Incremental improvements - a 10 percent lift in manufacturing output, a simplified self-service ordering process or a product repackaging for a growing sector - can ignite a company’s growth. Sometimes those breakthroughs appear magically and other times they remain elusive. That leaves business managers looking for ways to generate more regular and reliable improvements.
A more systematic approach to improvement is business performance optimization, an ongoing process of identifying, redesigning and optimizing, planning, and implementing new developments. These changes may directly affect production, improve “back office” administrative functions like billing and reporting or may alter the way you go to market.
Identifying and Setting Goals
Strong improvement ideas stitched together with the discipline of clear goals provide the foundation for performance optimization. But which comes first, the improvement goal or the improvement idea itself? Certainly either can serve as a starting point, and an external industry scan is often the best place to go first. An external scan involves research into what is going on with competitors and the industry overall. Through industry studies published by research firms and industry news sources, conversations with suppliers, customers and partners and looking at competitor webs sites and news releases, you can understand the state of the competition and your position in product development, delivery of customer value, cost structure, etc. You may even find compiled benchmarks from industry groups or private sources as well as see specific ideas that you want to pursue. All of this information can help you determine the overall goals of your improvement plans and allow you to glean specific ideas to pursue.
Internal sources for improvement
Organizations with an engaged employee base and a continuous improvement mindset are on a constant scan for possible improvements in all areas of the organization. Others may need clear, market-derived goals from the external scan mentioned above to kick-start an improvement process.
To turn the corner from brainstorming towards formulating a performance optimization plan, you need to evaluate ideas along with their projected impact in time, money, and quality with an understanding of the resources required for the improvement effort and the expected gains. This clarity provides guidance for managing and prioritizing the improvement projects and goalposts for evaluating them when complete.
With goals set, you are ready to look at various approaches to making the desired improvements.
Redesigning and Optimizing
Changes can be made in two ways: Re-thinking a process from scratch for a fundamental change (“redesigning”) or improving on the way things are done today (“optimizing”).
Redesign efforts require more time and resources than optimization, particularly if they contemplate replacing capital equipment like production lines or major software installations. The impact of such efforts can be transformational and can in some cases lead to fundamental improvements in an organization’s capabilities. Examples of a redesign effort include implementing a Customer Relationship Management system in an organization currently using ad-hoc contact lists, or re-tooling a production line to automate high labor input steps in the process.
Optimization often involves making carefully calibrated incremental changes to an existing process to make it more efficient or to expand its capabilities. Each optimization is lower cost and risk than a full redesign, but the cumulative changes can be quite large. The results, however, may not consider the end-to-end process, possibly causing some parts to be optimized at the expense of the whole system. Examples of optimization efforts include linking a Customer Relationship Management system into the accounting and support systems to provide visibility of orders and calls to salespeople, or adding safety equipment and safeguards to the existing production process to reduce costs and improve quality.
Planning the Implementation
The next step, project planning and structure, may not be intuitive for fast growing businesses that pride themselves on quick reaction over formalized process. Attention to a modicum of structure can go a long ways towards ensuring results from the effort. Key elements include:
Roles: Accountability starts with clear role assignment. Each initiative needs clear leadership and team roles. The more you can define those roles by type of engagement, e.g, analytical support, idea generation, link to key functional areas and level of support, e.g., leader, full team member, consultation as needed, etc., the more likely you are to get good results .
Project planning. Project planning is at the intersection of scope (features, capabilities), time, and cost. Good project planning reflects an understanding of the tradeoffs between those three. The key output for a project manager is a step-by-step plan, including what is to be done, when it will be started and completed, and who is responsible for doing it. If other tasks must be completed before a task is started or completed, then those dependent on it must be flagged.