We need to understand we pay for friction twice plus compound interest. Friction dampens exponential growth dramatically.
We pay for friction twice because as we pay for people doing busy work, we are also paying for lost opportunity to do substantial work. And we are paying compound interest because strategic investment builds on itself, so when the ability to substantial work is dampened you are shrinking the base of the strategic investment- hence paying conpound interest on the losses.
But we need real numbers to measure losses. We have approached friction very abstractly so far. We need real numbers. Of course, they are hard to get.
How much are your key people worth per hour business cost wise? You have business expenses. You can calculate this at a cost per hour and adjust for wages as needed to get an approximate cost per employee.
Now you estimate the time spent on one aspect of friction for each employee. This is going to very rough, but calculate it for a month, for a year for 5 years- the longer you look at it the uglier it looks- but how long are you intending to be in business?
You can identify a variety of sources of friction from this note. Feel free to add your insights at any point.
Now you have to calculate some factor for all the other ways friction costs money.
- Doing busy work hurts morale and erodes initiative.
- Busy work distracts.
- Busy work requires help often from other people trying to work done.
- Busy work frustrates people and depletes a sense of robustness and self confidence.
- It is corrosive to the soul of the employee. Busy work grinds people down.
Friction extinguishes the robust enthusiasm of your employees dealing with customer service issues- sales issues.
This can cost sales. Now how do you account for lost sales? You don’t. You also don’t get paid.
This dissection of the high cost of friction is threadbare and needs your input here.
What would you add?
Leave a comment below or feel free to call or email.
