The 3 Keys to Simplifying Your Business

By Charles Alvarez , Contributor, the Price of Business Show. * Sponsored

The key to simplifying and streamlining your work and your business lies in your ability to reduce the number of steps in each process. When you reduce a process by a single step, as in going from five steps (a complexity level of 25) to four steps (a complexity level of 16), you reduce the possible costs, delays and mistakes by a factor of nine! As you reduce steps, you speed up your ability to get results, at lower cost, with fewer mistakes.

In the process of reengineering, you stop the clock, like calling a “time out!” in a football game, on a particular business activity that has become complex and time consuming. You then analyze every step involved in the process of doing that job, writing them down in order.

Simplify the Process

Once you have made a list of every step, you then go through the list, looking for ways to reduce steps wherever you possibly can. You know that even a single step reduction in a process will dramatically reduce the complexity and thereby increase the speed at which the job or task is accomplished.

You act as your own management consultant and ask hard questions, just as you would if you had been hired in from the outside. Ask why every single step is being taken. What is its purpose? Why is it being done in this particular way?

The second stage of reengineering is for you to go through the list with the goal of eliminating at least 30% of the steps the first time through. This is virtually always achievable, sometimes to the amazement to everyone involved. It just takes a little imagination.

Collapse the Process

Here is an example. Northwest Mutual Life Assurance Company, prior to reengineering the process, required six weeks to approve a life insurance policy application from the field. By the time the approval got back to the agent, the prospective client had often decided to go somewhere else, or not buy the policy at all.

When they analyzed the six-week process, they found that there were 24 steps in the approval or disapproval of a life insurance application. Twenty-four different people had to examine some part of the application. But the total amount of time actually spent on each application turned out to be only 17 minutes.

It turned out that this process had developed over many years as a way of avoiding mistakes in policy approvals. Each time a mistake had been made in the past, another check or control was created to catch the mistake in the future.

The process had obviously become too cumbersome so they therefore decided to reengineer it. The method turned out to be quite simple. They consolidated 23 of the 24 steps into a single job for a single person, who checked every detail of the policy before sending it to a supervisor. The supervisor simply checked the analysis of the first person and gave an approval or disapproval. The answer went back to the field within 24 hours. As a result of this new speed of processing, Northwestern Mutual was able to write many hundreds of millions of dollars of additional insurance every year.

Consolidate and Eliminate Steps

In streamlining your business processes, you first eliminate every unnecessary step that you possibly can. Next, you look for ways to consolidate steps into one job so that more of them can be done by a single person or at the same time, rather than being stretched out.

In the most efficient and profitable airlines today, you will often find that the person who checks you in and gives you your ticket is the same person who clears you onto the plane at boarding. Then, you look up and find that he or she is the steward or stewardess on the flight. When you arrive, he or she is busy gathering newspapers and cleaning up for the next flight. In some airlines, each of these jobs is done by a different person. Which airlines do you think are the most profitable and efficient?

Sponsored by the Price of Business, on Bloomberg’s home in Houston, TX

All opinions expressed on USDR are those of the author and not necessarily those of US Daily Review.

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