By True North Learning Director and Senior Facilitator: Errol Amerasekera
Operational Excellence means that organisations have the capability to deliver a particular project or task to the required specifications and standards, on time and on budget. Whether or not an organisation achieves operational excellence by meeting its KPI’s is important. However, what is more important is how an organisation approaches the challenge of moving towards operational excellence. So, in building a healthier organisation, the old business adage of the process being more important than the outcome, is definitely true. In this case, the how relates primarily to the efficiency by which an organisation achieves a particular set of results.
Efficiency can be defined as the amount of resources that a business consumes to produce a particular outcome relative to the benefit of that outcome. In an organisational context, there are three key categories of resources — money, time and people. Obviously, these three categories of resources have significant overlap. The more staff on a particular project, the more money it costs the business in wages, but hopefully, the less time it takes. While all three resource categories are important, I believe the most valuable one is time. This is because if money is misspent or lost, it can be made again. Staff members can leave their roles and be replaced, and staff that have a reduced motivation or disengage from a particular task can be re-engaged. Therefore, as important as money and staff are in terms of the resources a business has access to, they can be considered renewable resources. In contrast, time is a non-renewable resource. Once time is spent, that minute, that hour, that day cannot be renewed or recreated. Unfortunately, there are no Mulligans (a golf term used when the golfer is given a second chance to play their shot) or Groundhog days (in reference to the cult movie with Bill Murray) for spent time. Thus, the efficiency at which organisations use their time is probably the most important ingredient in delivering operational excellence and therby showing how healthy that organisation is.
The True North Learning Organisational Health model is designed to do one thing — increase the efficiency which an organisation utilises its resources — time, money and staff, but especially time.
For example, we have worked with clients at their strategic planning days where a list of ten actionable items has been developed; each one of which has the potential to improve the business and its effectiveness in some aspect. Three months later, only a small minority, if any, of these strategies have been actioned in accordance with the implementation plan formulated at the strategic planning meeting. Hence, the one day those eight senior managers took and the associated resources have been effectively wasted. If we do the sums, 8 managers on an eight hour strategic planning day, the cost of transport, venue hire, catering, etc, probably thousands of dollars all for just about zero return. Those managers may well have taken that time and money and gone to the pub — at least they would have had a good time. The return on investment of those resources would effectively have been the same. I know this sounds a bit harsh, and I do admit that I am being a little tongue in cheek in order to make a point. Most of us have been in teams or worked in organisations where creative and talented minds come up with amazing strategies, but because of a lack of capacity somewhere in the organisational system, these strategies never come to fruition. Therefore, the strategies do not provide a benefit to the organisation (or a return on investment on the resources that it took to create them). In fact, one could argue that not only does this have a minimal return on investment, but it actually also has a negative impact on organisational effectiveness. This is because when senior managers invest their time, ideas, passion and experience into developing a strategic plan only to repeatedly experience those items not coming to fruition, it builds the degree of hopelessness and cynicism in the effectiveness of their organisation. This then affects the extent to which those managers are prepared to invest themselves at future strategic planning days.