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The Next Generation of BPM

February 27th, 2013 Comments off

The Next Generation of BPMWhat is BPM? Simple question, right?  Is it about aligning the organization with the wants and needs of clients?  Is it about deploying scorecards and dashboards to provide real-time visibility to performance?  Is it about using things like Lean and Six Sigma to improve processes and make workflows more efficient?  Is it about software platforms that provide sophisticated workflow and real time visibility and control of operations?   Is it a process, technology, or management discipline?Tips for gardening in winter months Cheap Burberry Bags Outlet

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Waterfall Design (QFD): Looks Good but Watch Your Step

February 24th, 2013 4 comments

Pretty but Watch Your Step

Waterfall design looks so good on paper.  You start by defining customer requirements and then each step naturally leads to the next until the service is offered, product produced or new process is launched.  A QFD is a waterfall design process and it expresses this natural progression as linked matrices.  Anyone who has ever seen a presentation for QFD sees and accepts the logic of the waterfall concept.  Why then is it that what seems like a smooth running machine usually ends up a painful and burdensome process?

The problem is that elements of a product or service are usually put through in phases to keep the whole work flow running.  If that weren’t done, the Company would have the vast majority of the people in the process idle having either finished, or still waiting for their turn, to contribute to the final work.  Such massive underutilization is no way to run a company.  So we avoid the poor utilization by breaking things down into pieces and sending them through the process in components.  The pressure to maintain utilization and the resulting flow of components creates a tremendous problem in waterfall design processes.

The problem is the series of rework loops caused by gaining buy-in and responding to feedback from internal customers. As each segment flows through the maze of work, each functional area has valuable feedback and expects to be heard.    Once again, using the QFD process as an example, as the output of each matrix becomes an input to the next matrix, the new parties have comments.  And as such, the input to a particular matrix gets kicked back along with the new functional area’s thoughts and comments. The water is now flowing up the waterfall!

Now the problem starts to compound when you have more than two matrices in the process.  When its just two, the rework and new work cross and loop until their joint work product meets exit criteria.  They are just handing off to each other like two people having a catch with two balls.  Every now and then one player may have both hands full but the waste of his compatriots empty hands is short lived.

Download WP “Design Basics – QFD Overview”

But once past two players, problems arise quickly.  As a simple example, let’s imagine three matrices starting with product definition.  Product definition provides input to design which, in turn, provides input to Service Operation or Manufacturing, as the case may be.   Now imagine, just like when there were two matrices, that the output of the first matrix (i.e. product or service requirements) goes to a design team which provides feedback.  They remain in equilibrium until the design team’s output goes to a production or delivery team which has its input.  As Player 2 passes reworked Cycle 1 to Player 3, they are also receiving reworked Cycle 2 from Player 1.  It isn’t long before a ball hits the ground.

Irrespective of how fast everyone can be, if you add enough matrices or steps, the process breaks down.    What usually happens is that Player 1 ends up with a stack of balls on the ground around him.  The system was designed for one set of requirements to flow smoothly.  When multiple rework loops occur, the perfectly designed machine collapses under its own weight.

There is no easy and universal problem for this breakdown.  Some possible solutions are for fully integrated teams representing all functional areas to work on components together through all phases.  A design “cell” if you will.  Another solution might be to design from the back to the front.  And yet another might be to simply accept underutilization as a cost.  But whatever the case, you should be aware and step outside the box before you drown in the waterfall.  If you have comments, please contact me.

Alignment through Business Process Management

February 20th, 2013 Comments off

Strategic Alignment, Organizational AlignmentWhat do we enjoy about leisure activities?  A symphony’s crescendo.  A well executed touchdown.  A sunset from a summit.  We love the harmony.  But in business, there is also value.  Along with that feel good moment, alignment creates value.  It ensures the whole is worth more than the sum of the parts.  And the potential for alignment is in many directions.  We want to be aligned to customers, shareholders, employees and our communities.  But alignment only occurs through design.

In a phone conversation this week, someone asked me what BPM is.  To me it is the design of the alignment.  BPM isn’t the only discipline driving alignment.  In another conversation with a private equity sponsor, when asked about their upstream measures of alignment, I was quickly given financial metrics which if crossed triggered an action.  In such an advanced market economy, we have very refined measures for alignment to the requirements of capital.  And alignment with customers is the essence of Voice of the Customer.

Alignment and Balanced ScorecareSo where can the elements offered in SSQ’s business process alignment focus?  How do we contribute to an organization’s quest for value?  We focus on aligning processes vertically and horizontally using KPI metrics.

We introduce scorecards or dashboards as a way to monitor alignment vertically in an organization. The built-in ability of cascading scorecards, regardless of the number of hierarchies, depicts how the business rolls up from any perspectives.  While easily attained but it is readily understood and accepted.  It fits our view of organizations and compensation systems.

A greater challenge is achieving horizontal alignment.  Even though vertically defined functions and groups have a stake in a company’s outcomes, many times the overall company fails to optimize its potential because resources and information are “owned” by the vertical components. Thus, we create silos.  I am an optimist and believe people want to work together.  But I also believe in our quest for simplicity and accountability, we’ve failed to fully understand horizontal relationships and created incentive systems that drive people to work on their own.

So our implementation of BPM seeks to facilitate an organizations’ understanding of how a course of action adopted by one function impacts other functions. We seek to aid the company building a systems approach by giving the various vertical entities visibility into each other’s plans, resources and performance gaps based on internal and external customer requirements.

BPM Whitepaper – A Structured Approach to Delivering Value

We finally seek to redefine the KPI’s balancing the vertical requirements with the horizontal requirements to get the alignment in harmony.  By comparing those KPI’s with actual performance we help a company define the projects and activities that will close the gaps to the highest scorecard to ensure we also meet external alignment.

The BPM we introduce has many benefits.  It examines and aligns to scorecards.  In ensures financial and vertical measures are met by building the muscle tissue in the form of process definitions.  It focuses on KPIs, performance gaps and prioritized project lists.  But it is unique in its facilitation of an understanding and acceptance of horizontal alignment and thus takes organizations a step closer to its optimal value creation.

So in answer to the question for a definition of BPM, I say the essense is alignment.  And in answer to what we bring different than any other focus, we feel we facilitate overcoming horizontal barriers to value creation.  If you’d like to discuss these concepts and how we can help your organization, contact me.

Strategy, Execution and Operational Excellence

February 17th, 2013 2 comments

Hmm…something’s wrong

What is a strategy?  Where do you separate strategy from execution?  What value does Operational Excellence offer?  Why does any of this matter?

Quite simply, strategy is a decision about who you wish to serve, how you wish to serve them so as to deliver value and what capabilities are needed to succeed.   Answering these questions provides the guidelines by which to allocate resources.

On the other hand, execution takes your strategic decisions and converts them into a vision, mission and operational plans.  If you’re a regular reader of our blog, you’ll know we connect operational plans from each functional area to improvement projects by using core value streams.  Identified performance gaps in the value streams are the building blocks of an Operational Excellence effort.

Why are these distinctions important?  Describing vision, mission, operational plans and operational excellence activities as strategies confuses the journey with the destination.   That mistake ensures you’ll never arrive anywhere.   It also strips away the value of helping a client choose the means by which to execute a strategy.  Putting the cart ahead of the horse, yields both a useless cart and useless horse.

I tell prospects, clients and partners; we’re here to help execute on strategies but we assume those strategies are in place.  One of our value propositions to our clients is that we will develop a governance map from a top level scorecard at the highest point to the deepest sub-processes at which improvement opportunities reside.  There we specify business improvement cases and projects.  However, we expect the client to choose and weight the criteria by which to prioritize the projects for execution so we can allocate resources such as budget and personnel.

It is the choosing and weighting of criteria for project ranking that tells me if a company has a clear strategy.  As previously stated, a strategy specifies what customers a company wishes to serve, how it wishes to serve them to deliver value and what capabilities are needed.  These decisions provide the guidelines by which to allocate resources.  When a company has a very difficult time ranking and rating projects, much less being consistent over time, it is clear they don’t have a clear strategy that is understood by everyone.

Systematically Driving Value with OpEx

When a company doesn’t have a clear strategy, improvement initiatives run into common problems.  The company develops a long list of projects but they are all equally critical.  People work on many projects spending a little time on each and never getting any of them done.

If you’d like to discuss, feel free to contact me

Leadership Steps in Creating a Customer-Driven Process Enterprise

February 13th, 2013 2 comments

Everyone in an organization has a responsibility and something to contribute to Process Management.  Executives, Process Owners and Process Team Members all have a role to play to create a Customer-Driven Process Enterprise.  But leadership’s role is the most impactful in truly achieving the end state.

Leaders need to have a map in their mind and understand their vital role.  They should know the foundation they can lay, the steps along the way and how to identify when they have arrived.  But first and foremost, they must understand what they can do as individuals and buy into those actions.

Download BPM Overview PresentationOur BPM Overview Presentation.

So what personal role must leadership take to create a customer-driven process enterprise?  We believe those steps are as follows:

  • Demonstrate commitment.
    • Stake your own reputation to the transition
    • Commit to the goals in public
    • Adjust reward and recognition programs
  • Commit the required resources
    • Fund in full the up-front investments to get started
    • Dedicate excellent people to the effort
  • Demand participation and engagement
    • Stay personally engaged throughout the process
  • Be passionate about change
    • Talk about it to everybody and get them emotionally engaged

If a leader can’t buy into those steps, don’t go any farther. But if they see the risk worth the reward, they should first focus on building a foundation in the organization which ensures success.  So here are the prerequisites for transitioning to a customer driven process enterprise.

  • Bring all initiatives together under the umbrella of business process management
  • Communicate the seriousness of the need for a customer-driven process enterprise
  • Determine an implementation plan for becoming a customer-driven process enterprise

With a foundation in place, how do you get from point A to point B?  Here are the phases of the process and what you have to do at each step along the way –

  • Stage 1 – Establish.  Set a Vision, Mission and the elements of a balanced scorecard.
  • Stage 2 – Deploy. Identify Key Business Processes and their Process Metrics.
  • Stage 3 – Implement. Provide Process Owners and Team Members the support to establish a management system which measures actual results, gaps to the desired state and actions by which to improve.
  • Stage 4 – Review.  Evaluate and tie performance evaluation and rewards to how the management system operates.

Download BPM Scorecards executive briefDownload our new executive brief discussing scorecards as part of BPM.

Often, you work so hard at something that it is difficult to know when you’ve realized your goal.  Keep in mind the goal isn’t simply achieving the numbers established for process metrics.  The goal is a cultural shift that orients the company to the customer using processes.  So how do you know when you’ve arrived.  When all is said and done, you’ll know you are there when you see the following –

  • More focus on processes than on functions
  • Employees know and accept process goals
  • Everybody understands how the processes are performing
  • Processes are measured objectively and frequently

So if you are a leader in an organization, or working closely with one, think about whether you exhibit those last four bullet points today.  And if your organization doesn’t, ask whether you need to before one of your competitors does.  If the answers tell you to start changing, feel free to contact me to begin your efforts.  In the meantime, if you want more information, see the complimentary downloads featured in this article.  Upon download, we’ll follow up to offer a complimentary copy of our two day course “Establishing the Strategic Vision” which gets into much deeper reviews of all my points above.

Productivity – The Coming Golden Age of Continuous Improvement

February 10th, 2013 Comments off

A Drive for Productivity

Last week I wrote a post entitled Value Creation for Private Investors that went largely ignored as it was one of my lowest viewed posts of the new year for a Monday when most of you tune in.  The idea about which I wrote was a revelation to me but it was still nascent at the time and thus very undeveloped and weakly presented. But it gnawed at me and so it kept turning in my head.  And now it pops out again this week hopefully a bit more developed.  The idea is the transition we are making from creating the illusion of wealth with financial engineering to needing to truly drive wealth with productivity gains which will make for a golden age in Operations and Operational Excellence.

As a nation, we will flourish based upon our ability to drive productivity.  You see wealth, as measured by GDP, during the majority of our lifetimes has been driven by population growth.  But as our population growth slows, wealth will only be created by increased productivity.  This transition has been hidden from us for some time by the illusion of wealth creation brought about by high capital liquidity and inappropriately priced risk which eventually lead to the bursting of a financial bubble.  But with risk being more appropriately priced, the illusion is gone and we are now faced with long term slow growth and the only way to stoke it is with increased productivity.

To drive the growth in productivity, I wish to cite a recent blog post by GE’s Jeffrey Immelt a portion of which read as follows;

There are four new drivers of productivity, and success in each depends on the technology and talent we develop. The first is how the sheer volume and increased access to shale gas in regions around the globe is changing the energy debate and the balance of energy power. It would require real infrastructure and pipeline integration between Canada, Mexico and the U.S., but North America could achieve energy independence within 10 years. The second driver for dramatically increased productivity is applying the lessons of social media to the industrial world and building what we call the Industrial Internet. By owning and connecting the analytical layers around industrial products – and using real time data to extract real timeknowledge – we can improve asset performance and drive efficiency. The third driver is speed and simplification because the only way to serve our customers better and compete in a complex world is by working faster and smarter. The last productivity driver, and related to the other three, is the evolution of advanced manufacturing. Manufacturing excellence, forgotten for too long, is once again a competitive advantage.

Drive Value with OpEx

Now when you look at this argument about from where we will get the productivity growth, a problem jumps out.  Namely, we have to generate non-population related productivity gains with a population that isn’t geared to Immelt’s productivity drivers.  Our younger citizens certainly are better aligned and skilled but as population growth slows, they will be the minority.

So guess what — the knowledge of how to improve services, products and processes is really valuable.  Now I’m not talking about how to write a project charter or write up a SIPOC.  I’m talking about revolutionizing energy with process innovation in the extraction of natural gas, the development of the cloud so we can jettison underutilized servers from expensive IT budgets and citizen publishing of information so knowledge flows freely and into every nook and cranny of the population instantaneously.  Imagine – those have all happened in the last five years.  Those are the types of improvements that transform an economy.  But there is plenty of room between a project to save an AP process two days and reinventing the extraction of fossil fuels.  And every time a new industry is targeted, all the operating processes below the top level change will also be looking to improve.

Can you imagine where these big seismic changes will happen next?  How about redesigning education so everyone has access to knowledge inexpensively?  Or health care where we can all see an insanely low level of simple IT tools that if applied would eliminate gobs of waste.  Or all levels of government where we have constantly rising costs with little measureable gains in services.  These trends will continue.  They must continue or we, as a nation, will slowly lose our global relative wealth.  And I just don’t think Americans are ready for that.  But the changes will be disruptive.

In the race to drive wealth through productivity gains, we will see the greatest impact in processes and services simply because they are the largest percentages of the economy.  I’ve already named drilling services, the cloud, newspapers & magazine publishing, health care and education as service companies which either have gone through or are poised to go through significant redesign. What of the process side?

Systematically Driving Value with OpEx

Well I think we are going to see work get reinvented.  My former colleague at Qualtec, Mitch Lawrie, is working on software to focus management on results versus activities and my recent blog on the subject drew significant attention from many of you.  We have worked with several clients in financial services, telecom and transportation which are redesigning long accepted processes to drive greater than 50% reductions in key process cycle times by making them leaner, reducing complexity and capturing information better as well as analyzing it for knowledge.

To return to my original post, my “aha” moment was that I was at a private equity conference where investors of all sizes where lamenting they could no longer make easy money.  That easy money was driven by a combination of capital liquidity, high tolerance for risk and poor quantification of that risk.  It was a recipe for a bubble.  If you bought an asset, held it and sold it before the bubble burst, you made money.  If it was levered, you made a lot of it. The funny thing is that private corporate investors weren’t the only players at the casino. We were all there with real estate and stock portfolios.

But that is gone now.  And as we look into a new environment, we realize we are facing the longer term challenge of slowing population growth and an aging population that isn’t skilled at what is needed to drive the sort of productivity gains needed to maintain historic wealth creation.  To create wealth as a country, we now have to earn it the hard way.  And since there are only so many hours available in the work force, it means we have to work smarter.

And a clearer definition of that “aha” moment brings me to the message in this post.  We figure out ways to work smarter – whether it is a fifth level sub-process or an entire industry.  The result is that we are entering a golden age for people focused and skilled at how to work smarter.   We have the opportunity to make great contributions to our economy.  I urge you all to THINK BIG.  If you’d like to discuss, feel free to contact me.

Let Your Business Define Your Improvement Program

February 7th, 2013 Comments off

Old Six Sigma Training ModelI remember all too well when companies would be told they needed to “be a Six Sigma company” and to do so they had to subscribe to a formula requiring strict percentages of their employee population be trained as Master Black Belts, Black Belts, Green Belts and Yellow Belts.  In addition, the definitions of the knowledge those people required was equally strictly enforced.  Companies were told achieving these goals would make them a Six Sigma company and being a Six Sigma company would make them successful with their customers and shareholders.

Anyone that lived through the last 15 years of evolution in the field of Operational Excellence can recognize the folly of this prescription.  With the benefit of hindsight, it is obvious the program can’t dictate to the business.  And in all honesty, I don’t wish to pick on any singular subject area.  We’ve seen the same sin from many other philosophies and disciplines.  In the excitement generated by a successful new tool or compilation of tools, we tend to pursue the expertise ahead of resolution of our problems.

As we enter a new business cycle, let’s bring all our knowledge together and recalibrate how we choose to apply it by putting the problem or portfolio of problems first.  To avoid having a snazzy tool take over what we do each day, we recommend the following path;

  • Understand where you want to go.
  • Understand where you are…which has two aspects; (i) your level of performance and (ii) your ability to improve performance
  • Let the comparison between where you want to go and where you are currently performing define what you need to accomplish
  • Let the comparison between what you need to accomplish and your ability to improve dictate what new capability you need to acquire.

Download our BPM Overview Presentation

 Our BPM Overview Presentation.

When you are finished outlining the steps above, you will see something quite different than formulaic curriculum and percentages of your population to be trained.  In fact, the solution will not appear simple or fast.  And therefore it will not be as appealing as the aforementioned formula or any other formula from the array of philosophies available in the profession.  The plan that emerges is a function of applying a series of decision rules more than simply measuring the ingredients of a recipe.

But think about the obvious logic of the outcome.  Your business isn’t simple.  If it were, everyone would do it.  If your business isn’t simple, how can a solution to your challenges be simple.  The complexity of the solution will match the complexity of the problem.

Pull-based Capability and TrainingSo how and where do you start?  How do you bring order to the chaos?  The answer lies in the definition of your projects, the identification of their root causes and in grouping them together by root cause so as to build a roadmap forward.  The complexity is in the selection and prioritization of projects. The simplification comes in executing on the projects.

I spoke to an executive at a company yesterday that described the old process as creating angst.   The word itself gives you heartburn.  When I asked him what gave rise to the angst, he responded that the discipline had been forced fit.  What can you say to such powerful words as those?

If those are the feelings the prior model drove, what do we strive for today?  We strive to “PULL” the required knowledge.  We believe anyone pursuing the path above should one day describe it using words such as choice and flexible.  The emotion we hope to see at the end is relief.  That is the new paradigm.

If participants should one day replace the words “Forced Fit” with “Choice” and “Flexibility” and the word “Angst” with “Relief”, what should we see at a business level?  Well, here are some key results that should be witnessed.

  • Faster returns.  While the long path is more complex, the milestones become simpler so measured returns should be faster. The simple formula of ten years ago is monolithic and so the returns can’t be measured for a long time.  In fact, the fallacy of the monolithic argument is partly hidden by the time spectrum as you are asked not to measure for months if not years.   (A key aspect of this is discussed in our recent article “Pay as you Go”).  Armada v. Drake's English fleet.
  • Organizational Traction.  Creating a ladder of success ensures Organizational Traction by producing “wins” and establishing a foundation of knowledge and capability to tackle tougher problems.  So many Performance Improvement strategies talk about resolving the big chronic problems.  But pursuing them right from the beginning is fraught with risk. And pursuing resolution to smaller problems with the tools you need to solve big problems takes too much time and effort which is wasteful for individuals and the organization.
  • Alignment.  If you adopt a Pull strategy, you can’t help but be aligned.  Your business defines your problems which in turn define your program.  As a result, your activities are ensured to be aligned to your business.  Leadership needs to see resources dedicated to the problems they are trying to resolve.  We are all living in an environment where we must do more with less.  There is no room for unaligned activities.  Pursuing a philosophy for its own sake is a luxury no company can afford.

We see this happening every day now.  Listening to the organization and being flexible produces more of the right gains faster than talking to the organization and forcing it to fit a prescription.  Individuals get more involved with something that produces relief instead of creating angst.  Pull is significantly more effective than Push.  Let the business needs and ability define the improvement program.

Contact me if you'd like to discuss this in more detail.

10 Steps to Implement Kaizen in a Service Organization

February 5th, 2013 Comments off

A key aspect of service organizations is the flow of information. In fact, a core process in any financial service organization is that information flow. There are many steps about which we have written on how to implement process improvement in service organizations. One of the most popular articles was “What About Lean in a Services Environment?”.

Lean, with its focus on identifying the Elements of Waste, is a powerful concept in a services organization.  This article is meant to drive down one step further into using Kaizen events to eliminate said waste.    But when it comes time to actually make improvement changes, Kaizen is one of the fastest and cumulatively most impactful activities a service organization can implement.

Download our Lean Quickstart Presentation

 Our Lean Quickstart Powerpoint Presentation

Kaizen (k-eye-Zin), defined by the Japanese as “continuous incremental improvement”, is a fast and furious implementation of continuous improvement activities designed to create radical and sudden changes in business processes. During a week of highly focused activity, a cross-functional, section specific team receives training on specific tools and techniques needed to analyze and improve a process immediately. There are 10 key steps to this process and they are:

1. Training – The key issue is to select a small group of individuals to be trained as mentors who will also be the key person to select the team members.
2. Project Selection – We have written extensively about the need for projects to be aligned. A few of the articles are “Let Your Business Define Your Performance Improvement Program” and “Business Process Management (BPM) = Robust Project Pipelines After the Low Hanging Fruit is Harvested“. But along with alignment, project selections should be cognizant of the impact the project will have on the specific area in which the project is to be conducted a well as any up or downstream effects.
3. Team Selection – The team must start with subject matter experts from the targeted process’ area. But it should also be cross-functional and include process owners, finance & admin personnel, IT personnel and anyone who has pertinent knowledge of the project process. These people should be open minded, willing to challenge the status quo and influential in the organization.
4. Value Stream Mapping – This is a hands-on technique utilizing flow charting and icons to analyze information flow in graphical form. The team will identify and compile all the specific elements necessary to bring a service from inception to delivery. The purpose is to understand the relationship between process steps and identify those areas most in need of improvement.
5. Process Mapping – The process map is more focused on one part of the oeverall process than the value stream map discussed above and provides more detail. When a team builds a process map it allows everyone to agree on the actual steps performed to produce the product or service. It’s a great tool for identifying non-value added process steps and reducing complexity.  This begins the team’s root cause analysis.
6. Developing Baseline Data – You must develop Primary Metrics to improve a process. In fact, it is the development of that Primary Metric that often leads to and is an indication of improvement.
7. Creating Spaghetti Charts – This is a visual diagram depicting the information, personnel, and document movement in a process, department or entire service organization. It is a great first step to eliminating waste in motion and conveyance.
8. Conducting Time Study Analysis – This tool is used to collect and verify cycle time data relative to an operation or process. This provides for careful study of each aspect of the process and continues to contribute to root cause analyis.
9. Developing Continuous Improvement – This is where the team records the changes to be implemented resulting from the analysis of collected data and brainstorming. The purpose is to identify improvements and their implementation.
10. Implementing Appropriate Changes – It seems all that is left is to implement the improvement. But along with implementation, the team should develop Control Plans so 30 to 60 days after implementation one can assess the impact of the process changes.

Download our Learning About Lean Executive Briefour Learning About Lean Executive Brief for a good overview of Lean

Lean in ServicesService organizations are unique in their reliance on people and information. Those two organizational elements are the service companies’ most valuable assets. One might say customer relationships are the most valuable asset but to a great extent, those relationships are entrusted to those people and organizationally captured through information. If you are part of a service organization team and looking to drive improvement FAST, then look at the aforementioned 11 steps to implement Kaizen in a service company.

If you would like to discuss case studies of organizations that have done this, then contact me.

OpEx Value Creation for Private Investors

February 3rd, 2013 Comments off

Last week I attended a conference hosted by the Wharton School of Business for Private Equity and Venture Capital investors.  At the conference, I attended a panel discussion on value creation.  Each of the panelists had a great point of view on how to drive value at private companies.  Private companies in private equity portfolios have unique aspects as they are under the governance of intelligent and demanding owners who have the flexibility to think in terms of either the short term or the long term as the opportunity presents.  And their ability to drive returns that are shared with management allows them to attract the best to pull on the oars with them.

The panel discussed many different means by which they’d driven value in the past. They talked about providing their portfolio companies access to best practices in the recruiting and development of human capital, the implementation of IT systems, the development of strategies to capitalize on market opportunities and, although certainly not desirable, the ability to change leadership when the situation merits.  I thought about these value creation strategies and what we could contribute to the discussion.

Undoubtedly, one of the most amazing accomplishments in our economy since the Great Recession has been corporations’ ability to drive continuous gains in productivity. This has been accomplished in many ways. Certainly, a great deal of the initial gains came by reducing headcount which isn’t the way anyone want to drive productivity.   But there was also the introduction of new technologies and innovation.

But along with all the above, one of the contributing factors has been constant process improvement and redesign.  We have seen and helped in so much of this.  We have a client, a distribution company, with whom we worked that posted 5% annual productivity improvements for five consecutive years.   Another client decreased their expenses by 10% in 18 months before settling into 3% annual gains without resorting to layoffs.  In many different industries, there are examples like this. And nearly all those companies have established OpEx programs as a standard management practice.

Exec Brief on OpEx ROI

Imagine the value created when you are able to reduce your expenses by 5% annually for each of the last five years.  Imagine the muscle tissue that company possesses which can then be applied to new products and/or services or integrating acquisitions.  Imagine the stability and predictability in their execution.   Take a look at my recent post on how strategy starts with operational excellence.  Imagine the strategic alternatives created when you become a low cost provider or can quickly change your production line to produce custom products.

I think what we do can be a tremendous value driver for any ownership. I think the sort of long term capability we drive can be some of the most desirable value a company can establish.    If you have any thoughts on this, please contact me.