You may feel that your business is progressing well, but by giving it a sound foundation, you may be able to improve productivity and cut inefficiencies.
"The true cost of errors (inefficiencies) is unknown and unknowable." W. Edwards Deming. From 25 to 30% of the total cost of doing business is tied to inefficiencies and, just like strawberry jam, these inefficiencies spread to everything and everyone a business touches and in the process drive up everyone's cost of doing business.
There is always room for improvement
If you think you have reached perfection in how you carry out your business functions, stop right now and give yourself a slap on the side of the head, or pick up your phone and call your spouse and ask if you are perfect. There is always room for improvement! Two things required for change and improvement are:
– Acceptance that things can always be done better.
– A commitment to improve – because of new technologies, the economy, competitors, and other impossible to foresee forces, companies must embrace an on-going climate of constant improvement and efficiency with a sense of urgency, if they are to survive and prosper.
"It is not necessary to change/improve. Survival is not mandatory." W. Edwards Deming.
A pillar is a support that is used to hold up a superstructure. Without a good support system in place a structure is at risk of sudden turns, of temporary eccentricity or of a freak and capricious wind. And so it is in business. By utilising a systematic set of support methodologies, or pillars, a business can achieve on-going new levels of efficiency which drive down costs, provide the basis for higher morale, productivity and a tangible competitive advantage.
Every business manager should be driven by the profit imperative, by the obligation and responsibility to ensure that the work done or investment made results in a reasonable return or profit. Profit is the end result of doing something right. Willie "the actor" Sutton was once asked why he robbed banks. "That is where they keep the money," he answered. While there are different ways of turning a profit, the best long term and personally rewarding way is by meeting or exceeding customers' expectations – at a profit. To know what customers' expectations are, much less meet or exceed them,requires that they be asked and then be listened to. Sometimes it seems as if this simple but all important core principle of business – ‘take care of the customer' – has been all but forgotten, most especially by large corporations. B2B customers' expectations go beyond just price, it is about the total business relationship and the total cost of doing business.The first pillar is critical to trust. Trust (integrity) is efficient and mistrust is not. The first pillar of B2B efficiency is ‘the profit imperative' – meet or exceed customers' expectations… at a profit.
Every business function must have a clearly articulated and understood purpose, and all those involved in the function or affected by the function need to have input into establishing the purpose of that function.To determine the purpose of a business function, begin with listing all the costs and investment associated with the function and then ask: Why are the costs associated with the business function incurred? How does this purpose support the first pillar of efficiency – the profit imperative, the meeting or exceeding of customer expectations? The second pillar of efficiency is a clearly understood and stated ‘purpose' for each different business function.
Once the ‘purpose' for a business function is established and clearly understood, that function can be broken down to its core parts, with each part being arranged by order of priority or sequence of events. Once this is done, a goal can be completed for each core part of the business function. Most often you want to limit the number of core parts to four or less. Based on the ‘goal' for each core part of a business function write a ‘policy statement', a goal-based guideline for each core part of the function that in turn support the second pillar, the purpose. The third pillar of efficiency is ‘goaldriven policies' for each core part of a business function.
Every business is different and unique. Every business is made up of a collection of in-house experts who understand better than any outsider how the work of that business is carried out. Just as every company is different and unique, so are the specific and unique ‘processes' that lead to the meeting or achieving the goal(s) for each core part of a business function, as codified by the policies. Processes support the goal(s) for the core parts of a business function. The fourth pillar of efficiency is the different, unique and documented step by step ‘processes' that lead to achieving the goal(s) of the core parts of a business function.
The right person for each job and the right job for each person. Try as they might; if a person lacks the skills, training, experience, education, talent or personally required to successfully carry out the processes that support the goal(s), they will fail. Based on the unique and specific processes, the right people must be employed in carrying out the work. Think how difficult it is for someone to be in a job that they cannot do – the feelings of inadequacy and the fear of being found out and fired. Those people involved in carrying out the ‘processes' may have once been ideal for the job, but as things change and new skills and talents are required, so new people may also be required. The fifth pillar of efficiency is ‘people requirements'.
Quality in a product or service is a basic given in today's competitive business environment, and so it is with how things are done (processes). Key steps often are transition points, and must be monitored in an on-going way, for any failure here creates a cascading effect of inefficiencies. The sixth pillar of efficiency is ‘process monitoring'.
Goals not measured are but wishes on a star. Years ago I heard Dr. Don Rice say: "Employees respect (do) what is inspected (measured) and not what is expected." It is kind of like raising kids – it is the inspection and not the expectation that is important, or as former US President Reagan put it: "Trust – but verify." Achieving, or failure to achieve, the goal(s) for each core part of a business function must be known and dealt with.
The seventh pillar of efficiency is ‘performance measurements' against the established goal(s) for each core part of a business function.
Regardless of how good a job has been done in placing the first seven pillars in place, the job of maintaining efficiency is never done. We are, and perhaps always have been, going through a time of instability. We are, and always have been, challenged by the external environment of rapidly-changing technology, a changing economy made up of a demographic base with different needs, a time of reduced demand, of traditional and non-traditional competitors chipping away at our business base. If we are not looking for ways to deliver a new efficiency value proposition to our B2B customers, someone else will.
The very first line of every business manager's job description should be: "Constant and on-going improvement – our support pillars must be maintained." A business manager not focused on constant improvement becomes an administrator at best and a bureaucrat at worst. The eighth pillar of efficiency is ‘on-going constant improvement'. To fully and best support a long-term and successful commercial endeavour, it is required that all the pillars be in place and support one another. One weak pillar an
d the house may tumble with the first strong wind. Many businesses, including large companies, operate on a ‘word-ofmouth' basis, whereby the new guy learns from the old guy, who learned from the dead guy. This way of doing business is rife with inefficiencies. That unique and specific
expertise that resides in every business must be documented and have a cover sheet that says in big letters ‘under construction', for efficiency is an on-going process to be constantly reviewed, and not a project to be completed. If a business organisation could reduce its inefficiencies by just 20% by better organising and documenting its expertise, in most cases the result would be at least a doubling of their profitability – without the need to increase sales one dime, and while at the same driving down the total cost of doing business for its business customers. That is a competitive advantage.
Four phases of change and improvement
We are creatures of habit and the longer we do things in a certain way the stronger the habit. One of the first things to overcome on the road to improvement is comfort levels. Riding a rut can get real comfortable but, in time, it becomes a ‘trench' – a grave open at both ends.
– Expect resistance – including in yourself. Anytime you want to make an improvement ask why it would not work, then listen and take notes.
– Small successes are necessary- from your notes as to why an improvement will not work, make up a list of the first small steps to be taken.
– On-going small steps – as each small step is accomplished introduce the next small step.
– Pay for performance – constantly remind people and yourself why you are making improvements.
Consider the Friday afternoon ‘constant improvement' meeting for all managers.
Let everyone in the place know that, just as little inefficiencies have a cascading effect, so do new improvements and efficiencies.
The way to fill the bathtub, the ocean, is one drop at a time. Ask for – no demand – improvements and then implement. Success and survival are up to you.
Bron: CCR World