Add Value with Subtraction

Apply the competencies of Business Acumen and Critical Evaluation to make strategic recommendations

By Lindsay Northon, SHRM-SCP Aug 3, 2017
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Basic addition is taught at a young age: 2 + 2 = 4, right? We also learn that 4 - 2 = 2 as well. Let's say that company XYZ currently manufactures 100 products, but most customers rarely use or may not even be aware of 20 of these products. It's possible for companies to have amazing products that mask how poorly its other products are doing. In this case, the success of the 80 high-demand products erases the losses from the 20 in low demand. But why is XYZ still making those 20 products? What value do they add, if any? 

When people think of adding value, they typically think of "more products" or "increased profit." But that thinking doesn't always work; more doesn't always mean better. 

Developing more products (or creating new services) means more work for employees, which increases costs. Those additional costs have to be worthwhile. Business leaders must know which products add the most value and how that value can be optimized. A company can subtract 20 low-performing products and invest the resources that had been devoted to them elsewhere—for instance, by having employees improve a different product so that it brings added value to the consumer. 

An illustrative example is Apple Inc., worth roughly $750 billion. The company provides a free support service for its iPhone clients. Would the iPhone be as popular today if this service hadn't been provided over the years? My guess is no. While it is unlikely that the support team increases profit directly, it surely does so indirectly—by generating repeat customers, building customer awareness of other Apple products, etc. Customers who buy Apple's top products deem the company's support service essential, making it an indispensable value-driver. 

Subtraction can paradoxically add value as long as the equation results in higher value. HR professionals proficient in Business Acumen and Critical Evaluation know this. An HR professional skilled in these competencies can steer the company to a philosophy that is valuable because it is linked to outcomes: "How might we optimize our value addition?" 

Use your inner researcher to ask the right questions and interpret your organization's data. Understand the organization's business operations and functions, and keep an eye on the external environment. When you make recommendations that contribute to the organization's strategic plan, you highlight application of the Business Acumen and Critical Evaluation competencies. Your recommendation may be an addition or a subtraction—either way, it is made with intention. 

Here are some examples for adding value with subtraction, across your organization or within your own HR work: 

  • Concentrate your effort where it counts. The most important step is to connect with your organization's clients or customers to find out what they value. Should you prioritize projects to ensure that the most impactful and useful get done first? Or should your effort involve narrowing the business focus?
  • Remember that value-drivers are not always direct revenue-drivers. See above regarding Apple's free support service.
  • Know when to say no. What do you need to subtract? Have you reached your limit for projects that you have time to work on? Have other employees hit their capacity? Dig deeper to find out how employees feel about the quality of work they are producing. To get the insight you need, conduct one-on-one conversations, a focus group or an internal survey. 
  • Don't water down your brand. It is impossible to be everything to everyone. Can your organization do more? Should it? Say your company makes and sells hand-painted cups; it would be appropriate to create matching plates and bowls, even silverware. Creating a matching kitchen table, however, might be over the top. Sure, someone might want that, but if your employees aren't equipped to make hand-painted furniture, chances are you'd be making a mockery of your company's brand.
  • Don't cling to pet projects. Gather stakeholders to determine if a product will add value, help the company avoid expenses or cut costs somewhere else. If a product doesn't do any of these things, get rid of it. Even if that product was developed by one of the company's leaders, who thinks it is fabulous, if market research tells a different story, it needs to go.
  • Don't let your biases get in the way. This is always a tough one. When in doubt, reach out to your customers. What they value is what you should value—even if that goes against your own beliefs about your products or services. 

Lindsay Northon, M.A., SHRM-SCP (@SHRMLindsay), is HR competencies specialist at SHRM.

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