I’d Gladly Pay You Tuesday for a Hamburger Today
Yesterday, residents in the San Francisco neighborhood of San Bruno returned to what was left of their homes. Several had burned when a 24 inch transmission gas pipeline failed and a fire ensued. The section that failed was due to fail and, following the rules of physics, it complied. Those who own older homes, older cars, or are getting personally old know that time, elements, and decay will eventually win and create a disruption. The organizations who own and operate the pipeline take their responsibilities to customer, public, and customer safety with lots of gravity. The pipeline was due to be replaced and there was a plan filed with the regulatory agencies to do the repair work. They follow a business process that requires lots of opinions and decisions to weigh in before the line is fixed. It is called regulation and the real problem is compounded, not created by regulation.
In this case, the sometimes dysfunctional relationship between physics and economics has created another calamity. There are powerful forces at work to make it certain that many more calamities will happen. These calamities occur in all types of business systems: personal, private and public sectors, for profit or not. We operate these systems with a very specific fuel and consume that fuel to create value, deliver it, sustain it, and get some more fuel to run the process some more. When we are running out of that fuel in our tanks, we must convert the value we create into more fuel, find ways to consume less, borrow some more fuel, or stop consuming all together. That fuel is money, the lifeblood of economies worldwide. In order to operate our business we are required to compensate our sources of money at a specific rate. It is often the alpha process of all processes. The laws of economics will stipulate that no money means no process.
We have all seen the effects: work stoppages (private and public), staffing impacts, restructuring, budget adjustments, reworked plans, downsizing, ad infinitum. There is one specific behavior that is very dangerous; to systematically postpone, delay, underinvest, or forego maintenance of the physical and human systems that operate the business. It happens. An item scheduled for this year gets pushed into the next year’s budget in order to meet this year’s economic plans and aspirations, and we expect the laws of physics to change for us. Since many of our maintenance plans are statistically derived, the odds that a specific item will fail as a result of a “small” delay seem like a safe bet. It’s a bit like skipping an oil change or maybe taking a medication every other day. Does that become a habit? Do we eventually build a decision system that believes that the odds will always play out in our favor? Do we manage our plans and messaging to reflect an optimistic view? What happens when lots of the stuff is already old? Do we believe in luck?
When we deliver value, it is done so at a certain level of capability, meaning that some are better at converting money into value than others. Left alone, all these systems are subject to decay and disruption. That can be a pipeline or the skills of our people. When we engage in a process that decays faster than the business requirements to create value, a disruption is inevitable, physical or monetary. Yes, a delay in maintenance increases the chances that failure will occur and delays in building knowledge, skill , and tools for our people does the same.
When satisfying an economic goal in the present is competing with a possibility of a negative consequence in the future, who wins? As we face the current economic challenges, how do we decide what not to do? Do we manage the future from the present or the present from the future?
Thoughts?
