Achieving Operational Efficiency
By Steven E. Sacks, CPA CGMA, ABC
Over the past several years, companies have learned to do more with less. While profitability may have increased, workers have had to do the work of at least more than one additional person. Companies have found different ways to cut costs; some have been the easy stuff, such as looking at process delays, production waste, implementing scheduling software, employing mobile devices to track deliveries and on and on.
The result was an increase to the bottom line. But once that was achieved, what would be the follow up? These savings may not be annuitized especially with increased market competition. It is imperative to go beyond the cost cutting and identify ways to leverage the savings and increase competitive advantage where today you may be leading and tomorrow you could be chasing.
There are some approaches that will enable you to maintain a mindset of efficiency:
- Company leaders who eat and sleep operational efficiency. These individuals think about the entire company, from divisions to departments to individual teams. Looking at specific functions will enable you to see redundancies and unnecessary work flows. These leaders are examining entire value streams and looking between functions across and between departments as one way to root out waste.
- Define your capabilities. Companies use operational efficiency approaches that generate data. This data is thought to tell you how different systems are working, or not. But it doesn’t just start and stop with cycle times and savings. Dig deeper to discover what your company is actually good at and leverage these strengths to apply to all areas of operations. They may actually improve your competitive position.
- C-Suite individuals need to drive operational efficiency. While leadership may form process improvement teams, these teams must work in concert with senior leadership and share the same philosophy. Otherwise, cost cutting and process streamlining may not be in synch with the organization’s overall strategic direction and the identified priorities. We hear about the concept of alignment all the time. Here is where the rubber meets the road. The C-Suite individuals are the “front men” in this, as they have to “sell” the concepts as being part and parcel of the company’s vision and values.
- Transform operational efficiency into a mantra. From talking the talk into walking the walk, consider what your customers or clients think. Will what and how you deliver, whether a product or service, have any impact on the end user? It is helpful to seek feedback so that your customers believe they have some intellectual investment in what you have to deliver. From here, you can establish a collaborative relationship rather than simply keeping it at the transactional level.
- Explain clearly what you think and do. Looking for efficiencies often results in layoffs, or euphemistically, “rightsizing.” This is a hard sell to employees who look at this as a real or potential loss of their jobs. If you choose to use business terms, be transparent in their use and especially in your intentions. This, again, goes back to collaboration and a culture of openness. However, there will be times that you just cannot persuade employees that your actions are nothing more than bringing a percentage point or two down to the bottom line.
In the big scheme of things, there is nothing more fundamental than transparency, whether it’s good, bad or indifferent.
Steven Sacks is the CEO of Solutions to Results, LLC, a consultancy that specializes in helping individuals, firms and organizations meet the challenges of communicating with clarity and purpose. Visit his website at www.solutions2results.com.