Working Backwards? July 12, 2006
Catching up on my reading, and there’s an article in the July 2006 issues of Business 2.0 about the changes that have been made at the MGM Grand in Las Vegas, and the underlying process - you can read the article yourself by clicking on the magazine image over on the right.
The part that caught my eye was this:
Moving forward by working backward Aziz’s secret is a counterintuitive management practice - nicknamed “working backward” - that he invented on his arrival at the Grand. The strategy calculates the maximum revenue that each business or space could generate in a perfect world - that is, if every customer spent the most the market could bear and if traffic reached its physical limits.
Aziz then subtracts actual sales from that hypothetical number and calls the difference a loss, even if the venue is making money. His formula for closing the gap usually starts with a jackhammer.
That’s 180 degrees from the way most U.S. companies do things, which is to benchmark based on existing sales: Microsoft, for instance, is aiming for 12 to 14 percent growth next year on about $44 billion in revenue.
Once you think about it, it falls into that category of “well, duh! That’s obvious!”. Well, yes, I suppose, but not until you’ve thought about it that first time. And it readily applies to service orientated issues as well - assume a service level of 100% as the ideal (in some areas, perhaps over 100%?), and then map against actual service delivered. Delivering less than the target is a failure.
It’s just another tool to add to the collection - ITIL, standard business methodologies, Six Disciplines, project management — anything that adds knowledge and rigor of process is a good thing, in my mind.