Get Out of Crisis Mode and Stay Out: Utilizing Resource-Based Decision-Making in Your Organization
Two economic sectors dominate the field when it comes to decision-making: one operates on a resource-based model and the other runs on a continuous crisis model. Many organizations choose the latter model because they place tremendous emphasis on saving money minute to minute, not on investing in future need. But resource-based decision-making offers a process that helps you make instant decisions, and more important, introduces small changes that, over time, prevent your organization from getting into future bad situations.
Once you have assessed a situation, you need to determine the best course of action. But before you can make a decision about what to do, you must have the resources to put that action into place. Giant retailers operate on the principle of building “surge capacity,” and your organization can, too. Basically, surge capacity involves investing in plenty of extra resources and having people trained and at the ready to use those resources when necessary.
Here’s how it works: a super-store like Wal-Mart may have thirty cash registers, and while they may have fifty employees trained to work in check-out, at most times only five to ten clerks staff the registers. However, the store prepares based on its assessment of when business is likely to be slow and when it will suddenly mushroom to a point that necessitates bringing on additional staff to utilize those empty registers. On the day after Thanksgiving and Christmas Eve, for example, the retailer will need to add temporary workers and all available permanent staff to get customers’ money and then get them out the door with a minimal wait.
With Resources, Timing is Everything
The idea of surge capacity originated in hospitals that brought in additional help when necessary to utilize their reserve resources in the case of pandemic outbreaks or massive accidents. Ironically, most hospital administrators have now given up using the idea of surge capacity in their emergency rooms, which is why patients must sometimes wait as long as twenty-four hours to see a doctor.
Business models in every industry provide similar examples when they function without back-up resources or surge capacities. In manufacturing, does it cost more to store parts (resources) than it does to shut down the line and pay everybody if a strike means you’re unable to obtain just one necessary part? In your business, how often is a similar situation likely to happen? Knowing this will determine your risk model. What is your tolerance for risk? And what are your customers willing to accept as a failure?
In your own organization, you must look at what resources you have and make decisions about those resources on an ongoing basis. When you have resources in reserve and aren’t doing a lot of business, financial prudence may be wise, but as you approach the end of your available resources, you must reorganize priorities. When that happens, you get out of your comfort zone and front-load the system with more resources. Otherwise, you will provide worse customer service when your resources are only sufficient to meet immediate needs and face disaster when your resources exceed your needs. In extreme cases, you could end up with a full-blown catastrophe on your hands, where your needs exceed all ability to respond or recover. Fortunately, this doesn’t happen often, but when it does, it’s usually in the form of a total business failure.
To keep your organization from holding too many resources—whatever you consider your equivalent of too many empty registers—you need to start as soon as possible to notice patterns. When you begin to experience back-up, should you restrict product outflow or availability? Increase business through incentives at off-peak times so you need to concern yourself less with the peak times? These are all early resource-based decisions that keep you from getting into or exceeding your surge capacity.
Resource Availability and Adaptability are Key
You have to know your resource availability. This may seem like common sense, but cost arguments will arise, so prepare for opposition to this model in the majority of corporate value systems. While super-centers operating on the surge capacity system accept the necessity of only using fifty percent of their registers the vast proportion of the year, the airlines’ practice of overselling flights is far more common. For many such industries, angry customers seem like a small price to pay until the system is maximally stressed.
As you move further into your surge capacity, you need to bring in additional resources so you can utilize those physical resources you’re holding in reserve. In the retail model, this means spreading work throughout the store by pulling people off their positions and on to the registers.
With resource-based decision-making, you’ll learn that you need to adapt; sometimes it’s easier to get employees, and sometimes it’s easier to get equipment. If you’re an auto detailer, all you need to do routine business is your car and cleaning supplies until a surge period like Valentine’s Day, when you may need to hire additional office help to handle calls for service while you go out and detail cars, or you may need to hire other detailers while you stay in the office booking clients.
Many of us learned to make resource-based decisions but rarely as an ongoing practice. You’re taught to plan, but as situations develop, you’re likely to go off the plan, making up new plans as you go, thinking outside the box. But you need to think outside box before the box careens off the cliff. If you’re trying to make resource-based decisions in the middle of the crisis, you’re behind, and if yours is a resource-limited situation, you’ll stay behind.
Make Your Case for Resource-Based Decision-Making
No one’s likely to listen to a lone wolf advocating a resource-based decision model, especially in the midst of a crisis. To achieve buy-in, work patiently to change the corporate culture, introducing the ideas before the organization hits crisis mode. If you’re already at the disaster point, prepare to wait until the organization moves through the emergency, and then seek out key decision makers and suggest half-day conferences to familiarize them with the system’s principles. Post-crisis, many leaders are open to new thought processes that will provide a way to avoid future calamities.
In the end, resource-based decision making beats the crisis model 100 percent of the time. The key is to keep at it consistently and to always be evaluating your resources and making adjustments as necessary. By adopting this practice in your company, you’ll have an edge over the competition, happier customers, and less stress in times of challenge or change. And those are the true keys for a business that thrives.