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Value Of Reserves: The Unexpected Problem of 100% Utilization

Value of reserves is a concept frequently missed in the real world.

Think it's good to have all your resources hurtling along at 100% utilization? Think again.

Sounds good, doesn't it. Everything at work on your behalf. Nothing sitting around. Money, people, time. All maxed out.

And yet—

—what happens when you run into The Unexpected?

What then?

100% utilization means you have no reserves. Whether the scope of the issue is big or small, it means you're in trouble.

This is completely contrary to “logical thought”, isn't it! Let's look at a few examples, though, and you'll see the problem right away.

value of reserves army

Value of Reserves In The Corporate World

The first instance is one I've witnessed many times in the corporate world. Again and again it has also been brought to me by high level consultants I work with, like a Change Management expert who works with IT firms employing over 1000 people.

The firm has teams that are working on highly technical implementation projects for their own clients.

They have a handful of expert-level staff, who are naturally at 100% utilization. They are busy, locked down on one project or another.

And then something breaks.

Something in another project falls down, and that one expert's attention is not just needed but excruciatingly badly needed over there.

But the expert's plate is already full. There's no more of their time to give. If management's decision is to pull them off the project they're assigned to and put them onto the emergency, what happens?

Hue and cry. Expensive overtime. Unrecoverable critical task delay on Project A. Stress levels up on both projects, in other areas of the organization as well as for both clients.

If the company had planned to have some of their expert resources in reserve, all this would have been much lowered or completely avoided.

Value of Reserves In Your World

OK, Jason, you say. That's a big corporate example. But I run a little business. What about me?

This second example is in your world.

You're a business owner who does it all: sales through fulfillment, bookkeeping and bottle washing.

Your calendar is booked wall to wall and you respect your calendar. There's always something more to do. And your money...well, it's working at 100% utilization for you and there's nothing to spare.

So how can you ever grow?

To improve you need, say, to learn how to use a new CRM. Heck, first you have to pick that CRM. But you don't have time to research. And you don't have the extra money to jump on a deal for software even if you do find something tantalizing. Then you have to find the time to learn how to use the thing!

No reserves. Neither in your time or your money. Equals no maneuverability. No ability to grow. Stuck in the same day after day after day in your business, never working on your business.

My third example is even simpler, from the world of home renovation. A building contractor I was speaking with not long ago blurted, “If only I'd had a little more cash available, this renovation would have gone much more quickly!”

Now why did he say that?

Was he simply wishing for more money? I don't think so. His complaint matched up directly with the things I've seen an experienced elsewhere when it comes to the use of resources.

His problem was not just about buying supplies. It was about scheduling, managing, handling The Unexpected. All adding up to a big headache for HIM.

Understand the value of reserves.

Generals throughout history have known this value: they kept some of their units in reserve to plug gaps in the line and take advantage of opportunities.

Those reserves give you flexibility. They give you the ability to handle problems with lower levels of stress. And they let you move faster.

100% utilization seems to make logical sense. But it'll stress you out, limit your growth, and cause you a great deal of trouble if you pursue it as policy.

>> Jason Kanigan is a business strategist and founding partner of The Closing Engine. To book a two-call strategy & adjustment consultation package with Jason, click here. <<

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Change Management And The Unexpected

Change Management is a field of study that has been around for over sixty years. Yet most people outside of corporate executive roles at large companies have never heard of it.

Managing change is hard. Let's get that point out of the way right now. This is why government is so easy to screw up: you're involving and affecting a lot of people, and in most cases the decision makers don't even know what they're deciding. Not completely. There are always unintended consequences.

change management unexpected consequences angry customer

Let me give you an example from the corporate world. We'll do this through a peek into a late night conversation with a European client.

Change Management And Unintended Consequences

Imagine we have an old school financial firm that is making the jump to having its data online.

Until now, customers have received paper statements mailed at the end of the month. If they see a potential issue, they call customer service.

Customer service reps haven't had instant access to the data, either; and even if they did, they get a time gap here.

"Thanks for your call," they've been saying to the customer; "We'll look into this and get back to you."

And they do. They are good problem solvers. Look at the tone of the interaction: polite, a response to a friendly inquiry, with time to figure it out.

Now the company is moving to a self-service model. The data is going online, and customers have access to their up-to-date account information. Some customer service reps have been reassigned or let go. What happens next?

The customer sees the same data the rep does. They observe what they believe is a problem, and it's their money we're talking about here. They get mad!

Now they call customer service, and their tone is different than before the change. They're upset! And does the customer service rep have the time to dig into the problem and figure out what to do, like they used to? No!

They're expected to have an instant solution.

This is completely unexpected, both to the front line reps and the executives in charge of managing the change.

The surviving customer service reps may not even fully understand what is going on. "We got hit with all these upset customer calls!" they say. Some may even leave—why should they put up with the abuse?

The fact is the customer service reps need an entirely different skill set because of the change in tone resulting from the instant access to information brought on by the well-meaning change.

The tone of the calls has changed from inquiry to confrontation.

More training on "the system" is not what will help here, yet that is what many managers would prescribe.

Are you starting to see the challenge with making change?

Why it's so easy to make mistakes when making change?

How Experienced Suppliers Can Help With Client Change Management Initiatives

This is precisely the situation where an experienced solution provider can step in with their experience. If the customer allows them, they can share the benefit of their experience. "We've been through this twenty times," the supplier can tell the customer, who is going through it their first and perhaps only time. "Let us tell you about typical issues we've encountered."

Contrast with the Gung-Ho, "We're Perfect" sales approach of most pushy solution providers.

Will the mature and helpful supplier catch every possible thing that could go wrong with a change initiative? Of course not. The map is not the territory. But they can advise the customer, and get the customer into the mindset that the unexpected will be encountered.

How can you apply this mindset in your own organization?

>> Jason Kanigan is a business strategist. To book a call to discuss Change Management initiatives in your firm, click here. <<