Introduction:Why is reducing internal friction in the organization the best way to reduce costs and increase efficiency? With you**.
During this time, when chatting with many entrepreneurs, I heard the most common word, which is:Reduce costs and increase efficiency.
Indeed, 2024 is full of uncertainties, and if enterprises want to survive, reducing costs and increasing efficiency is the main theme.
How to reduce costs and increase efficiency? Many companies use a simple and brutal approach: layoffs.
But in reality, unless the cash on the company's books doesn't last more than three months, don't make layoffs lightly.
Because once the layoffs are made, the whole company is panicked, the team's combat effectiveness will decline, and the result is often more than worth the loss.
People are capital, not costs. If you make good use of people, you can create the best value and high returns.
Based on my observations over the years, I have found that there are many costs of occupying a business, but it is often overlooked:Additional costs due to internal friction in the organization.
So,Reducing organizational internal friction is the best way to reduce costs and increase efficiency
Organizational internal friction is the biggest hidden cost
What is organizational friction? It refers to the lack of unity and coordination within the organization, which leads to the dissipation of the company's resources and inefficiency.
In general, there are three hidden costs associated with internal friction in an organization:1.Communication costsThe first scenario in which communication costs arise is:Suspicion due to inconsistent information. There are differences in human perception, some people can see the whole picture of the elephant, and some people can only see one leg of the elephant. This information asymmetry leads to suspicion, where everyone feels that they are right and others are wrong. Therefore, we often see that the leader makes a decision, and the meeting is repeatedly communicated countless times, but it still can't be landed, and a lot of costs are wasted in the middle. The second scenario that incurs communication costs is:Misunderstandings due to misalignment of interests. In many enterprises, there is a phenomenon of "departmental walls", where each department works in its own way, and all departments only think about their own interests. As a result, in the process of collaboration, countless meetings were held, but no agreement was reached. Various departments are still hindering each other and passing the buck, resulting in the inability to move forward in business. The cost of communication exists at all levels of the company. Moreover,The higher the position, the higher the cost of communication. 2.Cost of efficiencyThe so-called "cost of efficiency" refers to the cost incurred due to inefficiencies within the organization. Most commonly, ineffective or inefficient meetings are conducted. Many people have encountered situations where they are called to a meeting unprepared, but the meeting has nothing to do with them. At the meeting, the leaders gushed their high opinions and turned into a personal talk show. Say that a short meeting of 30 minutes will be opened, and it will become a long meeting of 2 or 3 hours. Without any substantive resolution, the meeting turns into an act, which is formalism and a pure waste of time. There is also a cost of efficiency due to sluggish organizations and rigid processes. For example, the reimbursement of travel expenses by business personnel has to go through layers of approval, the process is extremely cumbersome, and the cycle of getting reimbursement expenses is very long, which will actually dampen the enthusiasm of business personnel. Some small companies will follow the example of large companies and design a complex process system, but this is actually a prison draw, which will lead to an increase in management costs. 3.Managers prefer costsWhat is "Manager Preference Cost"? That's itManagers make decisions based on their own preferences, and nepotism causes losses to the business, resulting in a lot of costs. For example, some managers practice mountaineering, cultivating cronies, cracking down on dissidents, and putting personal interests above corporate interests. As the saying goes: one general is incompetent, and the three armies are exhausted. One wrong manager can do more harm than 10 wrong employees. Therefore, Huawei regards the elimination of 10% of cadres every year as an important talent strategy. The above are the three hidden costs brought about by the internal friction of the organization. 
How to reduce internal friction in the organization? The root cause of the problem of internal friction in the organization is that many things are ambiguous。The team does not know what to do and what standards there are, which leads to internal friction and inefficiency in the organization. So, how can you reduce internal friction in your organization? 1.Unify thinking and improve consensusFor the wheels of business to move forward, it must ensure that everyone is standing under the same trench with the same red flag. If everyone has their own ideas and the direction is not the same, they will only pull each other, rub and consume each other's energy, then there will be no momentum to move forward. Therefore, it is important to unify thinking and ensure that all people are aligned in their strategic direction and work towards a common goal. How can this consensus be improved? It relies on frequent, open communication within the organization. If you don't communicate, others won't know what you think; If you don't be honest, others won't build trust with you. Communication should be top-down and bottom-up. When communicating, learn to empathize. When there is a disagreement, when you can't understand, think about the problem in a different position, the key is to reach a consensus and achieve the same desire. 2.Clarify boundaries and clarify responsibilities and rightsMost of the internal friction is caused by unclear responsibilities and rights. Responsibility is responsibility; Right, that is, power; Profit is profit. What kind of responsibility a person bears, what kind of power should the company give him, what kind of benefits should be given. There are two requirements for the right to accountability:Be clear and reciprocal. Why should responsibilities and rights be clear? Because, only by clarifying their responsibilities and authority, defining their own scope of work, and knowing what they should do and what they should not do, can they avoid misalignment and misalignment. If we do not have the right to shoulder responsibilities clearly, it is easy to shirk responsibility and take credit for the blame. Why should responsibilities and rights be equal? The logic is simple: power is used to make decisions, and decisions require information. The closer people are to the front lines and the more accountable they are, the more information they have. Give him the right power so that he can make the right decisions and exercise the power most efficiently. Give him the corresponding benefits, and his enthusiasm is the highest. If you can't put your responsibilities and rights together, you won't be able to manage them well. 3.Create a culture of simplicity and honestyTo reduce internal friction and improve team cohesion, it is necessary to create a culture of simplicity and honesty. Culture is the glue of the organization. It is necessary to do a good job of information promotion, so that everyone knows what the company advocates and what it opposes. It is also necessary to create a culture of truth-telling, so that everyone can put problems on the table, rather than suspicion of each other, and make the organization a mountain and a wall of its own. The so-called simplicity is to do things and not people. When you see what others are doing wrong, you can speak up and point out the problems of the other party for the sake of the results of your work. Because we are a team, the core purpose is to get things done. For the benefit of the whole team, in order to strive for the best results, be open and honest, and make communication easy. In this way, the efficiency of the organization is greatly improved. Finally, to sum up: there are 3 hidden costs associated with organizational internal friction:Communication costs, efficiency costs, and manager preference costs。How to reduce the internal friction of the organization? Unify thinking and improve consensusClarify boundaries and clarify responsibilities and rightsCreate a culture of simplicity and honesty