Are Management Issues Restraining Profit Improvement Initiatives?

One of the most frequent questions that we are asked by senior management is: What can I do as a company leader to significantly improving the company’s process & project productivity?”  

To answer that question, we begin by looking at some of the management issues that may be restraining the company from effectively identifying, implementing, replicating and maintaining profit improvement initiatives.

The five key issues for many companies that lead to ineffective application of profit improvement initiatives include:

1.    Lack of clarity or consistency in division or company direction: In short, a lack of understanding of the goal and the approach to get their results in inefficiencies. Symptoms of this include:

a.    Operations, sales, and marketing have different independent plans with  no mechanism to reconcile differences;

b.    Various company plans between units are not coordinated, so efforts are expended in areas with no impact on increasing company value; and

c.    Long-range plans are not disseminated to the organization, which will continue to work on a short-term, cost-based agenda

2.    Suboptimal measurements are used to manage the business. The result of this is:

a.    You get what you measure,” so standards are met while measures like Operating Asset Effectiveness and Competition performance languishes;

b.    Measurements focus on standards; and

c.    Measurements focus on symptoms rather than root causes

3.    Unable to replicate or sustain improvements. In a number of cases, companies have made some changes and have found they could not be replicated or sustained. This has resulted in management frustration. The causes of this have included:

a.    Improvements perceived as being inflicted on operations;

b.     “Not invented here” restricts dissemination of ideas;

c.    Addressing symptoms rather than causes leads to narrow “solutions” which cannot be replicated in other companies; and

d.    Limited or impenetrable documentation frustrates ability to communicate between departments

4.    Lack of focus: A significant problem in many companies has been a lack of focus of the skilled resources to the specific problems at hand.

a.    Key resources have been spread over numerous projects, until key players do no work on an infinite number of projects; in a number of cases we see few, if any, full-time teams;

b.    Many teams lack rigorous methodologies necessary to address issues and improve success rate; and

c.    Many teams not chartered with clear focus, finite duration, and measurable targets.

5.    Failure to address root causes at the department/unit level. This is a significant problem in many companies. The goal is to correct the symptom rather than take the extra time to find the root cause and correct the problem. The reasons for this include:

a.    Many organizations are good at responding to emergencies;

b.    Personnel are rewarded for excellence in emergency response;

c.    People tend to chase symptoms to obtain quick results; and

d.    There is lack of time and motivation to drive down to root causes.

We have found that these five areas are extremely important in identifying, implementing, replicating, and maintaining process & project productivity improvement initiatives. 

We would be happy to discuss this topic further or answer any questions about our approach to improving profit improvement initiatives or other profit improvement areas. Please feel free to contact us.

Joe Bonocore

jbonocore@bonocore.com