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 [email protected].