There are two ways to save money...

There are two ways to save money without undermining what you do: reduce cost and cut wastage.

When I recently invested in my bread machine I thought I was probably doing the former - reducing cost - because I anticipated the price of raw ingredients to be much less than the price of the finished product (a loaf of bread). 

It turns out this assumption is not as starkly true as I had hoped. Sure - there is a lower price point for raw ingredients, but it's more marginal than I had imagined. Silly me for not doing my ROI (return on investment) calculations based on more detailed research/discovery.

Notwithstanding, my bread machine is still saving me loads. How?

Because, for one, it's cutting down wastage. The ability to make my bread "on demand", to make the appropriate quantities I need, AND the ability to store the ingredients until they are needed (rather than keep unused bread until it is mouldy) means my purchasing and consumption patterns are much more closely aligned. I'm putting less into the system, but still getting what I need out. And it's fresher - i.e. better quality. In a sense, my process is more lean.

But there's a third factor two - possibly even the most significant - that is contributing to my results: transformation.

That's right - I have transformed my behaviour. And this is the third way to cut costs - by changing what you do.

In the case of the bread maker, my behaviour has changed so that I eat more bread, more often. This change in behaviour translates into less eating of other, more costly, foodstuffs (such as snacks and ready meals). And that is where the significant savings come. If I can feed myself on bread and soup for a day, it'll cost me, say £2 - when I might otherwise have spent £5 or £10 on alternatives (TV dinners, take aways, or even home-cooked meat & two-veg). The effect of transformation is stark. 

And this is how it applies in business too - technology is an enabler. It may slice a bit of cost off here, enable a slightly more efficient process there - but ultimately, it's by transformation - change in behaviour - that the big bucks can be saved. 

So there you go - the essence of business process transformation in a nutshell - or indeed, a bread machine.

Comments

[Jonathan]

Interesting post Nik ... Having gone the bread-maker route a while back, we have now invested in a Juicer. Similar observations apply. We can make fresh pure juice on demand, especially in the fruit harvesting season when we are typically overloaded with apples and other produce from the trees here. My wife likes carrot juice, which is harder to get in the UK, whereas carrots are cheap and more plentiful! The quality of the juice is better and we can make the quantity we need. It takes a bit more effort but not much especially since the juicer's components are dishwasher safe!

One aspect is that it doesn't stay fresh as long as bought fresh juice does ... so mixing with a little pure (non-concentrate) orange juice in each batch seems to help. We rarely had wastage unlike with the bread so there is less savings there. But the transformation of behaviour is true and I agree that this is the key thing. We find we drink more healthy juice now instead of other less healthy alternatives.

My work as a futurologist also deals mainly with identifying potential transformational change that would affect my clients' businesses and so I identify completely with your posting.