Consider your own organization, yourself, or any organization you are part of and ask yourself the simple question:
Do you have enough resources?
Would you like to spend more on needed things? We are not talking about getting a pile of cash and setting it afire or wasting it. We are talking about doing reasonable things that better accomplish your important missions.
If you answered that it would be nice to have more resources perhaps you are in what I have called the “Cost WarTM” The Cost War is simply the struggle to accomplish an organization’s missions in the face of constrained resources. Once it is clear that more fiscal resources are desirable, the next question is:
<script data-ad-client="ca-pub-3199160694160451" async src="https://pagead2.googlesyndication.com/pagead/js/adsbygoogle.js"></script>What are you going to do about it?
Typically, an organization’s first response to this predicament is to work very hard to get more budget. This is a political exercise at marketing the needs of the organization to the interest groups that support that mission and the budget authorities that ultimately must approve the budget. Increasingly, this response fails to solve the problem of constrained resources.
The next response of organizations under fiscal pressure is to react with downsizing of the mission. Sometimes these cuts are done across the board in what some organizations call “salami slicing.” This is to say that a 10% budget cut to the organization is accomplished by cutting all subordinate organizations 10%. While there may be an air of fairness and equity to this mindless approach it is hardly sound management.
It bothers me greatly to see significant capabilities and national security assets like brigade combat teams, air squadrons, and naval vessels downsized when I know there is a better way to operate.
My research focus over the last twenty five years has been to explore a third approach to the “Cost War.” This approach seeks to improve the cost effectiveness of government organizations in using their limited resources to better effect. A more cost effective organization can accomplish the same mission for less or can increase their mission effectiveness at stable funding levels.
Who could be against this?
Greater cost effectiveness is government would seem to be an apolitical issue. Running any program smartly should be better than running it poorly regardless of the program’s original political backing.
Our government institutions are indispensable to our way of life. Yet it would seem clear that we as a society cannot purchase our government services on credit indefinitely. I have been studying this issue for most of my adult life and will be writing this series of blogs to share what I’ve learned that may be helpful to you, your career, your organization, and society in general.
Future postings will explore many issues of cost management and cost management. The following list will be considerably expanded:
Cost measurement that transforms data into useful intelligence
Cost relationships
Cost tradeoffs
Cost explanation
Cost estimation
Managerial use of cost measurement for mission success
Cost benefit analysis
Organization based control
Role based control
Output based control
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