How You Can Harvest Acres of Diamonds

Jan 17, 2007 8:28 PM  By

You wouldn’t think many operations execs could learn from book but “Acres of Diamonds” by Russell H. Conwell may hold a lesson for distribution center managers. The book tells the story of a man who sells his farm to search for diamonds. He spends his life searching for riches and dies a pauper. After the sale, acres of diamonds were discovered on his farm.

The farmer missed wealth beyond his wildest dreams because he sought external solutions before exhausting internal resources. Many companies follow the same process. It is easy to fall into the “grass is greener on the other side” trap. Companies that seem to grow exponentially with minimum effort are featured in every business publication. The stories are a good read, but don’t sell the farm to follow their path. Instead, look for resources and opportunities within your enterprise that can be transformed into sales and profits for your own magical journey.

Using internal resources first simultaneously improves the return on investment (ROI) and strengthens the corporate infrastructure. There is a better understanding of everything that drives the business. This builds the foundation required to successfully choose and implement external solutions when they are appropriate. You will avoid many of the pitfalls that contribute to failed implementations.

When you review new systems, processes, or personnel, they always appear to solve every problem. This is because you are seeking solutions to your major challenges and answers are always provided for the questions that are asked. Sometimes a complete conversion is necessary for continued success. More often, enhancing or fully utilizing the available resources will yield the same results with less investment.

Resources are required for growth. Most companies have limited funds and have to maximize their ROI. A simple rule of thumb will help keep investments in perspective: Any expenditure has to generate sales or reduce costs four times the investment to justify the expense. This will usually guarantee a ROI.

Every resource commitment yields lost opportunities because the resources are not available for alternative solutions. It is important to choose the best option for a strong ROI. Here are some tips to get you started:

*Search for diamonds in the rough within your organization. You will find them in underutilized systems, staff, and information. Find ways to polish them into profitable growth.

*Challenge your team to rise above the status quo. Find ways to break them out of routine problem solving. If you catch them doing something right, always reward it. It encourages them to find more opportunities for success.

*If it is appropriate for you to seek external solutions, insure that you will not lose more than you gain. Detail everything that works wells in the current environment and verify that the resolution addresses the challenges without sacrificing the current benefits.

* Don’t forget the positive side of your business. Where are you most successful? How can you expand on that success? Sometimes, the challenges overshadow the successes and consume all the resources. Always allocate resources to improve on past successes.
Require a ROI analysis for every new expense and regularly review existing expenses. The objective is to continuously improve your resource utilization. Do remember that some expenditure is worthy, but intangible.

Debra Ellis is president of Barnardsville, NC-based Wilson & Ellis Consulting.