Today I had a talk with a family member who has considerable knowledge within procurement and service contracts in the public sector. We talked back and forth, for instance about cleaning services. I must do my utmost to remain a man of patience when I hear real-world stories like this:

"Let's force the company responsible for cleaning elderly homes, to reduce their prices with 30%." ... the rationale? "It should give them incentives to do the necessary improvements". Right? Wrong!

Go down that path, and you have apparently never heard the stories of how the American automotive industry tried to reduce costs on spare parts by putting pressure on the suppliers to the extend where they almost went bankrupt. This kind of behavior will be perceived by the supplier as a threat to their existence. And thus, they will react by survival instinct, which means extreme precaution, zero tolerance and distrust. It is impossible to have a prosperous partnership when one party is trying to take advantage of the other. And it is very hard to come up with creative
solutions for lowering prices in an environment of distrust.

A different (and better) approach for improvements could be to ask the supplier to work on increasing quality without increasing costs. That is not a threat to the existence of the supplier, thus they can respond with creativity instead of hostility and distrust. Hmm.. how can we increase quality without increasing prices? .. Maybe you are already bending your mind trying to figure that out.

In the software industry someone once faced a challenge like this, and then came up with the concept of Automated Testing -- Result? Increased quality, lower overall cost. Today we take it for granted. Naturally, this kind of innovative thinking can be applied to any domain.

By Sune Gynthersen

Reading the danish newspaper Jyllands-Posten today, I felt like writing a blog entry in a category we rarely touch on this blog. That is, commenting on political issues in Denmark. I was quite surprised reading that a recent study showed that infants born in Denmark in the year 2008, would during their entire life end up costing society more than they contribute. Naturally a problem, especially considering that Denmark already has one of the highest income taxes in the world (up to around 62% depending on your total income).

According to the article politicians are faced with only 3 options, to overcome this lack of balance between national income and expenses.

1. Increase taxes       
2. Make people work longer
3. Cut budgets

Now, I would agree if the assumption of time spent working, directly affected the tax incomes at a fixed ratio. That certainly isn't the case. Let's try and shift the problem. Imagine if companies were able to become more profitable, they would then pay more taxes, hopefully to the benefit of the nation. All without picking any of the options above.

So what options do companies have at becoming more profitable?

1. Increase prices on products and services
2. Lower average employee salary
3. Layoffs

Not surprisingly it looks a lot like the list in the top. Also, it has the same built-in assumptions.

It seems like a common misunderstanding that there is a direct link between time spent and value created. Does people that work longer create more value? Maybe, but not necessarily. It obviously depends on what they spend their time on.

None of the options listed above are particular popular, as they all have negative impact somewhere. But as I see it there is at least one more option, which is far more interesting. I am surprised that it is really so hard to see, that we jump to conclusions on time and value being part of a fixed equation.

The Fourth Option: Do more with less.

Sounds impossible? It's not. You see, working is not a goal - if it was, we could all just be digging holes in the ground and once done, we could fill them again. Value creation is the goal and work just happens to be a necessity in the process of creating value. By focusing on maximizing work, we are not necessarily maximizing the value created. Have you ever considered that much of the work we do today could be as value-adding as digging holes in the ground? And if that is the case, we have a potentially of increasing value creation, without working longer hours.

It makes you wonder, if doing work is not the goal why do we spend so much time talking about lowering unemployment rates? Unemployment is cleary related only to whether people work or not? I personally wonder why this nation have something called The Ministry of Employment? It should be changed into The Ministry of Value Creation.

I think it's about time we change focus from working hard, to thinking hard. I bet we could work towards unleashing the abundant source of human creativity, and surely we can find ways to add more value to our customers, our society and ourselves without working longer hours.

I'd love to hear your thoughts on this.

By Sune Gynthersen