Efficiency vs effectiveness
“Efficiency is doing things right. Effectiveness is doing the right things.” That’s Peter Drucker’s quote demystifying the efficiency vs effectiveness dilemma.
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CHECK MY NEW COACHING PROGRAM: THE ROAD FROM OVERWHELMED TO ORGANISED
Process improvement and happy customers
At the beginning of its existence, any business is LEAN. Our products are services are flawless, we carry out work efficiently, deliveries are just on time, and there is high employee engagement. We make fast decisions, take care of events and have happy customers. There is little concern with process improvement as things run smoothly.
The complication comes with growth. We start segmenting markets, hiring more people, adding more software to run the business, and growing our supply chains. We face the need to structure the organization, bring in place processes and procedures, and implement KPIs and career paths for our teams. Moreover, decision-making slows down when you involve more managers and consider more variables. Unfortunately, we somehow evolve from being small and agile to becoming big and chaotic. We might still be profitable, but we are less productive, efficient and just on time.
At this pivoting point, when customers are unhappy, and businesses face the need to improve processes, some managers fall shortsighted. Instead of turning to the customer for feedback to improve, most focus on personal opinions, experiences and the trend turn. Quick automation, outsourcing FTEs, a different income stream, low marketing and customer service investment become the firefighting solutions.
All those actions will, without a doubt, bring gains. However, they will not necessarily improve your customer service. Besides, when you implement focal remedies, you get local solutions. As soon as you fire-fix one thing, another becomes even more urgent than the one you solved. And you end up spending more money on process improvement without fully recovering from the initial investment.
The customer point of view
The customer will tell you what exactly they expect from you, what they value in you and what they dislike about you. Then, with that information, you turn to your processes and follow the thread to uncover root causes for problems or opportunities to improve, change, evolve and ultimately be successful.
Businesses always have the temptation to reject this analytical strategy because it requires investing time and establishing clear priorities. But it is the right way to approach transformation and avoid overspending.
So, start by surveying your market and analysing your processes. The best tool for it is Value-stream mapping. We use the VSM to identify where we generate non-value-added activities that cause delays, defects, and customer complaints. Those non-value-added activities are usually called ‘waste’, and business improvement or process streamlining, and automation would reduce this waste and increase productivity.
The key is to start drawing one process from the customer’s standpoint backwards to the first step. You are putting yourself in the customer’s shoes and looking at your value generation from another, more objective point of view. Once you’ve drawn the flow, identify at which points of the process flow there are problems; look for the root cause.
What is ‘waste’ in processes?
You do that by examining 7 areas of WASTE. They summarise the type of activities that add NO value to your product or service. On the contrary, these events increase your spending and are the root cause of poor quality, low performance, high costs, and customer complaints. So when you aim to improve your business and draw your processes, focus on eliminating or reducing these non-value adding activities.
- Transportation
- Inventory
- Motion
- Waiting
- Overproduction
- Overprocessing
- Defects
Learn to see
Map your processes and information flows, and discover where the waste originated and why. Focus on significant pains. Address those, eliminate or reduce activities that do not add value, cause extra expense or create defects.
Many solutions can make your business leaner, agile, customer-centred, and profitable. They vary from simple Roles and Responsibilities to End-to-end process automation. Implement wisely according to what your customers expect from you.
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