There are many organizations with
very impressive strategy and efficient operations management, yet not performing to the expectations
of stakeholders. Top management reviews its strategy and re-confirms
the same and Operations team reviews its KPIs minutely and finds nothing wrong.
The GAP still persists and the organizations’ struggles to
continue.
Wonder Why? Is it the VUCA
effect or the Dynamism of the external environment or is it lack of Response
from the organization?
The answers are not easy to find,
but here is one of the perspective.
While it’s easy to define an organization
in 2 Dimensions of Strategy and Operations, there exists a THIRD dimension,
this third dimension is the link between Strategy and Operations and it’s also
a link that brings the DREAMS / GOALS set in the strategic management come true
via effective implementation of Operations Management.
This Third Dimension is known by many names, Continuous Improvement Management and Operations Excellence are
the most common names.
Organization is like a FLUID body
consisting of 3 concentric circles as shown in the picture below. Each of the
circles has ability to contract and expand, in turn creating the pressure on
its immediate next circle. So, if the strategy has to change and contract, it
creates pressure on the middle circle, which in turn creates pressure on the
operations management. You can call this as an alignment of forces.
Now imagine if the Improvement
Management circle didn’t exist and Strategy has to change and expand, what will
happen? It will expand creating a vacuum or disconnect between Strategy and
Operations. How does this vacuum gets filled in? How does the external forces
acting on the organization get effectively transmitted to the operations management?
This is typically a situation when opportunities exist but the execution is
lagging behind and organization is not able to grow.
One can also imagine the
situations other way... if Strategy was to change and contract and if the
Operations Excellence circle didn’t exist, how will it impact the Operations
management? This is a typical case of “Difficult
economy” and one finds that the organization is struggling with “Cost” issues.
Operations do represent “Cost” and the circle becomes bigger than the “Strategy”
or “Revenue”.
Existence of an Operations
Excellence circle combined with the concept of Fluidity or Agility of the
organization is the crux of the situation.
Why the Organizations don’t
have the Improvement Management Program as part of the structure?
For a long period of time, all
the organizations operated at 2 levels and faced a difficult challenge of integrating
strategy and operations. Few of the organization continue to operate the same
way even today.
One of the reasons is the “Organization
Structure”. While organizations are growing, the focus is on the “growth of top-line”
or on the fear of “not losing the opportunities”. This is a common cause in
growing organizations, where the top line growth is given paramount importance.
Organizations focus on development of “Capacity” and at times miss on
development of “Capabilities”.
Another common reason, it was
long believed that “Strategist” is a different breed than “Operation team” and
no inter-disciplinary movement between these two was possible. “Strategist”
always aimed at the “Corner Office” and came from the “Ivory Tower”, whereas
“Operations” was confined to day to day affairs.
What are the Common Symptoms
and How do you know it’s time to reflect?
The “Cost Growth” starts leading
the “Revenue growth”. Performance measures like Quality and Delivery start getting
affected adversely, inordinate delays in resolutions of problems, recurrence of
problems at regular intervals, increase in working capitals, frequent material
shortages and customer un-happiness starts increasing.
Industry growth is higher than
the organization growth, market share is shrinking.
Don’t just Run… Take Strides… and
Breathe as well…
Growth brings along its own
issues and if not managed well, an organization can get into a vicious circle.
Every growing economy brings such matters to the fore, few organizations
survive and many becomes part of the history, largely because of absence of the
cushioning effect that Operations Excellence brings along with it.
Japanese philosophy didn’t
believe in two-dimension theory, didn’t believe in “Strategist” Vs
“Operations”. Japanese philosophy brought in the concept of fluidity in the
organizations. It taught organizations to be flexible and responsive to the
customers’ needs. “TAKT Time” is the best example. It gets calculated based on
the customer demand and the whole organization has to work to it and not be
constrained by the infrastructure, the machine time, or the labour
productivity.
Which Organizations should
focus on Continuous Improvement Program?
Continuous Improvement Management
is the essence of Japanese philosophy, Operations Excellence is a more
glamorous name of the same. Independent of the name, the concepts that it
brings with it are useful for every organization irrespective of its status in
the life cycle.
For an organization in its early
years, it lays the strong foundation for performance management and developing
the agility to grow and expand profitably. The organization which has passed
the initial stage and growing rapidly tends to have Achilles hill, the
improvement management provides it with an opportunity to overcome these
problems systematically before these problems becomes a systemic problem. For an organization which is in the maturity
stage, it definitely provides enormous opportunities. It helps the organization
to reinvent the vigour, extend the maturity stage.
One of the important learning of
my experience of last 30 years is that it’s vital for an organization to have a
strong “Improvement Management”, for implementing strategy successfully. It’s a
crucial link between an efficient Operations management which operates for
“Today” and “Strategic Management” which operates for “Days after Tomorrow”.
“Learning and Development” a key element of Improvement Management keeps every
organization in its learning mode.
I did mention in my previous
article that china is picking up on Operations Excellence at a rapid speed, and
closer to home in India, many industries which stayed away from it earlier,
like Pharma Industry, are catching up now. In the Indian context, when
organizations are struggling for growth in Top line and stress on Bottom Line,
the importance of Continuous Improvement management can’t be emphasized
enough. The focus will move on to “Sharpening the skills” at all levels. The
opportunities arising from the global factors will demand Indian organizations
to strengthen CONTINUOUS IMPROVEMENT MANAGEMENT at a faster speed to meet its
strategic goals. It offers a gateway to Business transformation and cost
optimization along with the most intangible and everlasting benefit of
“Enriched class of people”
