Blog 6 of 6: Operational Process and Measurement
This is the last in a series of six blogs that draws on our extensive research involving 75 medium-sized businesses and 1500 leaders. This research has identified six key challenges that these businesses must address to succeed.
In the realm of business operations, efficiency and effectiveness are not merely goals; they are imperatives for sustained success. Establishing robust operational processes and precise measurement systems is crucial. Here’s how organisations can streamline their operations and enhance their decision-making capabilities.
Create an End-to-End System– Then digitise
The first step in optimising operational processes is to create an end-to-end system based on your critical path. This system should encompass all stages of your operations, from initial inputs to final outputs, ensuring comprehensive coverage and integration. Once established, digitizing these processes can dramatically improve efficiency, reduce errors, and facilitate easier scaling. Digital tools and software not only streamline workflows but also provide vital data that can be used to further refine operations. Standard Operating Procedures (SOPs) of how to do each step then create the ability to train people to the system, create resilience for absences, and when someone leaves their knowledge doesn’t leave with them.
Train and Lead to the System. If No-One is Using It, You Don’t Have a System
Implementing a new system is only as effective as the training and leadership driving it. Comprehensive training for all team members is essential to ensure everyone understands how to use the new tools and processes effectively. Leadership must also fully embrace and advocate for the system to model its importance and integration into daily operations. Remember, a system ignored is a system non-existent. Regular usage, supported by continuous training and leadership reinforcement, is key to making any operational system effective.
Review, Learn and Iterate the System
Operational excellence requires a commitment to continuous improvement. Regularly reviewing the performance of your operational system allows you to identify areas where changes are needed. Learning from these insights enables you to make informed adjustments, enhancing the system’s efficiency and effectiveness over time. This iterative process is crucial as it helps to adapt to changing business needs and technological advancements, ensuring that your operations remain competitive and cutting-edge. The biggest typical mistake is ‘winding the system down too tight’, try to find the Goldilocks Zone of just the right amount of process for consistent, measurable delivery.
Bring Data from the System to Support Decision Making
Data-driven decision-making is the cornerstone of modern business strategy. By integrating data collection and analysis into your operational systems, you can gather actionable insights that inform strategic decisions. This approach allows leaders to make more informed, accurate, and timely decisions, reducing guesswork and enhancing outcomes across all levels of the organisation.
Create Clear Financial and Non-Financial KPIs, and Know What Moves the Dial
Key Performance Indicators (KPIs) are vital for measuring the effectiveness of your operational processes. Establishing both financial and non-financial KPIs provides a holistic view of performance, encompassing everything from revenue and profit margins to customer satisfaction and employee engagement. Understanding which metrics truly 'move the dial' is essential for focusing efforts and resources on the most impactful areas, thereby optimising performance and driving growth. The biggest problem with KPIs is typically not having enough, the second biggest problem is having too many. Try it and see what works and iterate.
Conclusion
Streamlining your operational processes and establishing rigorous measurement systems are fundamental steps toward enhancing organisational efficiency and decision-making capabilities. By creating a comprehensive, digitised system, ensuring its adoption through training and leadership, continuously refining the process, utilising data for strategic decisions, and focusing on meaningful KPIs, organisations can achieve operational excellence and sustain competitive advantage in their respective industries.
Contributed by Greg Allnutt MNZM, Partner