Your best Digital Hero is a Zero
“If you always do what you always did, you will always get what you always got.” - Albert Einstein
These words ring so true in the digital world today. What have worked couple of years ago, has already been disregarded and doesn’t work today. This is the big disruption that everyone is talking about, where some companies existed two years ago and disappeared today, or the digital model and experience that was seen as a breakthrough few years ago is not even considered “allowed” now.
Therefore, in the digital world, relying on past approaches and frameworks will not support your growth and profitability in the disrupted markets of today or the future. Instead, you can be aware and learn from the past but you should always design and plan for the future.
That’s why many digital companies are now trying out “Zero Based Concepts” (ZBC), in budgeting, planning and even the culture within their environments.
What is “Zero Based Concepts (ZBC)”?
Zero Based Concepts (ZBC) are as old as 1970’s when governments in that time tried to push such concepts during the financial crisis.
Zero based concepts are NOT techniques to start from zero every year in relation to strategy, budget and organisation. However, it is more a repeatable process to rigorously challenge the status quo, not based on the past data but on looking what we want to achieve in the future.
ZBC is about driving continuous improvements for processes, costs, structures and plans which allow you to let go of the “past” and grab into the “future”. This avoids “one-time” cost saving programs, budget planning or productivity, and ensures sustainable improvement over time. Moreover, ZBC indirectly builds an agile and responsive culture of continuous improvement, cost management and most importantly transformative change among all employees.
Why ZBC and why for Digital?
ZBC doesn’t imply to remove all investments, costs, organisational structures and concepts and start from scratch every year! But your budget planning, organisational reviews, and productivity measures should have the “frame” of the future, and this is what is important! It supports digital companies to build agile and future looking culture, to design “right” Organisation structure at the right time, and to shift talent based on desired future outcomes rather than past experiences. Moreover, it helps digital companies to concentrate on transforming the operating models to where the growth is going to be rather than where it was.
And for Digital companies, this is the peak time to use Zero Based Concepts to improve efficiency, raise productivity and redefine tasks & processes in much quicker way. With digital technologies such as robotic process automation (RPA), global business process management systems and artificial intelligence, it is much easier to reduce errors and speed to such activities and enable companies to gather and organize data on a global scale quickly, optimising it and implement it in fraction of time (what might have needed months just few years ago).
When to implement Zero Based Concepts & for what?
Ideally, you should use such ZBC in everything you do, however if you have the following triggers in your organisation, use them as excellent vehicles to trigger Zero Based Concepts:
A merger, acquisition or a carve out
Transformative change programs
Budget Planning Time
Zero Based Concepts can apply to budgeting & cost management, Customer Service & Service Level Management, Transformation & Innovation management, and Organisation & Resource management.
Budget & Cost Management: ZBC will help you plan your budget for the upcoming year based on strategy rather than based on last years budget. As for cost management, productivity & costs programs can be defined based on business unit strategy, project and customer directions rather than multi-year programs that are top down. These are mostly not effective and usually become very quickly not relevant with the speed of change in the market.
Customer Service & Service Level management: Instead of accepting year on year the same service levels internally or towards your customer/consumer, reset your baseline and let go of what needs to be dropped or are nice to haves and concentrate on what your employees, customers & consumers really need.
Transformation & Innovation Management: In digital world, transformation & innovation are fairly intertwined and these are constantly required. Therefore, use ZBC to re-align projects, people & budget to transformative & innovative initiatives. ZBC can help deliver the culture of “Should be” rather than “Have been”.
Organisation & Resource Management: Continuous improvements is the recipe of success in such a fast paced changing digital market. ZBC brings continuous improvement on organisational structures & operations, agile redirection of resources and employees to the right and high-value areas of the business. ZBC will ensure the enterprise is always ready to face the digital challenges, with a workforce that will be more motivated through continuous learning.
How to implement Zero Based Concepts?
ZBC programs or initiatives can be taken on an enterprise level down to a team level. Yes, enterprise level would allow the most value to the entire organisation however, in my experience, starting at a team level will be quicker, more effective, allows more buy in and of course you can “fail-fast and learn fast”.
So what are the steps to take to implement Zero-Based Culture:
Define your Zero: Defining your zero is difficult and against many people’s habits. You should be very self critical and hard on what are really your minimal set of capabilities, systems & processes you would keep if you were to build your business all over again. This also should link to the structure and people you have in your organisation. These have to be lean, simple and limited to ensuring you can “Keep the lights on” in your company towards your customer and regulatory bodies.
Define your North Star: Your North Star is your ideal target state, your “To be” position that maps to your vision and mission for the business, the employees and of course your customers. North Star shouldn’t replace your vision & mission, but instead complement it with a very clearly articulated, understood, and accepted description of where you want to be in a defined set of time. This defined set of time should then also be your “cadence” for when you run your ZBC on a regular basis.
Eliminate the Unnecessary Plus: Having your Zero defined, then initiate the analysis of all upcoming planned projects and activities, examining their respective investments, capabilities, systems and processes and identifying what you need to stop/eliminate, simplify, or even aggregate to simply keep your Zero at level. All those that you decided to eliminate, take them to the next step.
Re-define the Plus from Zero: Now identify your greatest drivers to reach your North Star. This should cover the work (i.e. Critical Projects & activities), effort (covering the time and frequency of outputs), structure that supports the core competencies, roles & responsibilities to be added, people and skills to be stretched and developed, right tools needed in place, and of course the right objectives & metrics to reach it.
Drive with full Speed!: Implement your work based and with full commitment and support from you and the leadership of the area/company towards your North Star. Beware of any scope creep. Don’t make exceptions (or avoid them to bare minimum - Zero)
Reach, Stop, Assess, Repeat: With every implementation, understand what went well, needs improvement, needs change or needs to stop. Repeat those steps at every cadence.
How to keep your Zero a Hero?
From my years of change management experience, (and as per my blog “6 Levers to manage Change in the Digital Age”) for change to work, be effective and stick, organizations need to: (1) Lead with culture, (2) involve every layer, (3) engage engage engage, (4) break silos, (5) lead outside the lines and (6) demonstrate progress. This applies to all transformations, including transformation based on ZBC.
(1) Lead with Culture: ZBC have to be ingrained in the culture, integrated in the people’s behaviour and thoughts to become as natural. Senior Leadership has to drive this change with clear communication, storytelling of the benefits of Zero Based Concepts and narratives that employees can relate to.
(2) Involve Every Layer: With ZBC, the right cadence for you company should be agreed on (e.g. every budget cycle, every 1 year, every 2 years, etc..), the involvement of management & employees should be clear and any governance structures should be transparent and open.
(3) Engage, Engage, Engage: With tendency of human’s to avoid loss rather than prefer to acquire gains, results of ZBCs have to be regularly & openly shared and discussed within the organisation using both virtual and physical channels with clear learnings and improvements along the way. There is no such thing as too much communication from leadership.
(4) Break Silos: With employee’s preference to the “path of least resistance” i.e. bias towards the status quo, and “not invented here” Syndrom, let the employees contribute to your Zero “status” and to your “North Star”. Allow co-creation as part of your regular process and target that everyone is working towards making things better.
(5) Lead outside the lines: ZBC allows you to look at the minimal need to perform the activity and concentrate on the effort with the highest value. This should apply to leadership as well, where management interference should be left to minimum and highest drive is left to the employees, the community & the change agents that will put their energy towards making it a success.
(6) Demonstrate Progress: Of course, ZBC will only stick when regular transparency on progress, failures and successes are being shared and made available to everyone.
The value of ZBC comes when the environment in your company becomes an environment that everyone believe they are part owners/investors in, their success is the company success and their continuous improvement and dedication to make the enterprise effective, efficient and forward looking is recognized, seen and felt.
So in the next 90 days, why don’t you
Get the appetite of ZBC in your team/department/organisation
Apply it to one area where you have the biggest pain
Learn, improve, repeat and Expand!
And please share your results within your team, organisation and I would be very happy if you can share it with me as well!!!