Operational EfficiencyVarious performance-improvement methods were developed over the year and considered as fashionable, each one at its turn. That includes the Total Quality Management (TQM, remember?), Kaizen, Six Sigma, Lean and more. But looking back, researchers concluded that those methods neither supported the clear identification of specific areas of operation, which need to be improved nor helped to prioritize areas for improvement. Performance-improvement projects often addressed specific areas, that did not improve operations as a whole and did not improve firms’ financials. The bottom line is that the success rate of such methods was rather low (a recommended read: Smith, 2002).
Results were found to be different with respects to the field of Corporate Turnaround. Here, various turnaround strategies have been found as highly effective in improving operations as a whole and impacting firms’ bottom-lines. Three specific, turnaround strategies deal with improving operational processes and are relevant to this context:
- Improvement of marketing and sales processes
- Improvement of operating processes
- Improvement of support processes
Each one of those turnaround strategies aims at decreasing processes’ costs, quality of outputs, timings, and alignment with a customer-centric approach. Just to be clear, “customers” here, refers to external ones, not internal. Right, those who make our top line, not our operating expenses.
How do you approach a task of improving such processes? In general, quantitative indicators take a front seat. No more annoying tales about reasons for which numbers are low, such as local political developments, or detailed descriptions of the challenges. We will also avoid post-mortem discussions about the reasons for which it failed before and who is guilty. Similarly, we will ignore internal, underground politics, which prefers personal interests over business-related ones. We will start talking in numbers while clarifying who needs to do what and by when.
How do we start talking in numbers? We need data. It is often amazing to witness the unavailability of basic data, which could be used to understand the outputs of central operational processes. When such data is obtained and processed for the first time, you realize that it’s not reflecting the reality you wished for. However, do not come down hard on yourself: That could happen to the best players in your industry. What you do need to do, is to accurately define the type of indicators you see as most important, demand it and accept no reasons for leaving it.
There are also many benefits in analyzing central processes and identify process-stages that are either over or under-controlled, stages that could be automated for decreased work-load or bottle-necks. Non-standard incidents handled by such processes should also be examined, any ways of standardizing such incidents should be sought.
Two guidelines worth highlighting with regard to such projects: A) Make sure that proposed changes are likely to increase processes’ effectiveness and efficiency. For example, make sure that increased efficiency does not compromise effectiveness. And B) Do not accept “it’s impossible” as an answer. When you ever hear that answer, respond automatically by sending back the following slide (Premium users section: Premium users are free to use it while keeping the copyright notice):
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