Process Management 3 mins read

Efficiency: Higher, faster, further?

Many operational excellence initiatives fail because employees do not feel included.

Dr. Helge Hess Dr. Helge Hess

Is optimizing operational efficiency really the answer to the current challenges?

The world is in the grips of a crisis that will influence the future prospects of many organizations in the coming years. Employees fear for their jobs and criticism is common when companies put their workforce under additional stress by applying too much pressure to be efficient.

On the one hand, we have seen how software robots can do routine work, which can threaten the jobs of both skilled and unskilled workers. On the other hand, discussions about a fundamental change in forms of work, or “New Work,” are booming. (The concepts of New Work are in terms of autonomy, freedom and participation in the community.)

If operational efficiency is the answer, how far can we go with it? The answer is not black and white – the current situation varies greatly from industry to industry – but a few patterns can be identified that lead to the right balance between efficiency and customer/employee satisfaction.

Only success secures jobs

For successful organizations, efficiency – or operational excellence – must go hand-in-hand with product and process innovation. For example, at some point it no longer made sense to offer an even-better analog camera or MP3 player when your customers could take digital photos and stream music. In other words, optimization and efficiency gains make sense, as long as your business model is viable overall. When industries change fundamentally, transformation – not optimization – is the key.

The customer must be the focus of attention

In many industries the customer is willing to pay a higher price if the product quality, the shopping experience and reliability of the supplier are right. Cost optimization makes sense in processes where differentiation is not the issue. In customer-facing processes however, the focus should be on customer satisfaction and differentiation from competitors.

Peter Drucker’s statement, “you cannot manage what you do not measure,” still applies today, as net promoter scores, first response times, customer retention rates, service quality and reliability become the top metrics for measuring customer satisfaction.

Engage your employees

Many operational excellence initiatives fail because employees do not feel included. Studies show that fewer than 10% of transformation and change initiatives actually lead to improved business performance. This is because the majority of companies fail to close the gap between strategic change and the operating model.

From an employee’s perspective, it is important to understand the new way of working, as they will understand their contribution to the company’s success and thus be involved successfully if tasks and guidelines of a role are clearly described.