"Now," questioned his _alter ego_, "how do I determine how much of that
money stays in the bank as profit, and how much has to be checked out
right away for expenses?"
And from his handy list of managerial functions it was plain that it
depended on three things--buying right, selling with as little waste as
possible, and keeping expenses down.
"Now we're getting somewhere," he said to himself. "Those things lead me
right into my next job--which is to fix prices fairly. For what's the
use of buying right, handling supplies carefully and keeping expenses
right down to the bone unless my selling prices cover costs, yield a
profit, and still look reasonable to the public?"
Yes, and the most attractive prices, backed up by careful buying and all
the rest, wouldn't keep the dollars clinking merrily over the counter
unless the food was so good and the service so excellent that customers
bought liberally and came back for more.
By this time, you'll note, on taking another peek at the chart, he had
worked right back to his "Number 1" job--getting more customers in.
Thus, by ANALYSIS, he found out definitely what had to be done--and what
had to be done first. Brother-in-law thought he knew, but he had begun
at the wrong end. He had been looking after expenditures first and
receipts last. He was trying to squeeze a little margin out of his
receipts before he did anything about getting the receipts.
How different the new owner's viewpoint! His brother-in-law, he found,
was thoroughly competent. He'd simply got off on the wrong foot. In the
kitchen and the storeroom, he was a good operator. But the new owner's
place was "out front."
His job was to "get more customers, get them to spend more--and to give
them such good food and service that they would come back and bring
their friends."
He began by spending money. Took out the gas pipe at the entrance.
Replaced it with a brass rail. Provided a small lounging room where
customers could wait for their friends. Put in upholstered chairs so
they could be comfortable while waiting. Put attractive uniforms on
attractive serving girls.
There was an air of good taste about the place when he got through.
Then he changed the arrangement of the counters. But you know all about
that--how the desserts came first so they would catch your eye before
your tray was too heavily loaded with the heavier part of the meal.
Staples which offered a small margin of profit were relegated to places
in the rear. Dishes that made the best profit got the positions up
front. Each day he offered a low-priced "special." Thus he planned to
increase customers' purchases.
And the business began to grow.
That's all there is. There isn't any more. Today he doesn't own a chain
of cafeterias extending into many cities and feeding many thousands of
people every day at a good profit.
He's still a very successful ceramic manufacturer--and a cafeteria
proprietor.
"I flew in the face of tradition," he says. "'First watch your kitchen'
is the cry of the restaurant man. But I started with what I wanted--net
profits--and WORKED BACKWARD to make conditions that would provide net
profits.
"VOLUME OF BUSINESS had to come first. I had to get it before I could
get a margin of profit.
"No doubt I could go out in the kitchen today and save some money. If I
went to market myself, maybe I could save a cent a pound on my meats.
But I can't give up my attention to the 'front' in order to watch the
'back.' As soon as I do that I'm going to be right back where I
started."
It would sound like heresy, wouldn't it, if we hadn't sat in and
watched him begin with his final objective and work back through the
means which make the objective possible. Only by careful analysis would
he have had courage enough to FOLLOW HIS PLAN THROUGH to its successful
conclusion.
And here's the amusing sequel. Today, as he still dabbles at feeding
people, he will admit that he's a better ceramic manufacturer as a
result of his cafeteria experience. His pottery had always yielded a
nice profit. When he sat down with his sheet of coordinate paper and
analyzed it, he found his job of management differed not at all in its
fundamentals.
His first job he found was "out front" getting more customers in. A
better knowledge of markets, a better job of selling, a better
product--those were the ways to get the customers in and make them come
back for more.
And his need for a better product led him out into the plant where he
found that tunnel kilns with exact temperature control would more than
treble the production of the old periodic kilns--and would produce
better ware.
But that's another story. The important thing, anyway, is not what he
found had to be done in the cafeteria and in the pottery, but HOW he
found it.
He took his business to pieces--BACKWARDS.
He began with the objective he wanted to get--MONEY. It was a simple
matter to find that to get money from the business he had to get
customers to come in and spend money; that to get customers to come in
he must make his place look like a good place to come to; that to make
his place look attractive he must spend money on equipment and thought
on the arrangement and display of food.
And there he had his big job cut out for him, with the other jobs
following along in natural sequence. It altered the whole METHOD OF
MANAGEMENT.
How this METHOD OF MANAGEMENT is applied to your job is shown in the
chart which follows. It's a skeleton of what the cafeteria man did.
Indeed, it's more than that. For it shows what every manager--whether he
manages a steel mill, a punch-press department or a time-study job--must
do if he is to get an honest-to-goodness PERSPECTIVE OF HIS WORK.
+----------------------+
+------------+ +----------------------+ +-----------+
| The Work |__| The Means |__| The Final |
| to Be Done | | for Accomplishing It | | Objective |
+------------+ +----------------------+ +-----------+
+----------------------+
It can be done very simply. Just a sheet of paper ruled in small
squares--you can buy it at any stationer's--on which to fill in the
steps you must take in between what you have to do and what you seek to
accomplish by it--and some careful thought as to just what your job is
and why it is to be done, will develop a true ANALYSIS of your problems
which will beat reams and reams of typewritten words.
Remember the words of the Chinese philosopher: "A picture is worth ten
thousand words"--and reflect how clever these Chinese are!
The MEANS FOR ACCOMPLISHING the final objective may be many or few. You
have seen the cafeteria-manager's problems on the chart on page 24. Now
turn to page 35 and see what a file clerk does beside powder her nose
from nine to five.
A bright young lady fresh out of high school went to work in an
editorial office. There wasn't enough filing to do to keep her happy
from nine to five, so she filled in with a bit of typing here and a
trifle of routine clerical work there. Thursdays she hopped over to the
neighboring bookstore and collected _Saturday Posts_ for the
editors--now she'll have to do that on Tuesday. And Fridays she
distributed _The New Yorkers_ to avid readers.
Filing, though, was her main job. When she first came, the managing
editor said "Here it is" or words to that effect, and she went to work.
Those files had always been more or less of a sore point. An editor's
mail is nothing if not voluminous. And every day Flossie the fascinating
file clerk got a mass of data which she had to stick away. Her great
trouble was finding it again after she'd stuck it away.
Often she couldn't find it. And pretty soon she discovered that she got
the blame no matter what was missing--whether an important inquiry from
Peter B. Stilb or the editor's pipe cleaners.
She couldn't do a thing about the pipe cleaners, but she made up her
mind that since she was held responsible when a letter got lost, she
would also have the responsibility of changing the filing system. The
system, she felt sure, was to blame.
One day when she was "on her lunch" and the editors didn't need
cigarettes from the corner drugstore, she sat down and made an ANALYSIS
of her problem. Curiously enough, she started at the end and WORKED
BACKWARDS.
She WORKED BACKWARDS, not because someone told her that was the right
way to analyze her job, but probably because she was only a file clerk
and no one ever told her anything.
"Why," she asked herself, "do I file these old papers anyway?"
"So I can find them again, quickly and surely, when they're wanted,"
seemed to be the only answer to that.
"What's the right way to file these letters and papers and data so I can
find them quickly?" was her next question.
"Arrange them like words in the dictionary--ONE PLACE, and ONLY ONE
PLACE, where each can be," was only common sense.
In the filing system which she had inherited, there were a dozen places
for each set of data. There was a file on "Industries" with sub-files
for "Automobiles" and all the rest; a file for data on "Railroads," with
two or three sub-files. The file clerk had to use judgment and
discretion in selecting the heading under which each letter or piece of
data was filed. And she wasn't hired for judgment and discretion.
Sometimes, too, the editors erred in their descriptions of the material
they wanted.
+-----------------+
| Arrangement |\
| of File So That | \
| Title of Data | \
| Wanted Will Show| \
+----------------+ | Exact Spot to | +------------+
+----------+ | Only ONE Place | /| Look for It | | To Produce |
| Filing |__| to File |/ | +----------------+ |Any Desired |
| All Data | | Regardless | +-| Cross-Index of | |Data Without|
+----------+ | of Nature | | CLASSES | | Delay |
| of Thing Filed | |Showing for Each| +------------+
+----------------+ |Class the Title |
|of Each Piece In|
| That Class |
+----------------+
One file, arranged alphabetically--ONE PLACE TO LOOK, regardless of the
thing looked for--was the logical conclusion, viewed from the standpoint
of _finding_.
The managing editor was horrified. Mix "railroads" with "public
service," and "manufacturing" with "agriculture"?
"Why," asked the file clerk, looking back at her analysis, "why care how
things are _kept_ so long as they can be _found_ quickly? When you send
me for Camels, do you care, so long as you get them quickly, whether
they're kept next to Chesterfields, or right beside the chewing gum?
When the chief asks for data on 'C.P.R.' does he care, if he gets it
right away, whether it was filed next to data on 'Coal' or beside facts
about other railroads?"
"All right," objected the managing editor, "suppose someone asks for all
the data we have on railroads?"
Not a bad question. It was from a _finding_ standpoint.
"Have a separate cross-index by classes," was the answer. "That is,
under 'Railroads' have a card showing the name of every----"
"But look at the extra work."
Back to her ANALYSIS went the file clerk. "Why file at all, except to
make it easy to find what we file? If we were to set up a system for
_easiest filing_, we'd simply put everything in boxes just as it comes
to us. Our main objective is to make information easy to _find_, and
anything that increases the work of filing but lessens the work of
finding, is profitable."
The result was a filing system that has made a great mass of data as
accessible as the words in the dictionary. And it has taken the human
equation out of the job. No longer does the file clerk have to stop and
use her judgment as to where she shall file Mr. Stilb's letter. There is
ONE PLACE AND JUST ONE PLACE.
And the basis of the plan was the simple process of ANALYZING--of
starting with the final objective and WORKING BACKWARD--not forward
from the work to be done.
In hundreds of business offices--in countless industrial plants--time,
labor and money are being wasted today in outmoded methods which, like
Topsy, "just grew." The manager who started them didn't stop to reason
out first exactly what had to be done--or if he did, he failed to WORK
BACKWARD from the final objective.
One way is as bad as the other.
In fact, it may even be better not to reason at all than fail to get to
the very bottom and reason out the absolute right of what has to be
done. At least it takes less time.
A sure way, incidentally, to avoid making mistakes in your analysis is
to do it on paper. A professor of mathematics in one of the large
universities always tells his students that no problem should be
performed in the head that can be done on paper. "Make pencil and paper
do as much as you can, for your brain has enough to do to supervise the
work."
Until your mind is trained to the habit of QUICK, ACCURATE ANALYSIS,
you'll find it helps to do the work on paper. Keep on hand a small
supply of blank charts like the one on page 31, on which to sketch an
analysis of new work or of important decisions. The constant performance
of this detail will of itself train your mind to look at problems more
analytically, and automatically to sift and classify them more
logically.
Perhaps you can improve on the chart shown on page 31. Surely you can
adapt it better to your own needs. But force yourself to some such
method. It will help you to cultivate the instinct of SHREWD, RAPID
ANALYSIS--and at the same time it cannot help giving you a KEENER, SURER
INSIGHT into the particular problem, no matter how complex or how simple
it may be.
Sometimes it is the apparently simple problems that need analysis most.
For example----
Did you ever hear of a sales organization that didn't have a
stenographic problem?
The New York office of a Western factory was no exception. The manager
was broadminded--even liberal--with his salesmen. But when it came to
stenographers, he was decidedly Scotch. Valuable men sat around the
office mornings and evenings waiting for a chance to dictate to a staff
of girls which was measured to fit the average load of the day, but not
the rush load of the two hours a day when the salesmen were inside.
Dictating machines seemed to be the answer. The sales manager figured
they would not only solve the dictation problem, but would further
reduce stenographic costs.
They were installed. At the same time the stenographic force was cut to
insure keeping all the girls busy all the day.
Good. The salesmen were able to dictate when they felt like it. But
often the letters dictated were a day or two late in being transcribed.
Complaints increased. And the manager lost his temper: "What's the
matter with this cursed letter-writing business?" he demanded. "Why the
Sam Hill do we have typists and stenographers?"
Well, why? He calmed down a bit, seized a sheet of paper and mapped out
his problem.
This is what he wrote:
1. Salesmen's letters are to save salesmen's time and to give prompt
service to customers.
2. I don't begrudge half a day's time of a $20-a-day salesman to call on
a customer. Then it's still profitable to waste half of the time of a
$4-a-day stenographer in order to save a long trip for a salesman, or to
get a quick answer to a question.
3. What we need is enough typists to transcribe every letter of every
salesman promptly, even if part of them have to be idle half the day.
The increased use of sales letters, the greater freedom salesmen feel in
their dictation, the number of selling details now promptly handled by
mail without an expensive call--all are directly traceable to the
manager's ANALYSIS which he made by using the final objective as a
starting point.
He's a convert to the pencil and paper method. Sales problems are part
of his daily exercise. He goes to the bottom of them instinctively. But
any problems that arise concerning office work, he settles only after
analyzing from front to back--on paper.
His method of charting his ANALYSIS differs in appearance from the chart
on page 31, but it is identical in PRINCIPLE AND EFFECT. It works from
final objective BACKWARD.
One more application of the same KNACK OF ANALYSIS--and we are done. It
is that of an Ohio manufacturer who recently put up a new building.
Plans prepared by the architect called for four stories and a basement.
When it came time to discuss arrangement of space, it was found that one
department would have to go in the basement. There were objections from
all sides.
The manufacturer ended up by taking the problem home with him to TAKE TO
PIECES and put together again.
He began--fortunately--with the final objective. "What's this new
building for?" Obviously, to provide more space for enlarged operations.
"How much space is needed?"
He went over the figures and plans and found the four main floors
weren't enough.
"Then why not a fifth floor?"
As long as a bigger building was to be built, why not make it big
enough? Why not another full story instead of a basement?
Why not, indeed! Come to find out, no one knew just why a basement had
been considered. The old building had one, and apparently that was the
only reason for proposing one for the new building. A full story would
give all the general storage space of a basement and also give regular
working quarters for the department crowded out of the four upper
floors.
And when the architect was consulted, it was found that with the extras
for excavation, waterproofing and the like, the cost of a basement was
considerably more than the cost of another full story.
Yet, but for the manufacturer's analysis of the building problem from
the point of final objective, the basement would have gone in--simply
because NO ONE HAD STOPPED TO THINK, and think clearly and logically.
Logical thinking is a trait that can be cultivated. Every problem
thought through by means of some such simple help as we have suggested,
makes the mind more ready to tackle the next problem.
Some men's minds grow so keen by practising that sort of thinking that
they AUTOMATICALLY TAKE THINGS TO PIECES as they listen. Before you
finish talking to them, they have already analyzed your statement and
are planning on its execution--or are ready to reject it. Sometimes it's
intuition. But rarely. Usually, it is nothing more than cultivated
KNACK.
Cultivate ACCURACY first. SPEED OF ANALYSIS will come of itself.
_Don't start until you know exactly where you're going._
There is no task so trifling, no business so large, that its management
does not need to ANALYZE EXACTLY WHAT THERE IS TO DO.