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To Lower Costs Through Simplification, Have a More Exciting Purpose

Feb 10, 2008
Many effective simplifications followed casual observations and suggestions by non-expert stakeholders. Because humanitarian purposes are so inspiring, everyone wants to make a contribution to helping more people. The exciting purposes of the organizations also help lower the organizational barriers to accepting new ideas and using them to develop simpler processes.

Compare motivation to simplify between those who work for a typical start-up for-profit bank and the Grameen Bank's owner-depositor volunteers in Bangladesh who help the poor to make profitable investments and build homes. Those who assist in the for-profit bank's simplifications only benefit if they are shareholders. Since most employees, customers, and other stakeholders aren't going to be shareholders, that approach eliminates a lot of potential stakeholder motivation.

By contrast, everyone in the Grameen Bank is a shareholder and a depositor. In addition, almost everyone in the Grameen Bank's community who isn't a depositor-shareholder will benefit indirectly from their neighbors' prosperous use of loan funds.

In the for-profit bank, stakeholders seldom see the money put to work. In a community served by the Grameen Bank, many people see the benefits on a daily basis and can contribute to producing more benefits. If a new entrepreneur is making a mistake with her new business, for example, Grameen Bank depositors will be inclined to make a helpful comment because they have a stake in the results too.

Most stakeholders of for-profit organizations are emotionally starved in this dimension of their lives because their firm lacks a compelling purpose. One way to add such purpose is to conceive of a new type of organization, one that serves both the for-profit needs of customers and the nonprofit requirements of beneficiaries and users who would not otherwise receive benefits.

One of the first examples we saw of this approach was when financially stressed inner-city hospitals in the United States began raising money to put in world-class centers for special surgeries. The hospitals then used the profits from the special surgeries paid by wealthy foreign patients to subsidize medical services to the uninsured in the local community.

Another way to create such a purpose is to have an organization-wide self-examination to identify inspiring results for the enterprise to create. Such a self-examination goes well beyond the typical vision exercise that delivers to a well-rounded statement about providing helpful results for everyone.

With a leader who is highly motivated to develop and pursue such a purpose, amazing concepts can emerge. If you would like to get a sense of how this can be accomplished, I recommend you read Let My People Go Surfing (Penguin Press, 2005) by Yvon Chouinard, founder and owner of Patagonia. That firm sponsors effective environmental activism, helps maintain wonderful wilderness environments, and provides a great place to work for the company's employees.

What inspiring purposes can you provide to drive forward simplifying cost reductions?
About the Author
Donald Mitchell is an author of seven books including Adventures of an Optimist, The 2,000 Percent Squared Solution, The 2,000 Percent Solution, The 2,000 Percent Solution Workbook, The Irresistible Growth Enterprise, and The Ultimate Competitive Advantage. Read about creating breakthroughs through 2,000 percent solutions and receive tips by e-mail by registering for free at

http://www.2000percentsolution.com .
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