That was one of the key roundtable topics during the last Business Transformation conference week in Amsterdam. As employees in an organization, we often struggle to work really hard and quick to give all the facts to our upper level for decision-making. The decision process is often too drawn out, and worse: transforming these decisions into actions takes even longer.
So what are the three key factors in a successful organization to be agile and move fast in the right direction?
Key Factor #1 to make better decisions faster: build a common PURPOSE
Function-based organization with multiple layers are slowing down the decision process.
This is simple: if our organization is split into separate departments (e.g. finance, HR, operations, supply chain, procurement etc.), and each department has a different manager, it is hard to make quick decisions as it can involve a lot of stakeholders, and each might have different opinions, different priorities or even worse contradictory objectives.
- Example 1 of typical contradictory objectives:
A service level KPI (Key Performance Indicator) must be directly correlated to the financially desired stock level KPI. These objectives must be defined by the financial department, the supply chain department, and sales & marketing to avoid any conflict of interest.
- Example 2 of typical contradictory objectives:
The OEE (Overall Equipment Effectiveness) objective reflects a machine or line performance. This KPI must be correlated with the suitable product stock level. The supply chain department will tend to reduce the batch size to have lower product days-on-hand while the operations will like to have higher batch sizes to limit the number of changeovers on the line (easier work, higher productivity, higher chance to be produced on time).
In consequence, decision-making which is department driven and often conflicting with other departments is slowing down the process and limiting the business agility. In addition, the decision-making process is slowing down when the number of layers in the organization is adding up. What about our customers’ needs?
Your organization must be business-based and NOT function-based.
Start with your customers’ needs and build an organization that gives them value. Each of us interacts up and down streams to bring value to our customer: you create Business Value Streams. Each business value stream has a representative of the key departments and interacts as one team led by a common executive. Common examples are that each business value stream has an HR Business Partner (I love this wording as it does describe the purpose of the function well: a partnership), a quality specialist (related to the specificity of the customers’ needs), a dedicated Supply Chain analyst and planner for the business value stream, etc.
As the organization is business based, we act as one team to satisfy the customers’ needs
Define one clear vision, mission, set of values and SMART objectives
In most businesses, I hear that we want to “enable growth and increase our margin”. Who doesn’t? The question is more what is specific to YOUR business to make it happen?
Knowing that you don’t have infinite resources, define your business vision, mission, set of values and your TOP 3 tangible objectives that will help you to play the “Infinite Game” (as Simon Sinek describes it) to give a higher purpose to your value stream:
Define the WHY, WHAT and HOW is quite difficult for most organizations, as it is often too vague or too large a topic as we want to cover EVERYTHING. As soon as you have SMART objectives (Specific, Measurable, Achievable, Realistic, Time based) and everyone, yes EVERYONE in your Value stream, understands them, their engagement for a higher PURPOSE and this CLARITY will help them to make decisions.
You and your team are now focused, you know what to do, how to do it and why you would like to achieve it … most importantly you are engaged to do so, because it has a higher purpose!
Typical tools that are used are “Policy Deployment”, “Hoshin Kanri” (方針管理, Plan-Management in Japanese) or “OGSM (Objectives Goals Strategies & Measures)”. Using these helps you to prioritize and decrease your number of initiatives significantly. To support you in this process, the Operational Excellence practitioner will lead the necessary workshops in a simple and engaging way.
I Love OPEX – Operational Excellence is a passion
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