Inflation. Supply chain woes. Gasoline prices. Talent shortages. The R-word That Must Not Be Named (shhh, you’ll make it happen!).
Vistage expert speaker Xavier Douwes suggests there’s a way to beat all this: “Operations is really the non-sexy secret to success in every business.”
Here are some take-aways from Xavier’s Six Sigma world which can help you to get even more traction with your strategy:
Define success.
This is as seen in the eyes of the customer, not anyone else. It’s important to get really specific here. We might have to dig deeper with our customers, and when we do, we usually find that it’s really only one or two things that top their lists because those drive everything else.
Then we have to measure that success. In my experience most companies are at the extreme ends of a KPI spectrum: some companies measure some basic things that aren’t really dialed in to what’s important, while others have so many metrics that they’re not helpful.
How do we decide what to measure?
Manage inputs, report outputs.
First, remember the GI-GO rule: Garbage in, garbage out. Get crystal clear on which inputs directly drive which outputs.
Second, anything can be measured, even those soft, squishy things which you’ve convinced yourself defy measurement. Outputs are reactive (they’ve already happened) so our focus should be on inputs, because they’re actually predictive of the outputs.
Third, there are inputs which we don’t have much control over (supply chain, anyone?). However, once you take a hard look at all the inputs contributing to your outputs (usual one output has at least three inputs), there’s good news: If you get really good at managing what you can control, they will make what you can’t control irrelevant.
Know your Vital Few.
This is as compared to the Trivial Many. The success that you defined earlier only comes from mastering the short list of the things that truly matter.
Our ol’ buddy Wilf Pareto reminds us to stick to 80/20 thinking: 80 percent of our outputs are driven by 20 percent of the inputs.
A great way to converge on what’s truly vital is to ask these questions:
– What needs to be true or in place in order for the outputs we want to happen?
– What inputs require care and feeding from us to yield the outputs we want?
– What would it take for us to lose our best or ideal customers?
Focus on and measure those few things, both inputs and outputs. Fun homework: Watch/Re-watch the movie “Moneyball,” it hammers this point home pretty well.
Kill variation.
Variation is natural. It happens all around us and it’s normal. However, in business it’s the enemy and we must kill it.
This is not to say that we can’t customize our offerings based on customers’ needs. Your drink of choice from Starbucks is infinitely customizable, but if you’ve ever taken a peek behind the barista counter, you know that they’re measuring everything out to your specifications – precisely, and to the now-standard recipe which you created from the app on your phone.
To kill variation first we must measure it. How do you measure the variation of your steps and processes? Many companies use averages. Never measure averages, because they lie. They’re not giving you an accurate picture of reality.
We’ll skip a detailed explanation of statistics and bell curves and standard deviations here; suffice it to say that the variations in your processes are eating your lunch more than you know, and averages don’t tell the real story. More useful is range (minimum and maximum, compared to what’s ideal).
Relentlessly pursue standard work.
Standard work kills variation. It’s exactly how your customized drink from Starbucks tastes the same no matter which Starbucks you go to. The barista is just following a standard work process (a recipe) just for you.
For work to be standard it must first be defined at a high level and then followed by everyone. This is done through uncomplicated written procedures, documented processes with flow chart diagrams, and checklists. Think checklists and bullets, not 100-page manuals.
More homework: Check out the book The Checklist Manifesto, by Atul Gawande.
Eliminate losses.
Errors, defects, and re-work due to variations in our processes are multiplicative, not additive. And when you bake that into an analysis of the how the variations at each step of a process affect the final output to the customer, a fascinating story emerges from the data.
Losses always have more power than gains. Not getting it right the first time has way more cost in it than you think.
The simple math reveals that if we can reduce the number of variations at each step of a process by half, we can actually double the profitability at the end of that process.
Whoa! With some measurement, some math, and having everyone on your team take a fierce and collaborative look at their work with a “my-outputs-are-your-inputs” mindset, there’s no tellin’ how much serious coin you’ll find under the proverbial cushions of your business.