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many organizations, dangerous beliefs destroy almost all opportunities for improvement. In this article, I will expose some of the worst beliefs to avoid and explain ways to avoid all dangerous beliefs.
When the CEO Speaks, People Take Action
Management authority Peter Drucker told me that one of the most dangerous beliefs in organizations is that an increase in brains comes with being promoted. Here's verification of that observation: Executive assistants at well-run companies were asked what was the single, most important thing their CEOs could do better. The aides spoke almost unanimously in reporting that anything the CEO said was treated as gospel. Underlings,[link widoczny dla zalogowanych], for instance, scramble to make changes even when the CEO was only asking an innocent question. The CEOs assume that the response would come at little or no cost from someone who already had the answer. Some executive assistants estimated that 25 percent of executive and managerial time in their companies was taken up with answering such casual inquiries and making changes that hadn't, in fact, been requested. The assistants wished someone would advise their CEOs to stop asking casual questions and making off-hand comments because the rest of the organization operates on the misconception that these words are major priorities on which careers will rise and fall.
I'd Rather Do It Myself
Imagine you are taking a walk and stop to pick up a dime. While you are focused on that one-tenth of a dollar, a five-dollar bill floats by. Someone else grabs the five-dollar bill. Grabbing that dime cost you $4.90. Ignorant of what they are missing, organizations regularly incur such large opportunity costs because these lost profits don't show up on the accounting statements. As long as an activity ekes out an apparent accounting profit on its investment that's above the interest rate on U.S. Treasury notes, corporate financiers are happy. That misconception keeps many enterprises busy with tasks that can be much better performed by others,[link widoczny dla zalogowanych], albeit at a higher out-of-pocket cost. But who cares if the out-of-pocket cost is higher if the resulting returns are also higher?
Peter Drucker has gone further in observing that outsourcing should be used to reduce the tasks that management must do so that more management time can be spent on the few tasks that add the most value to the firm. The actual cost of the outsourcing, he has stated, should be a secondary consideration.
Cutting Costs Can Slash Profits Instead
Cost reduction seems like something you should pursue whenever possible. But that focus can be a profit-reducing trap. Minimize costs in one part of a process, and costs will swell in every other part of the process. For example, if you run an expensive machine as little as possible, you may have to pile up inventory in the rest of the production process to adjust for the sporadic use of the machine. Equipment used to further process what the machine produces will also be idle when waiting for more semifinished materials. The ultimate irony is that organizations that pride themselves on cost cutting usually show little or no volume growth. Equal energy put into providing new offerings that are superior in their benefits might, by comparison, expand profits by as much as many decades of normal cost cutting.
"We Use All the Most Up-to-Date Practices": Hardly!
Almost every organization I have ever visited was filled with people who prided themselves at being the best in the world at what they were doing. Why were they so confident? It's pretty simple in most cases. These braggarts had little idea what anyone else was doing. I've come to realize that such statements are signs of ignorance, marking a sizeable misconception stall.
STALLBUSTERS
Encourage Unmasking False Assumptions
A company had assumed for decades that advertising would work only when demand was highest for its seasonally consumed food, yet others promoted s