Don't Divorce Activity Based Managment

Edition: February 2003 - Vol 11 Number 02
Article#: 1464
Author: Tom Pryor

Almost 80 percent of couples who were ‘very unhappy’ in their marriages and agreed not to divorce described themselves as ‘happy’ five years later, a new study finds. Of those who divorced, only half were ‘happy’ five years later.” This research (published in the Wall Street Journal) offered a timely reminder that couples who work through their problems end up happier than those who walk out.



On Dec. 31, 2002, I got a phone call from John, a manager in a large organization. He had read my article on the 10 habits of the 10 percent who successfully sustain continuous improvement and Activity Based Management (ABM). John said he needed to speak with a “ten-percenter” as soon as possible. He said that if his company didn’t figure out what they were doing wrong, they would abandon the Activity Based Cost system implemented in 1999. After four years of “marriage,” John’s senior management is prepared to “divorce” ABM.



When it comes to fulfilling New Year’s resolutions, it’s easier to stall than to start. And when it comes to marriage, too many people are more inclined to stop than sustain. I provided John the names of several organizations – Federal Express.



U.S. Patent & Trademark Office and Ralston-Purina to name a few – that have many ABM anniversaries to their credit. When he has completed several visits, John will learn the marriage of ABM to each “Improvement Keeper” organization is unique. But if he listens carefully, I believe John will also find a common theme in each of these lasting ABM “marriages” – partial surrender is no surrender at all. Half-baked attempts at improvement typically fail. Full surrender to a commitment is required for sustained success.



Why is it difficult for people and organizations to sustain commitments to improvement? Why are sound business practices such as Activity Based Costing, Total Quality Management, Continuous Improvement, Six Sigma, Lean Manufacturing and Process Re-Engineering implemented and then abandoned? I believe one reason for abandonment has been overlooked until now. Employees have been taught how the principles of each improvement method apply to the organization, but not to them personally. I believe that we must teach people how to use the principles of ABM at work and at home. Several experts in the field of change management share my opinion:



1. “People change what they do less because they are given analysis that shifts their thinking than because they are shown a truth that influences their feelings.” This statement from The Heart of Change, by Harvard Business School’s John Kotter and Deloitte consultant Dan Cohen remind us that managers will not embrace Activity Based Cost facts until they understand how the new data influences their feelings. “The flow of see-feel-change is more powerful than that of analysis-think- change.”



2. The author of The Fifth Discipline, Peter Senge, has been asked by many companies, “How do we sustain momentum?” He answered their question in a new book, The Dance of Change. Mr. Senge says, “In this book, we use the term ‘profound change’ to describe organizational change that combines inner shifts in people’s values, aspirations and behaviors with ‘outer’ shifts in processes, strategies, practices and systems.” If employees don’t understand and embrace the principles of ABM, ABC, Continuous Improvement, Total Quality Management or other improvement tools in every aspect of their life, the tool will likely be abandoned.



3. “In his book Freedom to Learn, Carl Rogers states that the only learning which significantly influences behavior is ‘self-discovered, self-appropriated’ learning. Only when subject matter is perceived as being relevant to a person’s own purposes will a significant amount of learning take place.” (Information Anxiety 2, Richard Saul Wurman) Using personal examples helps people understand and embrace the principles of Activity Based Management. For example, if remodeling a home, you will need to identify the Bill of Activity, i.e. Architect 20 hours at $100/hour + Contractor 10 hours at $25/hour + Plumber 8 hours at $45/hour + Carpenter 20 hours at $40/hour + Painter 12 hours at $15/hour = $23,500 total cost. Offering personal examples of ABM often leads to understanding, sustained use and permanent marriage of ABM to an employee’s professional life.



Change in any organization happens one person at a time. Providing ABM training that impacts each person builds strength through the power of multiplication. Therefore, don’t exclude any person who desires to contribute to the cause of improvement.

To develop a strong marriage between ABM and your organization:

· Teach people how the basic principles of ABM can apply to both their professional and personal lives. ICMS offers a half-day, onsite workshop.

· Teach people how to read, interpret and use ABM reports. ICMS offers a one-day, onsite workshop using your actual ABM data.

· Teach people how they can do their jobs better using ABM information. People embrace things that make their life easier. For ideas or more information on ICMS workshops, send a request to ABM@icms.net.



The success and sustainability of ABM requires big and small steps. Casting a vision and setting measurable improvement goals are important tasks for a leader. But leaving no one behind is equally important if those goals are to be achieved.



If you feel out of balance or contemplate “divorce,” be like John and give me a call (817/483-6511). Let’s develop and implement a plan to bring a personal and professional balance to your Activity Based Management system as well as your life. People, organizations and improvement systems that stick together through thick and thin are the happiest.



If you’d like more information on how Activity Based Cost Management can help you professionally and personally in 2003, e-mail TomPryor@icms.net or call ICMS Inc. at 817/483-6511.