Entrepreneurs have three things that loom largely in the back of their heads when thinking about their business. First, what is the next innovation or service that will add value to customers, attract new customers, and create competitive edge. Secondly, entrepreneurs know “cash is king.” It is critical that they ensure that there is adequate capital to pay people and bills while still investing as much as possible into growth. Thirdly, to reduce risk by containing and cutting costs.
The salesman in me wants to believe that we can always sell our way to the next goal. That sales mentality is risky because most salespeople have rose-colored glasses, and costs have a sneaky way of rising proportionally with sales. As a recovering accountant, I view cost containment essential to organizational health. Strong sales while containing costs enhances the ability to grow by investing profits, leveraging core competencies, and increasing velocity to GTM plans. Before you go sharpening your pencils and pouring over cell phone plans, I submit that one of the biggest, yet seemingly undetectable, business costs today are transition costs.
Transition costs are the time it takes to switch our focus and mindset from one task/topic to another. These add up. The more desperate the task/topics, particularly on the creative to pragmatic spectrum, the more time this takes. The American Psychological Association asserts that “even brief mental blocks created by shifting between tasks can cost as much as 40 percent of someone’s productive time” (“Multitasking: Switching costs”). In a business-world where being ADD is a badge of honor, there is conversely a simultaneous and tremendous impact in productivity and efficiency. Transition costs—wait, I just got a call from my son to discuss how badly Clemson beat Alabama in the National Championship game—so, what was I saying? Oh right, transition costs. Factors that increase transition costs on an individual level are the complexity/variety of activities required, span of control (the number of direct reports vying for attention), and also how well one takes care of themselves (proper rest, diet, etc.). The most insidious part of these transition costs is the difficulty quantifying the actual costs. Therefore, these costs are easy to overlook, shrug off, or ignore completely.
There are a number of fantastic resources and professionals that focus on assisting professionals in minimizing transition costs. and I have listed a few below. A few things that I have begrudgingly found effective are:
- Batching Like Activities – Pretty simple, just arranging my schedule to do similar types of tasks in the same time slot.
- The 1,440 “rule” – I read this somewhere. The notion is you only have 1,440 minutes in a day (24 hours), and only 480 minutes in an eight hour work day. With that perspective, I become more protective of my time, particularly when someone drops by saying “hey, can I run something by you for a few.” An excellent article on this topic is “What are You Doing with Your 1,440 Minutes? And Only 480 Minutes are in Your Eight Hour Day” by Jack Heimbigner
- Do Not Disturb – I thought this was the most horrendous thing ever, and it took every ounce of willpower I had to start and stick to it. Cell phones have “do not disturb” functions where the user is not notified if a call or text comes in. Thankfully mine also has an exceptions list such as if a caller calls multiple times, or If a call/text comes from a specific person or group of people (instructions for the iPhone I use). Over time, do not disturb has become “my time” that I value and enjoy.
- E-mail “times” – I have specific times in the day slotted to review and respond to e-mail. It takes discipline to do this and know that you will have to educate your less-patient folks on why they are not getting instantaneous responses. Yet, it has assisted me greatly in remaining focused and present. Of note: there is also a function in Outlook that I use that sends me a text if I receive an e-mail from certain people to whom I must be particularly responsive.
Curbing transition costs takes constant diligence. Think of it as life-hacking and make it fun. Like any other cost, if you spend the effort to minimize its impact, you will be amazed by the bottom-line results over time.
Resources:
Melissa Gratias PhD – Productivity Psychologist
The Freelancer’s 6-Question Guide to Knowing When to Outsource