One telecommunications company discovered that it used no fewer than 84 different types of envelopes in its mailings to its customers. It had envelopes of different sizes, different shapes, different qualities, different colors; some with a transparent window for the address, others without. This meant that the company had to keep 84 different inventories, and it did not have buying power for any envelope in bulk. The company estimated that it was losing hundreds of thousands of dollars a year by keeping such a broad inventory.
One of the senior executives set up a new process–an “Envelope Reduction Committee.” It had to be one of the strangest committees I had ever come across in any company. And it was also one of the least effective. Despite being the brainchild of a senior executive, the committee was promptly ignored by the executive once it was set up; no one on it had any actual authority, no one on the senior management team gave it any attention, and while the committee had the stated goal of reducing the number of envelopes, it didn’t really know why it was doing so other than “84 sounds like too many envelopes.”
The committee became a kind of internal joke at the company, a view that was shared by the members themselves. “Envelope reduction” became a catchphrase for any pointless initiative that went nowhere. A year later, there were still more than 70 different types of envelopes–and the committee was still meeting biweekly.
It seems like it should have been fairly simple to reduce the number of envelopes from a staggering 84 to a more manageable number–perhaps a dozen or fewer.
But this project was doomed from the start because even though it seemed like a problem with an obvious solution, there was no obvious way to arrive at that solution. In many companies there is no process in place to fix Existing Processes – this is the barrier. The Envelope Reduction Committee lacked all of the hallmarks of a good change process, in part because the company had no experience with change initiatives. There was no focus or support from management, there was no sense of urgency, there was no ownership, there was no way of building consensus.
And this was not a small idea. The potential savings from reduced inventory, reduced suppliers, reduced check cutting and accounting, and increased bargaining power amounted to almost $1 million per year.