Non-value added activities are a part of every company, especially large ones. As lean six-sigma has become a part of nearly every major company, “master black belts” have begun a seek-and-destroy mission against non-value added activities. Unfortunately, many non-value added activities are still required to continue operations. However, what many do not realize is that non-value added activities can differ significantly depending on the region, country, culture, industry, etc.
Tax code complexity and legal compliance vary greatly by nation. Security concerns make non-value added activities in one country a significant value-added activity in another. Selective government enforcement of contracts and laws rewards otherwise overly cautious behaviors. Facilitation payments may be tempting to keep processes from getting bogged down. Labor laws or work rules can restrict what employees would otherwise be willing and capable of doing, coerce a company into using unskilled labor, and consume management’s time with proper forms and filings. Once these different areas start stacking on top of the other, the non-value added elements of “normal” processes can reach staggering proportions.
There are three “successful” outcomes for a firm in this extra burdensome situation described above. 1) Remain small enough that non-compliance is not an issue. 2) Perform the best you can given the constraints in place. 3) Regulatory capture of those responsible for compliance. Assuming that you want to keep growing, option 1 is not viable. Also, either for moral or Foreign Corrupt Practices Act reasons, let’s assume option 3 is not viable. However, knowing of these two different options is important because it gives you an idea of the competition you will be up against.
“Doing the best you can” does not sound appealing. However, the one-eyed man, the tallest pygmy, and the sprinting sloth can all be champions given the right environment. “Nimble and dexterous” is a relative description, not an absolute one. Additionally, doing the best you can is the best strategy of the three options above because small players can never reach economies of scale and large players engaging in unethical practices encourage a stagnant and corrupt culture.
From my experience, I have learned three key lessons on how to succeed in this situation: Start Now, Recognize Reality, and Be Positive.
1) Recognize Reality – Before you build, sit down to count the cost. Recognizing “critical paths” of implementation is an essential consideration in the creation of a successful strategy. Beginning with the end in mind is essential, but the complex process of tracing it to action today means your dreams must be based in reality. Do not assume that the pieces will automatically fall into place, even if you have an excellent team put together. Is doubling your footprint in the country in 18 months a key part of your strategy? Know exactly what resources will be required, such as government applications, the average speed of negotiations, inspections, public infrastructure evaluation, etc. Once the critical paths are identified, then the route can be traced between the vision and the present.
2) Start Now – The easiest way to turn a boat is to start early and make adjustments along the way. Although counterintuitive, being nimble in a difficult environment requires far more advanced planning and accountability than many would initially believe or are accustomed to. Strategy cannot be made up on the fly or simply copied and pasted from a different environment. Once a successful strategy is identified and committed to, successfully implementing this strategy will have many more moving parts than you may think. A combination of execution and control by a very limited number of people, with buy-in and input from a much larger range of individuals is usually the best combination.
3) Be Positive – Yes, I know that sounds like utter feel goodery, but it works. Let yourself laugh at the insanity, then take a breath and get to work. Many managers are unable to get past this and remain eternal pessimists. Unless these people are your lawyers, drop them. Do not fall in the trap. Watch yourself and watch your team. Proactivity can heal a thousand cuts, but reactivity and negativity will put your company into a coma. The rule with my team is, “Always have at least one potential solution when presenting .” This one rule has preserved all of our sanity, as we never go to someone else exasperated. The bleeding stops, and we can move forward.
Yes, there will be deadweight you may not be accustomed to and every day may seem like a slow motion 100 meter dash, but everyone else is racing with moon shoes too and victory tastes just as sweet.
Tax code complexity and legal compliance vary greatly by nation. Security concerns make non-value added activities in one country a significant value-added activity in another. Selective government enforcement of contracts and laws rewards otherwise overly cautious behaviors. Facilitation payments may be tempting to keep processes from getting bogged down. Labor laws or work rules can restrict what employees would otherwise be willing and capable of doing, coerce a company into using unskilled labor, and consume management’s time with proper forms and filings. Once these different areas start stacking on top of the other, the non-value added elements of “normal” processes can reach staggering proportions.
There are three “successful” outcomes for a firm in this extra burdensome situation described above. 1) Remain small enough that non-compliance is not an issue. 2) Perform the best you can given the constraints in place. 3) Regulatory capture of those responsible for compliance. Assuming that you want to keep growing, option 1 is not viable. Also, either for moral or Foreign Corrupt Practices Act reasons, let’s assume option 3 is not viable. However, knowing of these two different options is important because it gives you an idea of the competition you will be up against.
“Doing the best you can” does not sound appealing. However, the one-eyed man, the tallest pygmy, and the sprinting sloth can all be champions given the right environment. “Nimble and dexterous” is a relative description, not an absolute one. Additionally, doing the best you can is the best strategy of the three options above because small players can never reach economies of scale and large players engaging in unethical practices encourage a stagnant and corrupt culture.
From my experience, I have learned three key lessons on how to succeed in this situation: Start Now, Recognize Reality, and Be Positive.
1) Recognize Reality – Before you build, sit down to count the cost. Recognizing “critical paths” of implementation is an essential consideration in the creation of a successful strategy. Beginning with the end in mind is essential, but the complex process of tracing it to action today means your dreams must be based in reality. Do not assume that the pieces will automatically fall into place, even if you have an excellent team put together. Is doubling your footprint in the country in 18 months a key part of your strategy? Know exactly what resources will be required, such as government applications, the average speed of negotiations, inspections, public infrastructure evaluation, etc. Once the critical paths are identified, then the route can be traced between the vision and the present.
2) Start Now – The easiest way to turn a boat is to start early and make adjustments along the way. Although counterintuitive, being nimble in a difficult environment requires far more advanced planning and accountability than many would initially believe or are accustomed to. Strategy cannot be made up on the fly or simply copied and pasted from a different environment. Once a successful strategy is identified and committed to, successfully implementing this strategy will have many more moving parts than you may think. A combination of execution and control by a very limited number of people, with buy-in and input from a much larger range of individuals is usually the best combination.
3) Be Positive – Yes, I know that sounds like utter feel goodery, but it works. Let yourself laugh at the insanity, then take a breath and get to work. Many managers are unable to get past this and remain eternal pessimists. Unless these people are your lawyers, drop them. Do not fall in the trap. Watch yourself and watch your team. Proactivity can heal a thousand cuts, but reactivity and negativity will put your company into a coma. The rule with my team is, “Always have at least one potential solution when presenting .” This one rule has preserved all of our sanity, as we never go to someone else exasperated. The bleeding stops, and we can move forward.
Yes, there will be deadweight you may not be accustomed to and every day may seem like a slow motion 100 meter dash, but everyone else is racing with moon shoes too and victory tastes just as sweet.
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