“Operational Effectiveness refers to any number of practices that allow an organization to better utilize its inputs by, for example, reducing defects in products or developing better products faster” – Michael E Porter.
There are many factors involved in the Operational Effectiveness in today’s dynamic, hyper competitive, and often debt strangled workplace. A few of the critical factors are as follow:
1. Management Style:
There is a significant correlation between the management style and the performance of the workers. Every manager, while dealing with his/her employees sets an example – ‘Monkey see Monkey do’. This factor is even more critical for highly customer centered organizations. Furthermore, unethical business practices will cost a business a lot in the long run and there are many real-life examples of this. Thus, it is the management’s responsibility to be an ethical role model to promote good work ethics in the workplace. Management should also, treat employees well through fair pay, benefit programs, profit sharing, and public recognition is likely to create a motivated and a cooperative workforce causing increased operational effectiveness.
2. Open Communication:
The more open and clear the communication, the better the workforce’s level of understanding will be. Harmony can only be achieved with a team effort. People are more willing to collaborate once they learn how their roles fit “big picture,” and can recognize and measure the interdependence of activities in all parts of a process. To encourage this behavior, people should be recognized and rewarded not only for personal achievements but also for understanding the big picture and collaborating with others for the organization’s overall success. Good communication clarifies the standards of each system and sub-system, and the roles of the entire team within them, which generates an open system with well defined objectives to increase Operational Effectiveness.
3. Innovative Culture:
Innovative culture is not just important, it is vital for any organization to succeed in today’s extremely competitive environment. Disruptions in technology, market needs and wants, the product cost/service delivery model, and world economic trends force workplaces to either reinvent themselves to succeed or die away. Workplaces that are capable of responding to the most sizable external threats or opportunities in an efficient way always have an edge over the competition. Many businesses have successfully implemented innovative culture and satisfying their clients and increasing value for their shareholders by staying ahead of the competition. Depending on the type of workplace, innovative culture can lead to improved Operational Effectiveness resulting valuable benefits which include Radically Improved Products/Services, Increased Revenues, and/or Reduced Costs.
4. Agile Processes:
Mastering processes is essential. Processes should not be confined to a specific functional area. Rather, processes should be analyzed and designed based on the overall business model (i.e. process within functional silos versus cross-functional boundaries). Process can be the engine of success in driving operational effectiveness but also in designing new products and services, measuring performance, improving efficiency and customer satisfaction. Businesses should also integrate parameters that enable a plug-and-play experience from the moment of change. This happens through clear but flexible processes, which result in a lower total cost each time a change is required. Set the process right and the system will work correctly. Processes must be nimble enough to adapt when the customer needs change.
5. Business Foresight:
Business Foresight can be the trump card in managing the operational cost, especially when it involves huge investments, organizations and their brand values, and the survival of the entire business. It’s critical for organizations to predict market and environmental changes, and to adapt to these changes rapidly, efficiently, and effectively. Sometimes, depending upon the market conditions more budget is allocated for Human Resources; while other times, more allocated for technologies, equipments, or other resources. Check out https://loans-n-loans.com/ for information on how you can finance your budget.
As a result, Business Foresight is not only an important constituent of Operational Effectiveness programs that help organizations survive in a changing environment, but it also enables organizations to stay alert to the next change or the next transformation. Henry Ford famously said, “If I had asked people what they wanted, they would have said faster horses.” His point was that you need to understand your customer better than they understand themselves. While other businesses talked to their customers about horses, Ford skipped a few steps and said, “People want to get more work done and horses ain’t gonna do it.” These customers demanded faster horses and had no interest in these “car” things, but obviously Ford understood their actual needs and envisioned a better solution that his customers hadn’t imagined.
6. Learning to Adopt:
There is a famous quote of Charles Darwin “It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.” Disruptions in technology, market needs and wants, the product cost/service delivery model, and world economic trends force businesses to both be responsive and adapt to disruption or die away. Certainly, the world is changing and so are the ways to face the challenges. Many organizations try to look back and sort out the solution to many problems that have occurred in the past; however, this approach can distract from the optimal response. (A “post-mortem” review of tactics can be an effective tool to optimize operations so long as the timing and prioritization are managed effectively against the opportunity cost of conducting said reviews.) In an ideal workplace, there exist various training programs for the employees to be more responsive and improve the level of Operational Effectiveness. Regardless, well planned training programs can certainly lead to reduced defects, eliminate wastage, and increased moral in workers, resulting in improved Operational Effectiveness. The professional trainers along with Business and Technology Consultants could be hired to collaborate with the employees and develop their skills relative to work assignments.
Please comment below and share any other critical factors that you can think of.
I am grateful to Ken O’Brien and Waseem Nisar for their valuable feedback in completing this article.