Question of the Day - What else can we do to be better?
Question - Operational effectiveness is recognized as a key element of continuing success. So, which is more important, growth or improvement?
Four consultants we know quite well (we often work on projects together) shared an interesting story about a coffee break that turned into a major planning and development project. It started with a question. One of their clients asked them “what else can we do to make our business as resilient as possible?” I sat in with them for this discussion and here is a list of questions they started with:
Are their operations utilizing best practices where they can?
They observed that many of the businesses they had worked with had a hodge-podge of processes that just evolved over time as they grew. It was noted it was not difficult to spot inefficiencies.
Does each best practice have a champion to keep it on track?
No, this usually has not been thought or discussed.
Do the workers have opportunities to contribute to improvements? And get meaningful recognition? And see the business improve?
No, what a great idea. Think of all the benefits.
We asked ourselves what often keeps the average business from embracing continuous improvement.
Common Hurdles
There seems to be three common adversaries that hold companies back in their quest of staying competitive: (1) Keep doing the same thing, (2) Superficiality, and (3) Inconsistency.
Here are a few observations:
Keep doing the same thing
“It’s still working, so why should we change?” is something we hear in businesses that have not been actively looking for changes to improve. And there’s a surprising number of mid-market companies with that mind-set. It’s generally a leadership issue of not knowing what they don’t know. They don’t venture into areas where they have no knowledge.
Superficiality
Not going deeper into understanding people and systems and their impact in business results accounts for a lot of lost productivity. Spending time with direct reports addressing performance opportunities is usually only addressed when a problem initiates the opportunity. A proactive, regular meeting process is unusual in many companies. Most often meetings are initiated when there is a problem, and then with little preparatory work.
Inconsistency
In our humanity we struggle to keep our good habits going, the bad ones not so much. What is good for us often loses to competing demands that are easier to deal with. (I often cite exercise and diet as examples of difficulty in staying the course). In our work with helping clients embrace change to help improve performance, there is a broad-based struggle to establish consistency. Human nature seems to rebel against consistency. The source of great consternation in generating quality, predictable results.
According to Michael E. Porter, Harvard Business School Professor and world-renowned expert on strategy, success requires both the right strategy and "operational effectiveness."
"Managers must clearly distinguish operational effectiveness from strategy. Both are essential, but the two agendas are different. The operational agenda involves continual improvement everywhere there are no trade-offs. Failure to do this creates vulnerability even for companies with a good strategy. The operational agenda is the proper place for constant change, flexibility, and relentless efforts to achieve best practice. In contrast, the strategic agenda is the right place for defining a unique position, making clear trade-offs, and tightening fit," says Porter.
The relationship between strategy and operational effectiveness goes a little deeper than simply mutual dependency. They inform each other. Operational effectiveness is about having functions in the organization that work well. These functions are, of course, the organization’s skill sets or 'core competencies' and therefore, as Porter points out, must fit together and work together to implement the strategy. On the other hand, the possible strategies available to an organization are constrained, at least in the medium term, by the skill sets available to implement them.
The Academy of Family Business has the knowledge, curriculum, and coaches to help you better understand the opportunities available in answering the question “what else can we do?” To learn more about developing best practices and their application, email us at: info@myAFB.org