Carter and Jim Underwood state that “honesty and trustworthiness are bedrock qualities of any successful relationship.” Organizations and business partners which rely on trust as their principle means of control are more effective, more creative, have more fun and cheaper to operate. Trust is learned and earned. I “learned to trust” certain people, organizations and methods through a process of reliance, reward and repetition. If you don’t develop trust in ABM as a tool to identify and eliminate non-value added supply chain costs with your business partners, the consequences may be chaos. In other words, trust or suffer the consequences.

Is your organization confronted with rising costs or shrinking profits? Do you need action plans to eliminate waste or optimize value? All too often, managers incorrectly assume:

• It is my responsibility to come up with the idea to improve cost.
• I need a big idea to match our big need.
• Cost reduction needs to be kept a secret to be a success.

Openly communicating the need for cost improvement and asking for everyone’s participation can produce big results. Here are three examples:

• Navistar uses Activity Based Management (ABM) and Six Sigma Black Belt trainers to get all employees involved in their process improvement program. Individuals begin as a Green Belt. More experienced Master Black Belts train and mentor Green Belts how to use ABM to improve and measure process improvements. After participating in several successful cost improvement projects, employees become Black Belts or Masters. Navistar employees have implemented hundreds of improvement projects at an average savings of $200,000. General Electric and Honeywell (formerly Allied Signal) have similar Black Belt programs where employees train other employees how to reduce costs.
• Sometimes you have to give to get. The May/June 2000 issue of Life@Workmagazine explains how Pastor Andy Stanley of North Point Community Church in suburban Atlanta created a spirit of stewardship and involvement in his congregation. The church gave envelopes containing a $5, $10 or $20 bill to 6,000 people during a Sunday morning service. The money came with three stipulations:
  • Everyone had to invest the money, adding to it if they chose, in God’s work outside the
walls of the church;
  • They could not keep the funds, but they could pool it with others if they desired; and,
  • They were not to give the money to the first street person they encountered. Be creative.
• Pastor Stanley got thousands of letters back from church members explaining what they were able to accomplish with the small amounts of cash. Stanley estimated that the $37,000 “seed” capital multiplied into more than $300,000 given for various needs.

In Pryor Convictions: 31 Insights into ABM, I explain the power of ABM multiplication that several ICMS clients are using. For example, if you implement ABM in 1 department, focus on 1 activity for improvement, define 1 action plan worth $1,000 per month that is implemented for 1 month you will save $1,000. Not bad, but if you increase each 1 to a 2, you will multiply your savings to $32,000. And if you make it 4, you can save over $1 million dollars!

Shortly after buying a piece of property, a nearby creek flooded, covering Mr. Ostry’s new barn with 29 inches of water. Herman half-jokingly said to his family, “I bet if we had enough people, we could pick up that barn and carry it to higher ground.” To his surprise, his son Mike started thinking about his father’s wish. Mike counted the number of boards, timbers, and nails, estimating the barn’s weight at 19,000 pounds. Mike figured that 344 people would have to lift only 55 pounds each to carry the barn to higher ground.

On June 30, 1988, Herman’s son ingeniously designed a grid of steel tubing to serve as the barn “handles”. Herman counted “one, two, three, lift!” The barn rose up off the ground like it weighed nothing at all. A crowd cheered as they watched 344 townspeople carry the 9 ton barn 50 yards up a hill in just 3 minutes!!!

Mike Ostry solved what seemed to be an impossible task by:

1. looking at the problem with a new perspective;
2. defining resource requirements;
3. defining a simple common goal;
4. spreading the workload evenly; and,
5. focusing everyone in one direction.

Does the job of cutting your costs 10% to 15% this year while simultaneously improving quality and service appear to be an insurmountable job? You can do it if you’ll simply use the Mike Ostry approach to problem solving:

1. use ABM reports to provide an new perspective of costs;
2. train all your employees“How to Use ABM for Continuous Improvement”;
3. define a cost improvement target and timeframe;
4. require every department to improveperformance; and,
5. require each activity and process improvement idea be presented to the plant manager or presidentby each department’s employees.

Divide the job of cost improvement among all your employees and conquer what today may seem impossible. ICMS can help you move your cost reduction “barn”. Do you need to cut costs by 10% or more this year? ICMS can train your employees “How To” create and use ABM reports to define measurable continuous improvement action plans that will meet or beat your 1997 cost improvement goals.

Don’t wait any longer. Spread the role and responsibility of continuous improvement throughout your entire organization with the ICMS “Using ABM for Continuous Improvement” workbook and onsite workshop. Don’t underestimate the exponential power of ABM when it is placed in the hands of your focused, trained employees.

Call us today at ph 817-475-2945 to order our very popular “Using ABM for Continuous Improvement”workbook, request a FREE copy of our ABM Cost Improvement workshop agenda, or to discuss your specific needs.

What was the result? Instead of the #3 pencils lasting three times as long, they lasted twenty times as long. And pencil purchases dropped to almost zero! What happened? Sensible employees simply refused to use #3 pencils and instead bought their own soft and easily erasable #2’s.

What’s the point? If you make something hard enough for people, they will usually not do it. If you want employees to use your Activity Based Management (ABM) system for cost improvement, don’t say “We need everyone to reduce their cost by 10% this year. Please see Mel Smith to pick up your ABM reports.” That’s a pure #3 pencil statement. If I’m an employee that is willing to help, I have to (a) know Mel Smith and remember to ask him for my ABM reports; (b) know what the acronym ABM means; (c) worry about the consequences of cost improvement; e.g. “Will ABM eliminate my job?”; (d) figure out how to read and interpret my ABM reports; and, (e) know how to use my ABM reports for continuous improvement. Why make it so hard for me to come up with cost improvements? Don’t you want me to submit and implement improvement plans?

Here are some simple steps that your organization can take to make continuous improvement easier for your employees:

• Senior Management must define targets, timeframes and consequences. Don’t assume that employees know what to do. Be specific. Tell the employees “We need a 5% cost improvement by June 30th.” Also define the positive and negative consequences of meeting or missing this goal.
• Format activity accounting reports in a simple spreadsheet format. No matter what ABM software you use, create a spreadsheet-style report with activities as the columns and overhead costs as the rows. The spreadsheet format is the easiest for non-financial employees to understand and use.
• Provide employees a copy of “Using ABM for Continuous Improvement”. This very popular book was specifically written for non-financial employees. The book is easy to read, contains step-by-step activity cost reduction instructions and is loaded with practical examples. Orderyour books today.
• Get the ball rolling by organizing one or two continuous improvement workshops. Show groups of employees “how to” use their ABM reports to identify and measure cost improvement. ICMS can help. We offer an onsite continuous improvement workshop that uses your actual ABM data. And we guarantee results!
• Name a Continuous Improvement Coordinator and make them highly visible. This person should be your on-staff internal ABM coach and consultant for employees.

Even though we are no longer in the ‘50’s, the #3 Pencil Principle still applies. To enjoy the bottom line benefits of ABM you have to make it easy for all employees to get involved in the continuous improvement process.

The person responded “I’m looking for my gold ring.”

The Good Samaritan inquired “Where were you standing when you dropped it?”

“I was walking down there.” He said pointing thirty feet down the dark street.

“Then why are you looking over here?” asked the Samaritan turned investigator.

“Because the light is better over here.”

Many implementers of Activity Based Management incorrectly assume that the activity classification “Non-Value” will spotlight all the waste of their organization.   During the past ten years I have learned that the majority of cost improvement opportunity in an organization is not exposed by this one ABM technique.

Here are some other locations of waste to investigate with your ABM continuous improvement flashlight:

Excess capacity is Non-Value Added waste e.g. employees can produce more Value-Added output without increasing cost. Perform capacity analysis on your most expensive activities.

Activity cost in excess of best practice is Non-Value Added waste. If your cost per purchase order is $25.00 but the best practice is $1.00, your purchasing department has $24.00 of waste.

Duplication of activities is Non-Value Added waste. If you unnecessarily perform the same activity as your suppliers or customers, you have waste. Use ABM as a common language to identify duplication.

Excessive secondary activity is Non-Value Added waste. If you spending more than 10% of your resources on activities such as “Attend Meetings”, “Supervise Employees” or “Do Reports” you likely have waste. Ask yourself “What is the primary mission of my department?”

If you don’t know how to properly price your products or services, you have Non-Value added waste. Use ABC to determine if you are recovering all the activity cost consumed by your customers. Cost that is not recovered in revenue is waste.

Don’t be discouraged if your initial Non-Value analysis is less than 20%. Instead, use the “daylight” provided by these five techniques to find your cost improvement opportunities.

If you need the help of a Good Samaritan, send me an E-Mail … TomPryor@icms.net.