Leadership Lesson: How many assets are you wasting? More than you think

Published in the Phoenix Business Journal on May 11, 2018

Too little? Truth is that we often have too many unused assets in our corporations, organizations, and small businesses – and are unaware of it. There is a cost associated with excess: cash, investment, space, staffing, real estate, and more. Look around. 

Our financial friends ( CFO, controller, accountant) see underutilized assets. They have a built-in aversion to waste. Ask them to build a list of the most unused and underused assets. Convert them to a better use. Including cash.

My mother was my biggest role model. She taught me to hate waste. – W. Edwards Deming, American engineer of high-quality, lean production for Toyota and others

Shopping list

Here are some key areas to look at for signs of waste:

Excess inventories – parts and raw materials that are lounging. Money is tied up in them and occupying valuable space. Reduce or eliminate the excess. Sell it off for cash. Barter it for something you really need.

Unused real estate – land not being used nor appreciating. Entire buildings empty or partially utilized. Sell or lease the land to someone who can use it. Ditto, the empty and dead space buildings.

Declining values – some assets decline in value across time. If the asset is not needed, don’t let it fully decline on your books. E.g., a large batch of a production material that is losing value and you do not need as much of it.

Consolidate assets – if you have two partially used buildings, move everything into one of them, and sell or lease the other building. This can be anything from a production area to an office space.

Technology gluttony – expensive technology for everything. It is too easy to overstuff ourselves with it. Get the expertise to determine what is needed for what purposes, understand all costs now and later, and get the real return on investment (ROI).

Overstaffing – payroll can be the single largest expense item. Optimize the use of your employees. Not to overwork nor unnecessarily terminate them. Simply utilize them more efficiently. Cross-training, better management, improved culture.

Prevention – why overpay for assets? Make sure that you are paying fair prices with good terms and conditions. Don’t budget for a multi-month marketing program that fails in the first month. Be wary of a large purchase asset that could decline in value.

Real savings

EMC is a major supplier of IT services. They recently undertook to reduce their real estate expenses associated with 12M square feet of space for 50,000 employees. In a two-year period they cut 20%, or $80M, from their real estate portfolio.​

Harvard research notes that virtually any department can cut its expenses by 10%.

Waste not, want not. – Benjamin Franklin, a U.S. Founding Father

The bottom lines

Excess. Too much real estate, too much staffing, too much production capacity, too much technology, too much inventory. Too much, period. Reduce, eliminate, consolidate. Find the weight, lose the bloat, gain the cash.

Click here to read this article on the Phoenix Business Journal site.