Undercover Boss

Picture1There is little room for television in my life; a little CNBC first thing in the morning or maybe some Science Channel or Discover when going to sleep is the norm. The remainder of my time with television is hit or miss. There are no shows I watch on a regular basis, I just happen to catch this or than while working on the laptop. One show however that has caught my attention is Undercover Boss.

This is a reality show that follows a corporate CEO or other executive as they pretend to be a new or temporary employee being filmed as they take on a new entry level job. The boss will move from one front line job to another learning the ropes and at the same time learning a little more about their own company.

In last weeks episode the COO of Churchill Downs made a particularly interesting statement. After spending his time undercover he commented how as an executive he remained somewhat removed from the operation because most of what he managed was accomplished through spreadsheets and reports. With his experience he came to realize that he needed a little more direct contact with his organization in order to improve his ability to manage and lead. He wanted to go to the work instead of having performance data of the work coming to him.

This idea of going to the work, as a management technique, is not new though. Going to gemba (Japanese for “the actual place”) has been used as a management technique for at least the last 60 years. This idea is also represented in the Lean Management technique of Genchi Genbutsu (Go look, go see).

This article was featured in the Festival of Frugality hosted by Frugal Upstate and The Money Hacks Carnival hosted by my friend Ryan at Planting Dollars. Please take a look at both of these carnivals for many other great personal finance articles.

Many high priced business consultants and financial advisers can work wonders with a financial statement or accounting records. Based on statistics they can tell you if you are spending too much in one category or another. They may be able to identify opportunities to increase your revenue through different investments or reduce your tax liability. Each of these analyses is based on preconceived notions coupled with only representative data. But how much can you really determine from a few spreadsheets or other documentation?

There was once a great story I heard about Honda. Allegedly a customer in the states complained about how his new mower was throwing rocks, it was dangerous and they were not happy. He called the retailer and got no help. He called Honda customer service and got no help. Out of frustration he wrote the president of Honda in Japan.

During a meeting the president brought up this customer concerned and demanded his staff address the problem. Weeks later the engineers were summoned for a review of the issue. They explained to their boss how they checked this model thoroughly. They ran it on smooth surfaces and uneven ground, they mowed thick grass and short grass and they even ran the mower over a gravel road but no rocks were thrown. They were confident, they said that the mower was working as designed. The presidents response was “did you mow the customers grass with the customers mower?”

Hundreds of hours had been spent in vain. There was nothing wrong with the models design or how it operated. After sending someone to the customer’s house they found an accessory attached to the mower was causing a change in its performance and allowed rocks to be thrown.

Undercover Boss and the story of the Honda mower remind me that we should not make assumptions. We cannot go through life with preconceived notions and guess the best ways to reduce our expenses or improve our investments. We must make the effort to get past the spreadsheets and reports and take the time to understand why your money and finances are how they are.

Case in point, our groceries; for nearly a year my wife and I discussed our budget and monthly expenses. No matter how many times we looked at these figures our grocery expense remained high. With each new high we rationalized the expense as being due to a holiday or special events. My wife would clip more coupons and make efforts to reduce our expense by cutting the number of steaks or buying smaller container sizes.

Out of frustration and with her urging I finally went with her on a number of grocery trips. We talked about each purchase we compared prices and we calculated unit costs. Then we went further, visiting alternative stores.

Going beyond the numbers, statistics and spreadsheets we found a number of opportunities for concrete savings. We still eat as luxuriously, we continue to enjoy our filet mignon but we are spending nearly 20% less.

Running a business effectively requires more than getting a degree, creating some processes and getting some customers. Running your financial life requires more than earning some money, opening a checking account and paying a few bills. On its surface, many of us give little if any thought to personal finance. What Undercover Boss has reminded though is that to really know our finances and money we must not just be aware of our finances, we must know them intimately.

Readers: Have you ever been surprised at how much you spend or what you are spending your money on? How did it come to your attention, by surprise or because you began digging?

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photo by Soggydan

Daily Yakezie Short Carnival

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What is Your Vision for Retirement? by Cool to be Frugal

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16 comments to Undercover Boss

  • I think that is a great show! I would love to see our company do the same thing.
    .-= Mrs. Money´s last blog ..Sunday Link Love =-.

  • It’s the old “Garbage-In Garbage-Out” deal. I have written before how my budget has failed in 2 previous attempts because it was inaccurate (NOT that I didn’t work on it for MANY time-consuming fruitless hours:)). I’ve learned from experience, if the information you put in is bad or incomplete you won’t get anywhere.
    .-= Stay at Home Mom CFO´s last blog ..Yakezie Link Love for my 5 Year Anniversary =-.

  • I’m basically a no TV kind of girl these days, but the idea is an interesting one.

    As for finding out what we were spending on. . .I do our budget at the end of the month and note every, single thing. So we discover some interesting things! Once we learned we were blowing a trans Atlantic plane ticket every year at Starbucks (ok, that was a long time ago. . .I’m still embarrassed). Recently, we also learned we spend about 60-75 euros a month on . . .wine. That’s more than our electric bill, or our internet/phone bill. Crazy. But my husband is very excited about returning to his homeland and I can’t talk him out of it. . .so we’re frugal in other ways.
    .-= Simple in France´s last blog ..On time or chronically late: a cultural connection? =-.

  • Good post. Interesting story about the engineers actually having to go visit the guy to figure out what was wrong with the mower. I am surprised Honda’s CEO did this.

    I found out that I spend an ENORMOUS amount of money on food. Since realizing this, I have made drastic changes in how I eat. Granted, I LOVE to eat, but I do it with a bit more self control now 🙂

  • The LeanLifeCoach

    @ Mrs. Money – I can also think of several companies I’ve done business with that should do the same!

    @ SAHM CFO – That’s the problem with with relying on data. It could be wrong but you often have no way of knowing.

    @ Simple in France – Just think, now that you are more frugal and saving at starbucks you can afford the flight home to visit without stressing!

    @ MFO – Thanks! For us it was eating out that started it all. Would you believe we use to spend like $500 each month! It makes me sink just thinking about it.

  • Lean,

    Not very related to your article, but you got me thinking…

    Did you ever live/work in Japan? Or are you some sort of reincarnated Samurai? 🙂

    Also, checked out Bytta’s (151DaysOff.com) newsletter. What’s with this Daily Savngs Note site? Can you expand on this?
    .-= FinEngr´s last blog ..Selfish Promotion: FiLife Article =-.

  • $500!! WOW I was not THAT high, but for me $200-$300 was still pretty high!! I just love to eat out!! Or, lovED to eat out 🙂

  • The LeanLifeCoach

    @ FinEngr – Visited only, but I love the place!

    @ MFO – Luckily it is never like that anymore. These days if we spend $200 out/month it is a really big month!

  • Ken

    Got my wireless internet bill this week and discovered it is NOT unlimited…got an extra $50 charge…wondering if I missed fine print, uninformed? got the wake up call…gotta call provider and check it out. Internet will be off when not in use…hard lesson to learn. You are right…the more intimate the better.
    .-= Ken´s last blog ..What Are You Working For? =-.

  • I really like the Honda story and how it’s important to often ‘take a step back’ and think things through and determine whether or not things are going as well as planned from a financial perspective.

    I have found that my ‘food & entertainment’ expenses have been high over the past years and I’ve been working at reducing this element of my spending to more reasonable levels.

    Nice post.
    .-= The Rat´s last blog ..Borrowing Against Your Home =-.

  • I really like that show, but there are a few things about it that annoy me:
    (1) No female CEOs/COOs/etc.
    (2) They always work with people who have very tragic backstories
    (3) A lot of it feels very staged
    .-= me in millions´s last blog ..Yoga, Life and Money =-.

  • The LeanLifeCoach

    @Ken – Ouch, sorry to hear about the surprise. Goes to show when it comes to our money we can never bee too careful.

    @The Rat – We too continue fighting the food bills… share what you learn!

    @me in million – It is TV so I’m sure there is lots on the editing room floor. As for the stories, you know they wouldn’t show the boring stuff. As for the females, you know they will at some point. As I recall only like 15% of CEO’s are women so statistically the male predominance is to be expected. I’d be willing to bet when they do show a female CEO it will be one of the better shows. She will fix the business instead of throwing money at people and their problems.

  • Barb Friedberg

    I appreciate your efforts trying to reduce grocery expenses.It is one of my perpetual challenges. I’m curious as to the specifics of what you cut or changed to reduce the food bill!!!! I shop at ALDI’s once or twice/month, wal mart too, in spite of buying generics, not eating much meat etc., I am still looking for ways to cut back on food that don’t take too much time!
    .-= Barb Friedberg´s last blog ..How I made $500.00 in Ten Minutes =-.

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