- July 15, 2014
- Posted by: andreag
- Category: Customer DrivenGrowthlinesInternal ImprovementSystems-Process-Improvement
How would you define success in your organization? More revenue? More customers? Funding to expand services? More profit? Optimizing performance?
I would suggest to you that the quickest route to many of these is to focus on optimizing the performance of processes through one or more successful change initiatives.
Better processes translate to lower costs, greater consistency, higher morale and higher quality outcomes for customers, be they internal customers of an administrative function or external customers of your products/services.
It is curious to me that although the logic of this is clear and simple, few managers focus on it. Maybe they don’t know how. Maybe they haven’t had success with it in the past. Maybe they think there is an easier road.
I want to make the case that focusing on process is, in fact, the express route to success and is far easier, when done right, than the alternatives.
What are the alternatives to fixing your processes?
The main choices for improving an organization’s success typically include:
- Grow Customers/Market Share: How challenging this can be is determined by how well your products/services separate you from the competition, whether you can create new demand and the cost/effort involved in doing so. This is marketing, sales, etc. Many executives focus on this but I would submit, this is not an easy road in most cases.
- Enhance Product or Service to Enable Price/Revenue Increases: This could be a service agreement for your products, it could be a new version of your product with enhanced performance, etc. Again, there is very likely considerable marketing and sales effort and considerable lag time in effecting these changes.
- Reduce Costs: This is the focus on process and change. When successful, you can apply the savings to your bottom line, lower product cost to gain market share or invest the savings to enhance your operation. How long does the average change initiative take? Usually 6-9 months. What does it cost? If you use outside resources to take employee teams through the process, $50k is a good ballpark. However, you can know in advance what your return on investment range will be over time.
The Best Choice
In our experience, reducing cost through a focus on change management is your best strategy for success, assuming you have a product or service that will have continued viability in the marketplace. There are even side effects of improved consistency, quality and productivity.
Why does process improvement succeed better than enhancing your product or growing market share? Several reasons: Highest probability of success. Short time frame. You control the process, which is not the case with marketing and sales efforts that are impacted by competitor moves and the changing whims of customers. Unlike other strategies, if done well, change management creates a huge boost in morale. Lastly, relatively low cost.
Again, it is curious to me why more managers don’t choose this alternative. I suspect one of the main reasons is that national data shows that two-thirds of the time change efforts aren’t successful. Having not succeeded in the past, there is a reluctance to revisit the strategy.
If you want to know the keys to success (or alternatively, the missing pieces that contribute to failure), then revisit the series on managing change. Find the first post in the series here with links to the others in the series at the end of that post.
I would summarize the main sources of failure as the following:
- Not employing existing work teams to design innovations and eliminate “rubs”
- Not managing the human side of the change process and thus encountering resistance to change that derails the effort
- Leadership not supporting implementation through providing needed resources, policy changes and other decisions
I consider these the primary factors that contribute to the 66% failure rate of such efforts. This is why, despite all the buzz about Six Sigma and “lean”, the literature is replete with evidence of these approaches not delivering for many.
What to do next?
First of all, do an inventory by yourself or with your management team to identify potential areas or processes for improvement. Where are results inconsistent? Where are there errors? Where are there dissatisfied internal or external customers? Where is performance too slow for you to achieve optimum performance? Where is morale low (productivity is the basis of morale)? Where have you had to add resources, but question whether they were needed?
If that doesn’t point out potential areas to examine, then ask groups of employees for their ideas on how and where their performance or performance of their team could be improved? You will hear about multiple variations of process being used. You will hear about having to wait on the results of another process. You will hear about slow hiring process or ineffective orientation/training. The list is endless. If they think you really want to know and won’t feel threatened by their answers, you will find the pathway to getting started.
Then, determine whether a 20-50% improvement in performance of a given process will be worth the investment to get there. The investment may include an outside consultant to bring in a methodology or it may be just the time of your employees to work on this.
But consider that if your people knew how to do this successfully already, they would have done so. Inventing their own methodology for process improvement or going to training in order to bring back a methodology is a higher risk strategy. Locate a resource with a proven track record of success with their methodology who can come in-house and train your employees as they work on the processes you selected. Once your people have learned the methodology, then you have the capability in-house to expand the efforts and continue on your own.
If you want help in locating areas for improvement or in evaluating the ROI of proceeding with process improvement, contact us. We don’t begin an engagement unless we have determined in advance what the range of ROI will be from the effort.