Part ONe: The Critical Path
The most important issue facing every company is how to design that critical path. How do you balance your needs vs. the customer’s preferences?
All companies, such as grocery stores, for example, take many actions to get you to purchase their product or service rather than those of competitors, from advertising to discounting items.
Grocery stores lay out their aisles and products to get you to buy stuff. For example, most grocery stores put milk and bread shelves in the back of the store. By making the customer walk to the back of the store, the customer may pick up other items from the shelves, thus increasing the amount they spend. Putting milk and bread at the back of the store also makes inventory stocking easier given their shelf life, since trucks deliver these goods to the rear of the store a few times each week.
These decisions are made primarily for the stores’ convenience and to increase their profits. If you think about this layout, it defines now how the customer interacts with the grocery store. It is the path that the customer must journey down to get their bread and milk. From the customer’s perspective, this is the critical path that the company has chosen to impose on the customer.
But most busy customers who want only these few basic items dislike the stores’ set-up for a few reasons. First, it wastes their time. If you want only a loaf of bread and a half-gallon of milk, it would be far more convenient to have the critical path to these items near the grocery store’s entrance. Second, it feels manipulative. Not only is the store wasting your time, they are doing it with the hope that you will buy more than you intended. Finally, the store is putting their revenue and logistical interest ahead of the customers’ convenience. Consequently, many customers feel like they are being used, getting the short end of the transaction in terms of time, convenience, and money.
Does that set-up and customer experience sound familiar? Because grocery stores forced that “unfair” critical path onto customers, they opened the way for the $200 billion convenience-store industry, one that better understood the hurried customer’s desired critical path. The corner bodega, the gas station, or the drug chain’s food section exist because customers did not want to walk down the supermarket’s critical path for bread and milk. By ignoring or losing sight of the critical path, the large grocery chains created their own competitors and drove their customers to an alternative critical path that met their needs better. Not surprisingly, to win back those turned-off customers, many grocery stores now have popular breads and refrigerated milk cases close to the check-out lanes.
The concept of the critical path is deceptively simple. As in the grocery store example, entire industries quite frequently lose sight of the connection that exists between themselves and their customers.
It can be just as difficult for many employees to recognize the role they play in getting their organization—and themselves—on that critical path. As we will explore in this section of the book, we can also think of workers as being on the critical path—that is, dealing directly with the company’s business of selling directly to customers—or off it.
You must understand your organization’s critical path and appreciate its importance. Otherwise, you cannot make your maximum contribution. You might have extremely deep accounting knowledge or engineering degrees, but unless you know your company’s critical path, you are like a blindfolded dart thrower. You may hit the target by luck, but never with the accuracy that both you—and your company—would prefer.
Once you understand your organization’s critical path, then you must figure out where you stand on it and how you can contribute to it. Some employees are directly on their organization’s critical path—they design, make, sell, deliver, and support the company’s product or service.
However, many workers do not interact directly with customers. Their contributions may seem more abstract, unrelated to the critical path. These employees manage those who contribute more directly, or they provide support services, such as legal, IT, or human resources. It is crucial that these folks understand that their main task is to help those other employees do a better job for the customers. Over the course of this section of the book we will explore ways to think creatively about the critical path and your place on it. There are many ways for employees to get on the critical path, and they all begin with understanding that path and the ways that they can contribute meaningfully.
We will also look at several ways of viewing the critical path, from breaking down the steps along that path to both present and future critical paths to adding value to the critical path.
The scorecard for any organization is measured in costs, revenues, and profits along the critical path. The goal for all workers is to reduce those costs, raise the revenues, and to increase profits. If the company doesn’t do this, it will not be a viable long-term business. It will either hobble along, dying a slow death, or, if it is a publicly traded company or a non-profit with an activist board, it will have fiscal discipline imposed by someone from the outside.
The bottom line: when your company and you create a strong critical path, good things happen. When you don’t, then don’t complain about losing the company or your job.
Lesson 1: Understand the Definition of a “Job”
My high school economics teacher, Mr. Thallamer, assumed that all his students were going to have to work for a living. So, he asked us:
“What is a job? What does a job mean to you?”
(You may want to take a moment and answer the question for yourself. Think about this before you read any further. Better yet, write down your answer so that you can reference it later.)
We, his students, shot off the following answers which are not all that different from what I get when I ask workers (whether on the shop floor, in the executive suite, or in graduate classes).
“A job is the exchange of labor for money.”
“A job consists of things a boss tells you to do.”
“A job is what you do at work.”
“A job is how you support yourself.”
“A job is a task assigned to do in a defined time period.”
Some students took it a step further:
“A job is a way to use my talents to meet an organizational goal.”
“A job is how I find personal satisfaction.”
“A job is how I get meaning from life.”
“A job is a part of my self-identity.”
Mr. Thallamer would shake his head and tell us we had to get our heads screwed on right. Too many people have jobs, he would say, but do not understand fully what a job really is. We had to stop looking at the work world from our limited perspective. All these definitions look at the job from the employees’ personal point of view. They miss the essence of what a job is from a different perspective. Unless you own the company, he would say, it’s not about you (and even entrepreneurs will admit that their companies are not about them). Then Mr. Thallamer flipped into econ-speak. For us, he said, a job had better primarily be:
“The opportunity to create more present or future value for the employer than it costs the employer to keep you employed.”
In other words, you have to make more money for the company than it costs to keep you around. Should your value fall below your cost, the company will eliminate your job or hire someone else to do it. Why should the company lose money on you, just so you can have a “job”?
(Now some people hold positions that don’t create any value, say the less-than-competent owner’s son or daughter, or non-productive tenured professors who just go through the motions, or political appointees who get patronage jobs but do little actual work. These aren’t jobs; they are subsidized sinecures.)
Mr. Thallamer’s definition of a job took on real world meaning for me when I was still a teenager working in our family gas station and car repair shop in Chicago. One hot, humid summer morning, I told my mother, who scheduled the work shifts for everyone in the family that I wasn’t going to work that day. Working on hot engines in 95 degree heat is often dangerous and dirty. Pumping gas, cleaning windshields, and checking the oil in the blazing sun is just plain tiring. I didn’t want to do it that day and thought I would give myself a day off. My mother didn’t yell, berate, or argue with me. Her lack of pushback, I thought, meant she was OK with it. I was elated.
A few minutes later, she said, “Oh, by the way, if you don’t go to work today, you don’t get to eat anything from this house today. And, if you don’t work your shift, you don’t get to sleep in our house tonight. So, you decide what you want to do.” In those few sentences she translated Mr. Thallamer’s definition into something my teenage brain could grasp. Through the gas station, we made the money that paid for the food and the house. If I didn’t earn my keep, they couldn’t afford to keep me.
I went to work.
Appreciating the “proper” definition of a job is the starting point for keeping your job and also for leveraging your value. The Critical Path is the where you add the necessary value to your employer. Most people don’t get on it and subsequently pay the price.
Critical Path Action Items
Do you know your company’s critical path?
What has been your definition of a job?
Are you providing enough current or future economic value to your organization to exceed your costs to them?