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.
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?
A critical event such as losing a key employee can be a huge setback for an ill-prepared organization. There are risks of loss of time, loss of money, and/or loss of goodwill over something that could have been mitigated through some planning. To list off a few stories that we have witnessed first hand:
- Frustrated customers feel alienated because their go-to point of contact has disappeared and both the customer and the organization have to re-learn how to work together; or worse, customers are loyal to the key employee and move their business elsewhere.
- Expending resources to piece together everything that the key employee was working on and pick up where things were left hanging. Some things may fall through the cracks and opportunities are lost forever.
- Valuable experience and learnings of the role and job functions have vaporized. The organization has to start from scratch in training a replacement and absorb the costs of ramping up the new person.
Something as simple as a piece of paper that lists the key employee’s job roles and responsibilities (WHAT) can save future headaches. For organizations committed to having a sound plan, a more sophisticated solution could entail living documentation and diagrams detailing her specific tasks/functions and HOW those functions are performed. Those documents are then reviewed regularly for accuracy and updated to reflect new responsibilities, processes, or metrics.
Taking it one step further, what would happen if the entire management team disappears, through an acquisition, for example? Instead of losing specific knowledge contained in one key employee’s head, entire chunks of an organization’s knowledge are lost. The risks are more severe when an entire department is replaced, but the same principles apply when documenting a department’s roles and responsibilities; it is not too far of a stretch from capturing a key employee’s roles and responsibilities.
No employee or role (or management team) is simply plug-and-play, but having some kind of records to rely on when in a crisis are better than having no records at all. What kind of techniques and methods have you found to be successful at capturing your organization’s knowledge?
“Business as usual” typically means things are running smoothly and there’s nothing new or exciting to report. But what is considered “business as usual” to one organization or person may be considered a complete wreck to someone else. I encourage you to take a step back and consider the following points:
- Do you find that the quality of your organization’s output is poor (things have to be re-worked, re-done, or scrapped more often than you expect)?
- Are you constantly having to expedite orders for reasons other than special customer requests?
- Is there always another emergency or fire to tend to, preventing you from focusing on work that will benefit the organization in the long-term?
- Are you sitting on dead inventory?
- Are you or your star players overwhelmed?
If you answered “yes” to any of these questions, then there is likely some inefficiency in the operations of your organization. Notice that each of these questions only reflects a symptom of inefficient operations; fixing the symptom will not necessarily get the organization back on track – the problem will manifest itself in some other way. Digging further into the root cause of these symptoms and removing those underlying obstacles is the best (and most difficult) way to achieving operational efficiency.
One technique to understanding and getting to the root cause of an issue is to act like a three-year-old. Ask “why?” to everything. Here’s an oversimplified example of how such a dialog might play out:
Process Owner: I’m feeling overwhelmed with all the tasks that are on my plate.
Process Owner: Everyone always needs an answer right away and I cannot even do my regular job.
Process Owner: I’m the only person who can do this one thing, and all the inquiries always lead back to me.
Process Owner: We used to have two people who could do this job, but she recently left and I’ve been stuck with all the work.
Process Owner: We haven’t had time to train anyone new.
You get the idea. The Process Owner is overwhelmed because he is the bottleneck – the point in the system where all things must flow and the system can only move as quickly as its slowest component. One possible fix for a bottleneck, and perhaps the most applicable in this scenario, is to hire and train an additional resource who can alleviate the work load.
This is just one illustration of an inefficient operation and how to go about resolving the problem. If you’re interested to understand more or would like some help exploring such issues in your own organization, contact us at email@example.com.
You’ve found the blog for Firebrick Advisory, a business process improvement consulting firm. For this first post, I’d like to introduce us and highlight some points that make us unique.
We believe that every organization, large or small, is capable of achieving operational efficiency. However, the path to achieving it is a very difficult journey: day-to-day operations provide a plethora of challenges, marketplace shifts impact customer demands and supplier capacity, regulations impose additional costs and constraints; the list is endless. Who has the time to think about, let alone begin working toward, operational efficiency?
Consider this: professional athletes work with coaches (sometimes multiple coaches) to hone strengths, learn from feedback, and improve on weaknesses. When competition day arrives, the weather may be sunny or rainy, the risk of injury from overexertion is greater, officials may not always rule in the athlete’s favor, but a good coach will have prepared the athlete to be able to face whatever obstacles may arise. Organizations can benefit from coaches to provide external insights, best practices, and techniques to improve strengths and close gaps in weaknesses. External forces will always exist that will require an organization to change, but an optimally running organization is better equipped to take on those challenges and is more flexible to respond to catastrophic occurrences.
Firebrick Advisory brings three aspects to an organization that is facing operational challenges.
- Analytics (stemming from Big Data, Statistical Analysis, Engineering) – Being able to define, capture, and collect data throughout the organization to discover insights on existing business processes and decisions-making heuristics. Data and factual evidence is the foundation on which the organization can learn to become operationally efficient.
- Practical approach to Theory vs Practice (stemming from Theory of Constraints, Lean, Six Sigma, Economics) – Understanding the difference between what is realistic and what is ideal as far as capability and appetite for an organization to achieve operational efficiency. Capturing real results quickly is the best way to validate any undertaking.
- Partnering for success (relating to “skin in the game”, performance based results, building lasting sustainable relationships) – Developing in-house systemic capabilities such that operational efficiency is not lost when the project is complete. Fitness coaches teach clients how to live a healthy lifestyle as a way to keep off the fat, we work with organizations to become and remain efficient.
So that’s us in a nutshell.