First step is the EASIEST!

hi

First step is the hardest, that is how the old saying goes, but that is not true. If you take company that saves money by cutting cost or using sub contractors. Or any other activity, like saving money. The first step is the EASIEST!. You have all the jobs that you can outsource, there is lot of unnecessary not company core related activities that can be outsourced and great savings can be reached. Security guards, IT support, cleaning and so on. After that it comes more tricky, you could outsource some simple area of the actual work. But if you continue it will get exponentially difficult, the cost of outsourcing goes higher and the cost for quality goes up. You can outsource the competitive edge of the company so the value is not made by the company, but all the fruits of the labor are collected by the subcontractor.

Same goes for savings, if you start to save space, you can save rent, so at first you notice that you can save 50% space, that was the easy part, but if you continue the benefits are quickly higher compared to the savings, you can make the people unhappy and miserable by continuing this route, there is no continuous space saving that is possible. You cannot improve for ever, even that is the mantra. If there is even one people thinking about this saving, the loss could be higher than the saving.

The benefits of any improvement go asymptotically to zero. First step is the easiest. And it’s best that you and any company realizes this when they start any improvement project.

Of course the old saying that the first step is the hardest comes from the fact that the first step is the biggest. The improvement is the greatest, so in some cases it makes it hard. The following steps are smaller and less beneficial. The effect of each step is smaller. But in company setting it’s good to realize this and understand that if the first saving round saves millions, the next one is less and after couple of rounds there is no benefit, or the cost of change is higher than the benefits.

-JP-

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