“The Costs of Scarcity … The Benefits of Abundance” — a white paper from the Institute for Strategic Clarity
We contend that most organizations are losing the benefits of the capabilities for which they pay dearly and exercise daily. When one understands that these losses arise from a measurable scarcity state that produces scarcity practices, one can begin to substantively reduce these “costs of scarcity.” We demonstrate to the reader from case studies herein that working out of a conscious “abundance dynamic” – versus a less conscious “scarcity dynamic” – enables one to make sustainable, striking gains in the conduct of day-to-day and long-term business.
What if you could increase the quantity and quality of resources in your organization, their efficiency, effectiveness, and innovativeness by 100% at no cost? The fact is that most organizations are missing at least 75% of the benefits of the capacities they have already paid for, as a result of, costs of waste, poor quality, excessive inventory, turnover of high-performance employees, stress, and the failure to meet customer needs. These same organizations may also be missing up to 90% of the benefits of the potential within their reach, such as seeing new opportunities, attracting top performers, increasing the percentage of the highest margin products and services in their niche, the potential contributions every employee brings every day, and stakeholder loyalty.
Our calculation of potential lost benefits is further supported from the large volume of research in lean manufacturing. This research shows that only 5-35% of work adds value, with 65-95% of work being one or more of the “seven deadly wastes:” overproduction, waiting time, over processing, defects and rework, excessive motion, inventory, and transportation. The “costs of scarcity” framework highlights many of the systemic root causes of the seven deadly wastes, indicating they are a conservative estimate of the costs of scarcity.
Abundance is a dynamic state, accessed through your organization’s capacity to generate and sustain a flow of more than it needs, more than it can use, and to spin-off the surplus to the benefit of itself, its stakeholders, and its larger system. Abundance is an inner and outer state in which one exercises specific capacities to produce and sustain the resources one needs to realize an individual or collective purpose. Outwardly, abundance produces material and financial resources, sufficient manpower, necessary skills and competencies, etc. Inwardly, it generates and sustains initiative, creativity, leadership, intellectual know-how, confidence, and clear understanding of future barriers and possibilities. Inner and outer abundance capacities are mutually reinforcing. The riches one creates enhance one’s confidence and capacity to generate further riches. The dynamic of abundance acts as a self-perpetuating virtuous feedback loop, raising all players in its system.
The capacity to be in abundance provides obvious, ample and direct benefits. The capacity for this abundance already exists in your organization in:
- the potential and development of your strategic resources, both tangible and intangible
- new and more effective possibilities in your organizational structures and processes
- your stakeholders’ perception of the value of their relationship with you.
Abundance is a desirable state for any organization. While this seems obvious, direct measurement of this abundance is not. If you can measure your capacity for abundance, your company can assess the benefit-cost of investing in abundance-based practices.
Most organizations live in and compensate heavily for scarcity. Some organizations are figuring out how to live in abundance and benefit from the extraordinary outcomes it produces. We will show you how to measure the benefit of abundance, providing a benefit-cost investment framework, as well as where to invest in abundance. Four case studies illustrate the framework.