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Improving Operational Efficiency

Making Improvements Stick

The current economic climate has encouraged firms to take a hard look at driving improvements with a very simple 2-part objective: reducing costs and increasing revenue. Some of our clients have set their aspirations at a stretch and yet made them simple enough so as to pervade the organisation where every meeting, every phone call, every document created, every email written relates to those aspirations. One client has boldly stated ‘we will double our revenue and triple our profitability within 3 years’. This has distilled down to an easily remembered, ‘x2x3’.

What cascades from such elegant simplicity is clarity of the objective and a focus on the drivers for change and improvement.The mechanics for achieving wholesale operational improvement must provide for 3 areas:

  1. Systems and processes to meet customer needs;
  2. Management structures that enable high performing teams and individuals; and
  3. Hearts and minds of individuals.

Sustainable operational improvement can only succeed when staff members’ mind sets are geared toward achieving organisational goals. In our experience and through executive surveys we’ve conducted, the single biggest predictor of making operational improvements ‘stick’ is the degree to which staff have been involved, included, and consulted on organisational change. The other extreme, where organisational change has been imposed on staff, results in disaffected and disenfranchised people who will go through the stages of the grief cycle (denial, anger, bargaining, and depression). This will, invariably, end in a change disaster.

Our approach to operational improvement combines the strength and clinical aspects of lean and six-sigma, and the ‘softer’ aspects of organisational change management. At the heart of operational efficiency is measurement and metrics. The balanced scorecard (goals -> critical success factors -> KPIs) is central to our measurement framework. Given the firm’s objectives, improvement initiatives are defined, established, and driven by staff. Importantly, bringing them on the ‘journey’ ensures engagement.

Over time we have found that firms opt for operational efficiency through process improvement rather than wholesale re-engineering. Incremental improvement has many advantages, not least of which is the rapid timescales within which it can be executed. We use our Engage Methodology as a means of implementing a continuous process improvement culture. Whereas re-engineering projects will typically run over 6 months and require the business to invest heavily in effort, operational improvement can be achieved in a matter of weeks and become part of the normal operating practice of the firm.