Check Your Plan Before You Act
drooping below breakeven, management looked to implement 100 improvement projects in a year. None succeeded.
At that point, focus shifted to just four high payoff programs, none of which was on the original list of 100 projects. These programs all succeeded due to focused attention, and the company was soon earning high profits.
Pick Improvements That Help Everything Else
What do you do when nothing works well? Identify how performance in one area affects performance in all other areas.
Another leading retailer with severe problems learned this lesson by testing a number of improvement ideas to see how many other performance areas were helped. What was learned?
Allowing employees to spend more time serving customers made both employees and customers much happier. Sales and profits rose as a result. This approach was counter to the retailer’s previous instinct to slash employees every time that profit targets were missed.
Measure at the Right Level with the Right Measure
Large organizations often confuse themselves by over averaging what they measure. For example, tracking the average temperature on a given day around the world won’t tell a retailer what kind of apparel to offer in a given store. Start looking at the temperature trends by store, and you may begin to improve your stocking.
STALLBUSTERS
Identify Your Most Important Processes
Ask these questions to begin your search for your most important processes:
-How long could your organization survive without each process?
-How long could your organization prosper if each process were done poorly?
-How long will your organization last if it performs each process less well than competitors?
Having developed a sense of what your most critical processes are, ask these questions:
-If you did the process as well as you can imagine it, what would be the size of the benefit compared to how well you are doing today?
-If you did the process as well as you can imagine it, what other opportunities would open up?
-What would developing those opportunities be worth?
Potentially Important Processes to Measure
-Developing new products and services that provide customers with major benefits over competitors’ offerings
-Marketing for attracting and retaining customers with whom you have a profit margin advantage over competitors
-Shifting your mix of customers, products, and services to improve your costs versus competitors
-Identifying and implementing your most important cost-reduction opportunities
-Finding and realizing your organization’s largest opportunity areas
-Reducing cost of capital in ways other than by borrowing more money and refinancing at lower interest costs
-Adjusting compensation and recognition activities to reinforce helpful employee behavior
-Obtaining win-win ideas for mutual benefit from suppliers, partners, and the communities you serve
-For public companies, monitoring of institutional investor decisions to purchase your competitors’ shares and debt rather than yours
Find the Critical Factors for Your Most Important Process
Once you have selected an important process to focus on, narrow your attention further to reveal the most important parts of the process. The following questions will help you:
-Who can help you determine the critical factors in the process you are investigating?
-How can you measure what may cause or influence the process’s important aspects?
-What’s the best way to check your conclusions about the critical factors of important processes by using statistical analyses?
Start by Measuring Everything You Can Think of (That Seems Worth the Cost) Concerning the Process’s Output and Its Influences — and Then Narrow Your Focus
This is a good time to identify which measures are most available for comparisons outside of your organization. Be sure to check all your data to see how well they help you understand your performance. Once you’ve done that, begin eliminating some measurements while paying more attention to others. To make this shift, work with data until you can statistically identify causes and effects.
In deciding how much to spend to measure and analyze, keep in mind the size of the potential benefits. Some expensive measures are well worth the cost. One firm found that a single measure (which cost more than all of the other measures combined) provided almost all of the insights into improving an essential process. Had the company