CHAPTER 13

If It Ain’t Broken, Break It

(Innovate)

Vignette: Five Monkeys

Imagine the following scenarioⁱ:

Start with a cage containing five monkeys. Inside the cage hang a banana on a high string so that it is inaccessible to the monkeys without a ladder. Place a folding ladder under the banana high enough to reach the banana. Before long, one of the monkeys will go to the ladder and start to climb toward the banana. As soon as it touches the ladder, spray all the other monkeys with cold water.

After a while, another monkey makes a similar attempt. As soon as he also touches the ladder, spray all the other monkeys with cold water again.

Soon, all the monkeys in that cage will try to prevent any monkey from climbing the ladder for obvious reasons. Monkeys are not stupid.

Now, put away the cold water, remove one monkey from the cage, and replace it with a new one. The new monkey sees the banana and wants to climb the ladder. To his surprise and horror, all the other monkeys prevent him from climbing the ladder. Another attempt and another prevention. The new monkey learns fast what to expect if he tries to climb the ladder. Therefore, he stops any attempt to climb the ladder.

Next, remove another of the original five monkeys and replace it with a new one. The newcomer is also prevented from approaching the ladder by the other monkeys, including the previous newcomer.

Continue replacing the old monkeys with new ones. Every time the newest monkey attempts to approach the ladder, the others prevent him from doing so.

Because all the monkeys are now new, they have no idea why they are not permitted to climb the ladder or why they are participating in preventing any new monkey from doing so even though they have never been sprayed with cold water. Nevertheless, no monkey ever again approaches the ladder to try to reach the banana.⁴⁴

Why not?

Because as far as they know, this is the way it is always done around here and that is how company policy begins.

But whatever the process was, some quite creative thinking was involved.

Vignette: The Accounts Receivable Policy

Remember the customers’ source of funds I found when in need of working capital? I was told by my accounting personnel, my sales resources, and even my workers that changing the accounts receivable (A/R) policy will never work in “this marketplace.” Why? Because the present system was the only one that worked. Because “everybody” did it this way. Nobody in their right mind would dare to change this.

Deep inside, “something” told me that they were right up to a point. Business is about win–win situations. There needs to be a balance between the give-and-take systems in place.

The question (for me) was not whether the new payment policy would work out or not. Instead, I had to find a way of making it work to reduce my working capital needs and improve cash flow. How could I make it work nevertheless? What could I give in return to my customers that would justify this A/R policy change?

Fortunately, my company used a comprehensive accounting software package (Timberline).ⁱⁱ Although Timberline was developed with the construction industry in mind, it had some interesting accounting components that worked well for a service company like mine.

I am not advocating or selling here the values of Timberline. I just want to emphasize that efficient information systems can sometimes deliver more than what they were designed to do.

Besides a general ledger, the system had other modules not fully used by my company, such as job costing, accounts payable, and A/R modules.

After reviewing the capabilities of our accounting systems, I noticed that we could tap into our work-in-progress information by generating a daily status report on all the work performed for each customer.

Sharing this information with each customer would benefit both the customer and the company.

Indeed, on one hand, the company would know daily the financial status of the project’s work in process that included the up-to-date project costs incurred by the business in terms of labor and material. On the other hand, the project manager could produce daily reports for the client illustrating the project progress, also in terms of labor and material.

Both sides could then appreciate the amount of work performed and the expenditures incurred and, therefore, better estimate the balance of work needed to be done.

I sensed that this type of information was very valuable both to the customer and to the company. Furthermore, this information could be used to generate interim invoices as the project progressed. This makes for a win–win situation for the client and the company.

Even if the A/R system was not broken, I broke it. It paid off.

If you do not try, you do not know.

Vignette: The President’s Office

John was happy with his new office. As the president of the new university, he has chosen to convert a classroom on the second floor of the building into a “boardroom office.” It was spacious. It overlooked a pleasant garden at the main entrance to the university. It was sunny and bright for most of the day. John was not going to give up his office with no reason. Why change?

I had another idea. I wanted to convert his office back to a revenue-generating classroom. How could I find an office suitable for the founding father of the university with similar features as his present office and free his present office for a much-needed classroom?

John liked the huge round table he used as his boardroom table. He was not very fond of square or oval tables. I had to accommodate the same type of table into whatever was to become his new office.

Adversely, his office desk had limited functionality. It was lost under his desktop computer, monitor, printer, and phone. He needed additional counter space for work.

The second-story faculty cafeteria was adjacent to John’s office. It was rarely used by the faculty because the main cafeteria was on the first floor. Would it fit the requirements of the president’s office?

I learned through my contacts with the provincial government that a deputy minister was moving out of the capital region and would be renewing his office furniture. The old furniture would be available for bidding very shortly. This consisted of a main office desk, a credenza, and a set of matching drawers, all in mahogany.

I showed John, using a furniture design software package, how his new office would look if we moved it from the classroom to the cafeteria.

We could comfortably accommodate his boardroom table and 12 chairs and the new deputy minister’s office furniture, and add a couple of sofas for informal discussion with visitors. A beautiful Chinese carpet, a gift from the marketing vice president, finished the look. All of these would fit the limited budget we had at the time.

John accepted the move provided I could meet budget requirements.

I knew that I could not afford the original price of the deputy minister’s office set; however, because of the size and the nature of this office furniture, I could place a bid for 10 percent of its original price, with a good chance that no other bidder would meet the deadline. I won the bid.

We moved the president’s office to his new premises over the weekend. John liked his new office.

I had now another classroom for the university’s design academy.

Take a chance. Try it; it may work.

Lessons Learned: Paradigm Shift

All it took was changing the established paradigms.

ⁱNote: The experiment as described in the story never happened. However, this story originated with the research of G.R. Stephenson. 1967. “Cultural Acquisition of a Specific Learned Response among Rhesus Monkeys”. In Progress in Primatology, eds. D. Starek, R. Schneider, and H.J. Kuhn, 279–88. Stuttgart: Fischer.

ⁱⁱSage Timberline Office offers an integrated accounting and operations software for construction accounting. Solutions are tied together to deliver a comprehensive job-based accounting system designed specifically to help contractors and developers increase operation efficiencies in small and mid-sized businesses. (Source: Adapted from http://www.sagecre.com).