There 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).
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?
photo by Soggydan
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