As your company grows, the operations that supported the business in the past will not suffice if everything in your company increases exponentially. That means that as your numbers climb to new heights, you need to build up the underlying infrastructure to support them. Operational excellence is the key to sustaining growth.
“Business leaders should constantly be examining key business drivers and investing in those areas that will position the company to be world class,” says Dwayne M. Holt, senior operations manager at CB Richard Ellis, Atlanta. “Managing a $1 million company requires completely different skill sets than a $10 million one.”
Smart Business spoke with Holt about how systematically investing in operational excellence prepares businesses for success.
How do you define operational excellence?
Operational excellence can also be termed quality assurance or process engineering. At its core, it’s the state or condition of superiority in operations and execution of business processes. Operational excellence means focusing on conducting business in a manner that improves quality, decreases time to market and reduces waste.
If you want more of the same, continue what you're doing. To see positive change, examine and re-examine every component of your company and look for ways to streamline and enhance key business drivers.
Why make this investment?
Operational excellence increases stake-holder/shareholder value through direct ROI, which can positively influence the short- and long-term business outlook. Typically, companies make these investments in people, processes and technology with the goal of positive ROI through improved execution of business operations.
What type of company should seek operations excellence?
There’s really no limitation on which organizations can benefit from pursuing operations excellence. A sole proprietor running a dry-cleaning business thinks every day about how to grow his business and then how to accommodate the increased demand. In the same way, an electronics manufacturer or clothing supplier needs to look for ways to improve and anticipate factors that could limit growth. All companies can benefit from looking inwardly at their businesses this isn’t just for the GEs of the world.
How does operations excellence affect productivity?
The goal of any business improvement program should be to improve the quality of the service provided to the company’s clients/ customers through consistent productivity improvements. Too often, companies rationalize cost cutting, but the problem with this approach is that it’s generally not sustainable in a flat business, let alone a growing one. Best-in-breed companies take a long-term outlook and look for ways to consistently enhance productivity in a way that increases the organization’s value. This includes heightening employee satisfaction. Looking for ways to do things better and maintain or improve retention positions the enterprise to attract world-class talent and motivates everyone to perform optimally. This makes a huge contribution to increased productivity.
How can these changes increase profits?
It is well documented by companies, like GE and others, that higher profit margins can be readily achieved by improving business processes and installing quality programs. These operational strategies are designed to improve profit margins and add client value.
How do businesses identify where to start?
To be operationally best in breed, organizations needs to answer some fundamental questions during strategic planning sessions:
- How can we improve our product or better service our clients?
- Are we positioned operationally to accomplish these objectives?
If the answer to the second question is ‘no,’ most likely the enterprise has not invested enough in people, processes and technology. When a company reaches a threshold or plateau, oftentimes, it needs to re-engineer its infrastructure to move to the next level. This could mean an increase in sales personnel, more automation, or even acquisition or disposition of real estate. Taking time to invest in areas expected to grow and examining and treating pain points is key.
What resources can help companies become market leaders?
All executives should closely examine other industry leaders and ask themselves:
- What are they doing that we’re not?
- How do our cost and other competitive factors align with theirs?
- Where would our investment make the most impact in improving market position?
Large firms often have dedicated staff assigned to quality engineering and process improvement, but not all companies can afford this approach. After some internal examination, executives at small and midsize operations can call upon the expertise of business consultants who can help identify needs and develop solutions. By simply completing an analysis of its growth cycle and where to invest in people, processes and technology on an annual basis, a company will be better equipped to thrive.
DWAYNE M. HOLT is senior operations manager at CB Richard Ellis, Atlanta. Reach him at (404) 923-1302 or firstname.lastname@example.org.