I recently visited with a Director of Marketing at a charitable startup, and he shared that his title sounds impressive, but his roles can vary from web developer, customer service representative, contract manager, warehouse fulfillment person, to janitor, depending on the day and need. Essentially, one person is fulfilling many different roles, and any issues across multiple functions are most likely going to be handled by the exact same person. In this scenario there is no cross-talk, no second-guessing, no conflicting information.
By contrast, in larger organizations, one hat can be worn by many people. Five different data-entry associates will tell you five different ways to process paperwork. When someone downstream needs to act on the information that was entered and has a question, who does she turn to for help? The person who produced the discrepancy may not necessarily be the person doing the troubleshooting. Time is wasted in tracking down the person who made the error, understanding what went wrong, fixing the error, notifying the person downstream that the issue has been rectified, so work can resume.
In both scenarios – effort and work is suboptimal from an efficiency perspective:
- One person doing multiple things cannot be the expert at everything. There are “switching costs” when a person has to put down one thing in order to work on something entirely different.
- Multiple people doing the same thing, but with slight variations, can lead to confusion when someone downstream receives something unexpected.
Resolving situation 1 may be a matter of time management and prioritization. Resolving situation 2 can be much more involved because more people are involved. Consider the following questions when when evaluating a process:
- How did the error get introduced in the first place? Systemic error or human error.
- How does the output from this function impact downstream functions?
- What are best practices to completing the task so everyone can benefit from a common approach?
Standardizing a process so it can be repeated and measured is one way to reduce the variance that occurs naturally when more than one person is tasked to perform the same function. The benefits of standardization are a reduced variety of errors, which speeds up resolution and less confusion downstream. Being able to measure a process also brings more visibility in managing a process – which leads to greater efficiencies and reduced costs.
To tie everything back to the Director of Marketing – variation in completing tasks is not as much of an issue since one person is generally doing everything from beginning to end. The practice of one person doing everything may be a necessity, however, it is not sustainable, and when new people come on board they will sure ask: “What is the best way to complete this task?”
Silos, a cultural phenomenon when organizations become burdened by bureaucracy. The phrase “That’s not my job” is a very strong indicator of silo mentality. Important stuff doesn’t get done because everyone is busy pointing fingers or trying to protect their own necks. It’s great source material for a popular comic series (dilbert.com), but – joking aside – silos stifle innovation, drive away high-performers, obfuscate decision-making, and contradict operational efficiency.
NASA was awesome in the 1960’s because their only mission for the entire organization was to be the first group to put a man on the moon. Janitors, engineers, astronauts, and management were all moving in the same direction and making decisions to support that singular outcome. Realistically, silos are embedded into the culture of an organization and rallying to be the first to put a man on the moon has already been done. Breaking down silos today is difficult work.
The first step is to recognize and acknowledge silo mentality.
- How are people being held accountable?
- Is information being freely shared between groups?
- Are there disparate systems that are hindering effective communication?
- How quickly does the organization respond to disaster?
The next step is to understand how much it is costing the organization.
- Is product/service quality suffering, are deadlines being pushed
- Are loyal customers leaving?
- Are new customers being turned away?
- Are inventories piling up?
- Are actual numbers falling short of forecasts?
The third step is to re-build trust among opposing groups.
- Cross functional teams can shed light on the benefits of working together
- Strong senior leadership that embodies the mission, vision, and values and effects will trickle down
- Incentives that reward collaborative behavior
A culture that embraces silo thinking will resist change, never be able to achieve optimal operational performance, not be resilient enough to adapt to external forces, and will ultimately fail. If you’re experiencing evidence of silo mentality in your organization, we would be happy to work with you to evaluate your specific situation. Contact us at email@example.com.
This sobering accusation about the NSA being overwhelmed with data should be a wake up call to businesses who are collecting data for the sake of collecting data. It is becoming increasingly easy for organizations to collect data on almost every aspect of their existence: customers, sales, inventories, markets, costs, operations, etc. but without a process for collecting troves of unstructured data, synthesizing the data into information, and translating information into action – you’re not effectively wielding the power of data.
- Improve Revenue
- Identify corellations and opportunities to cross sell products or services
- Identify and prioritize investments in specific customer / market segments
- Inform the supply chain to make smarter decisions as a whole and be more responsive to changing customer demand
- Lower Costs
- Reduce the amount of overstocked inventories
- Improve production efficiency and performance
- Flag customer behavior that may indicate a drastic change is on the horizon
- Predict when an asset may be expiring so action can be taken to prevent downtime
- Benchmark utilization and identify the superstars
We worked with a client in the telecommunications space who was collecting data on all of its customers. The client was interested to know if there was a way to improve customer retention, so we built a database around those customers with the goal of creating profiles based on certain characteristics and attributes. After careful analysis and many iterations of challenging and confirming assumptions, the result was a set of heuristics that enabled our client to have better conversations with their customers by anticipating customer needs, improve customer satisfaction, and increase average revenues per customer by offering more appropriate solutions.
The customer data sets contained all the pieces of the puzzle, but it took a team of people who possessed domain knowledge, an understanding of mathematics and statistics, a certain level of curiosity, and patience to assemble everything into a cohesive picture. This is the power of data, to information, to action.
NSA Mission Statement
The National Security Agency/Central Security Service (NSA/CSS) leads the U.S. Government in cryptology that encompasses both Signals Intelligence (SIGINT) and Information Assurance (IA) products and services, and enables Computer Network Operations (CNO) in order to gain a decision advantage for the Nation and our allies under all circumstances.
In other words, the NSA uses data to protect the Nation. Is your organization using data to protect its territory and gain a decision advantage over competitors?
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?