We are growing so fast that the quality of our product/service is suffering

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First of all, congratulations.  Growing pains are natural and these issues mean the organization is most likely over capacity.  Now would be a good time to take a moment to celebrate the accomplishments achieved thus far, because the next phase is going to present an entirely new set of challenges.

From recent history, American Giant’s “catastrophic success” comes to mind.  This clothing manufacturer’s hooded sweatshirt went from obscure to must-have overnight and, as a result, many customers were left waiting for months to have their orders filled.  Their explosive success tested customer patience and left the online retailer scrambling to ramp up production  in order to satisfy the surge in demand.  To American Giant’s credit, there were plans in place to steadily scale up production and growth, but nobody expected for their hoodies to catch on as quickly as we all now know.

Do you personally have an appetite for growth?

  • A business that used to be fun when it was just a small team may not be so fun after new people are added.  What was once a great work place with a fun culture could become a dreary place to field complaints.
  • More oversight will be required since there will be more stakeholders involved.  Do you have the patience for working through business problems in addition to technical problems?

Things to look out for when deciding to grow:

  • Are there standards in place to ensure consistency of products and services?
  • How dependent is the growth on a few key individuals?  These people are potential bottlenecks and must be willing to learn to delegate.
  • What capital requirements are needed to fund acquisition of additional equipment, hire and train additional people, lease more office space, maintain stable cash flow?
  • Vendor agreements must to be reviewed if your product/service depends on their ability to support your growth.

 

Looping back to this article’s title, it is important to define what “quality” means to you and your customer – then identify reasonable metrics that can monitor the product or service on a continual basis.  The metrics don’t have to be fancy, but the more relevant they are to a specific product or service, the easier it will be to respond when things go awry.  Here are a few examples of metrics that we have used:

  • Reactive product quality metric:  Has there been a statistically significant increase in customer returns reporting a defect?
  • Proactive product quality metric: Are suppliers providing materials that meet our customer’s requirements?
  • Reactive service quality metric: Has there been an increase in the instances of having to expedite orders?
  • Proactive service quality metric: Has there been sufficient training for our people?

Notice how these measurements come in two flavors: reactive and proactive.  Reactive metrics report issues after-the-fact.  Meaning, the damage has already been done and steps will need to be taken to fix a problem for the customer.  Proactive metrics can alert you when things may cause downstream troubles and corrective action can be taken before the customer is ever involved.  Though proactive metrics are much more difficult to identify and control, the shift from reactive to proactive metrics is important to sustaining steady growth.

Efficiency Big and Small

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Operational efficiency in a small company looks very different from operational efficiency in a large company.  Small organizations have a few people doing many jobs.  Each person is spread pretty thin jumping from one task to another.  In one instance, we observed an operations manager involved in collections, vendor negotiations, and cutting checks for accounts payable all in one day.  Large organizations, on the other hand, have many people doing one function.  A team of people may be responsible for collections while another team of people would be responsible for supplier and vendor contract management.

For small organizations to gain efficiency, roles and tasks must be constantly prioritized.  When one person is responsible for so many disparate things, it is very easy to get caught in the minutiae and chaos from switching between activities.  But this switching between tasks can have dramatically negative impacts on efficiency. This study performed by the University of Oxford explains the psychology of switching costs (http://www.ncbi.nlm.nih.gov/pubmed/11004877), but perhaps you can relate – regardless of job title or role – to the struggle of getting the right things done at the right time without sacrificing too much of everything else.

For large organizations to gain efficiency, one solution is through standardization.  When multiple people contribute to a team that has a specific function, there will be variability in the way certain tasks are accomplished.  By following a standard process, communication becomes easier, quality of output improves, and areas of risk or weak spots where errors can be introduced become more exposed.  The team can then take corrective action on the weak spots to gain further efficiency.

Operational efficiency isn’t something that just springs up overnight.  It requires constant focus and intent to improve and sometimes disrupt the status quo.  For organizations that embrace the concept, operational efficiency is a process.  What kinds of tools or programs have you employed to improve your own personal efficiency or your organization’s efficiency?