Are you are a business owner or working for someone? Do you acknowledge that market is much more competitive than ever before? Profitability and margins are shrinking and Returns on sales targets seems to be unachievable?
Well, the good news is that you are not alone. Majority of organizations still focus of competing on quality, cost, and product/service differentiation. Businesses are still encapsulating each employee in fixed ‘role and responsibility’ matrix. Organizations still have multiple layers of hierarchical management. Decisions are still made primarily by influence and power politics, sidelining analytics; data; facts; vision and mission of the business.
In the current economic times; when businesses are under constant threat of acquisitions, bankruptcies and loss of market share, how can business have a sustainable growth? Well the answer is quite simple, ‘Challenge status quo, innovate every step’. Generally, innovation is considered to be the job of R&D departments, CIOs, IT, Business Improvement departments etc. However, it is not good enough; all employees within organization should embrace this golden key. Let’s have a look how we can develop businesses that are guaranteed to succeed.
At corporate level
In theory, Business do not sell products or services, instead they sell ‘value’ to their customers. It is very important concept that entrepreneurs must understand and communicate to all employees. At corporate level, business should shift their focus from competing for quality, cost, and product/service differentiation to adding perceived value to each customer transaction.
Let us explore concept of value with the help of examples:
Amazon is not merely books purchasing website. In fact, they are revolutionized book purchasing experience by offering ranges of services like Kindle, optimized website experience to suit your personal needs, delivering content electronically via text/audio, electronically sending sample books, book reviews/rating and much more. By delivering this massive value to their customers Amazon is able to capture major market share, whereas; other vendors with traditional business models have to close their businesses within months.
Similarly, Apple found that they can add value and enhance customer experience for music buyers. They reinvented music purchasing experience by introducing new platform (iPods) to listen and buy music online.
Hence, what we sell is not that important, understanding customer needs and delivering value to our customers is more important. So,focus needs to be shifted from merely selling products or services to commitment to adding perceived value to each customer transaction.
At an Operational level
At an operational level, business must have clear understanding as how departments collaborate with one another to produce tangible deliverables.
Business should be able to clearly identify which of their operations are:
- Core functions – These operations add value to the final product or service. For example, in case of car manufacturing building car engine, body, painting etc are core functions.
- Support functions – These functions do not add any direct value to the customer. However, they are required to deliver core functions. For example, HR, Accounting operations etc.
- Pure waste – These operations can be part of Core functions or Support functions but do not add any value to the final product or service. For example, manual timesheets, paper based approval processes, unnecessary people movement, unproductive meetings, unnecessary reports, overproduction etc.
Each employee must be aware of these concepts. Business should develop culture where each employee is committed to contribute tooptimizing ‘Core’ and ‘Support’ functions and cut ‘Pure waste’.
Further, following initiatives must be encouraged at operational level to boost productivity and morale of employees:
- Challenge existing business processes with the focus on reducing waste, breaking silos and improving overall communication.
- Consider implementation of ERP or other specialized software to automate manual processes
- Introduction of robotics
- Outsourcing of unproductive/expensive business processes
- Implementation of specialized business improvement techniques like Six Sigma, Lean, Kanban etc
At an Individual level
Each employee must have clear understanding of how he fits in overall value chain. Employees must know how their work impacts other teams and the end customer. This will help employees to break silos of team structures, job titles and work collaboratively.
Business should revisit their organizational structures with the view to improve productive and improve customer value.
Some other questions that businesses should consider are:
- Do you need all employees to come to office every day? or some employees can be more productive and cost effective when they work off-site?
- Do you still think that employees should be paid based on Job Title, qualification or Timesheets? Orthey should be paid based on measurable productivity?
- Would you consider developing a framework which empowers high performer to undertake task beyond his position description. In turn, high performers are appropriately paid and recognized as well?
- Have you considered, firing ‘Managers’ and hiring ‘Directors’ instead.
“Manager is a person responsible for controlling or administering an organization or group of staff”
“Director is a person who is in charge of an activity, department, or organization”From business viewpoint, business should not pay someone to control others (Manager). Instead, Business should pay someone to who takes responsibility of their business unit and direct their team to common company’s vision (Director). Note that above concept of ‘Manager’ and ‘Director’ does not refer to job titles at all.
- What you can do to promote awareness among your employees that their each act (big or small) incurs costs to business? Challenge each employee to think cost of cleaning office, power consumption, paper printing, people unnecessary movement, unnecessary reports and meetings, lack of communication, rework, over-production etc.
Finally, I must say that the topic I have chosen in this post is much deeper and very broad. It can be (and should be) looked from multiple viewpoints and with different focus. Do you agree that challenging status quo and innovation is a need for every business and everyone within business should contribute to it? What is your view point? What tips you would like to add to above list?