HOW EXCELLENT COMPANIES AVOID DUMB THINGS

Assisted by veteran business and leadership writer O’Connell, Smith (CEO of Promontory Growth and Innovation) offers his recipe for business success.

The author’s “secret sauce” is consensus building. This idea, along with many of the other ingredients in his concoction, is well known by now. The names might change, but the staples remain the same—reductions in the cost of running a business through layoffs and what used to be called speed-up. The author claims that his process is designed to encourage the emergence of ideas from all layers and participants. He uses the word “ideas” in a specific technical way that is quite different than its usual meaning. “Every idea will have a value—that is, the costs it saves or the revenues it generates,” writes Smith. In this conception, ideas have a concrete financial value that can be quantified based on the risk level assumed in achieving payback of the costs of their implementation over time. Smith bases his system on the importance of undermining inertia and resistance to change; he claims to do this by identifying behavioral and structural “barriers” that have their roots in human nature. Preplanning and staffing is critical. Exposing the identified barriers and changing the burden of proof in internal discussions are among the ingredients that go into the preparation of the “secret sauce.” Smith illustrates his ideas with a variety of interesting examples—e.g., a candy company saved money by reducing the types of chocolate it used; a shipping company eliminated left turns on truck routes and reduced accidents. Sometimes his methods can be painful but beneficial to a company—for example, he contends that the bottom five percent of programmers in tech companies can be considered a cost and usually let go.

The author claims that his method will increase profits—and they likely will—but changes in corporate culture will be required to realize them.