Value-Directed™ Operational Excellence

Value-Directed™ Operational Excellence
Abstract:
Value creation is a two part process, which involves 1) Formulating a shared
vision and an aligned strategy creating “A Game Worth Playing;” and 2)
Executing with Operational Excellence effectively and efficiently. When these
components work together synergistically, your company’s system can achieve
300% to 600% improvement in value over companies with ineffective system
designs and implementations. This is what we mean by Value-Directed™
Operational Excellence.
512-213-2008 (Office Phone)
512-293-3275 (Mobile)
512-327-9977 (Fax)
Denary LLC
4611 Bee Cave Road, Suite 108
Austin, TX 78746
www.Denary.com
[email protected]
© 2014 Denary, Inc. All rights reserved. Securities offered through Independent Investment Bankers Corp. a broker-dealer, Member FINRA / SIPC
Office supervised by: IIB, 2900 N. Quinlan Park Rd., Suite 240, Austin, TX 78732 | Phone: 512-266-9701
Denary is not affiliated with Independent Investment Bankers Corp.
Value-Directed™ Operational Excellence
Introduction
Value creation is a two part process:
•
Formulating a Shared Vision and an Aligned Strategy creating “A Game Worth Playing.”
•
Executing with Operational Excellence effectively and efficiently.
When these components work together synergistically, your company’s system can achieve
300% to 600% improvement in value over companies with ineffective system designs and
implementations. This is what we mean by Value-Directed™ Operational Excellence.
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The Context for Action
“Operational Excellence” is a meaningless and un-measurable concept without a specific
context for action. This means the company must have and fully communicate:
•
A clear Shared Vision of what you want to become
•
Specific Strategic Outcomes desired
•
A Strategy to bring forth the Vision
•
An explicit Brand Promise and Values
This clearly thought-out context for action gives your firm and your team the ability to set the
quantitative and qualitative goals, which your company can and must achieve to create a
valuable, sustainable company. It sets the context for the capabilities and processes required to
achieve those goals.
Let’s Look at Systems through a Simple yet Powerful Lens
“Organization” is shorthand for people cooperating, collaborating and coordinating action
through the organizational processes they design to achieve shared outcomes. How they do
this is the de-facto system design. Therefore, this system design only changes when people and
their processes change. The Process Cycle Model below represents this simple yet powerful
concept:
Every desired outcome starts with and lives within this Process Cycle Model. Whereas your
Value-Directed™ Strategy dictates the desired organizational outcomes, the actual results issue
from the organizational capability that designed and drives your processes. If the results are
not moving toward the desired outcomes, you have to change the capabilities or the
processes or both.
All organizational results derive from individuals or teams that drive processes. While some
companies systematically design and document their processes, other companies allow their
processes to evolve haphazardly. Instead of documentation driving the processes, the “tribal
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knowledge” of the team drives them. How a company manages its processes has a huge
impact on its results, its value and its ability to exist long-term.
Undocumented processes often have a variety of problems and things that breakdown. If the
“As-Is” is not documented, it’s almost impossible to systematically identify gaps, friction,
irrationality, inefficiency, unnecessary delays, redundancy, and opportunities for error. This is
due to the fact that:
•
Undocumented processes cannot be measured
•
Unmeasured processes cannot be managed
•
Unmanaged processes cannot be improved
If processes are properly documented, the company can develop very efficient “Should-Be”
processes that ensure the Brand Promise is achieved consistently and with a minimum use of
resources. Having a good documented process takes much of the emotional finger pointing out
of fixing problems when things go do wrong.
Improving on results requires the design or redesign of the value creation processes, and, when
necessary, the supporting processes and capabilities. The following metrics measure the
effectiveness of these new or improved processes:
•
Strategic alignment with the companies goals
•
Reliably fulfilling your brand promise and producing high levels of customer satisfaction
•
Minimized waste and efficient utilization of assets
•
Shortened cycle times
•
Limiting variance and defects
•
High levels of employee satisfaction
•
And, most importantly, peerless profit margins
How does your company stack up against these metrics? If your answer is “subpar,” the time for
bold action has arrived. You must redesign your operations for a performance breakthrough.
Waiting too long to address cash flow pressures, lost market share, high turnover, rising cost
structures and a flagging reputation can have fatal consequences. In your given industry, are
you best-in-class in the following areas?
•
Revenue growth rates and profitability
•
Customer satisfaction
•
Market share
•
Employee satisfaction
•
On-time shipments
•
Quality standards
Deficiencies in these factors can prevent you from making the investments you need to make to
remain competitive, and can cause to lose customers/market share.
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If sustained corrective action eludes you, then it is time to take a deep look into the capabilities
and processes that are creating these breakdowns. There is no easy fix, but there is a systemic
approach that can guide you to the top of your class by increasing your operational maturity.
What Is Your Level of Operational Excellence?
If you like, you may gage your current situation by completing the Operational Maturity
Assessment in Appendix A. The assessment contains seventeen evaluation factors and a fivestep scale. Companies that operate at higher operational maturity levels tend toward the bestin-class metrics in their industry with an emphasis on profitability.
In this example, there is a 224% difference in profitability between the Median and the Best-inClass performers. Companies operating in the bottom quartile suffer loses
The Denary Operational Excellence Process: An Approach That Works
This process begins when the executive team declares its performance goals and agrees on a
strategy to realize these. Once this declaration is in place, the wholesale invention or partial
redesign of operations goes into motion, moving through this six-step framework:
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Over the course of the typically two-to-three-month lifecycle of this six-step process, we work
closely with you to ensure your team overcomes inefficiency and embodies the skills necessary to
continuously improve the process. (For more information on each of the steps outlined above,
download the “The Process of Improving Operational Excellence”)
A Word about People and Teams
Everything in business happens between people. Engagement, creativity, innovation, setting
strategic direction, problem solving and decision making only happen as a result of
“conversations”. Unfortunately, bad things also happen between people when conversations go
wrong. Examples are negative characterization, inability to collaborate and breakdowns in trust..
These conversations form a critical part of what some people call company culture, and others
call teamwork or the “rules of engagement” within a company. These conversations form a
critical part of what some people call company culture, and others call teamwork or the “rules of
engagement” within a company. Every successful CEO knows this is the “soft stuff” that all of
the “hard stuff” is built from. Conversational competency is a core business skill that can be
systematically taught and internalized by individuals and organizations. Without this
competence, it’s almost impossible to have a happy, engaged team; likewise, tensions will
frequently occur simply because people coming together from different traditions and
experiences will not understand how to talk to each other or hear what the other person is
actually saying.
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We believe operational excellence begins and ends with dialogue. Without ongoing authentic
conversations, breakthroughs will always remain out of reach. We employ an array of tested
techniques and perspectives to teach teams the conversational competency at the heart of
dynamic change.
We view an organization as a network of conversations and educate teams to appreciate the
language-action relationship. We help our clients:
•
Create an action-focused, commitment-based organization
•
Improve team collaboration, build relationships and trust, innovate, align, and manage
the commitments necessary for breakthrough results
•
Achieve desired end results despite inevitable breakdowns
Our proprietary approach unleashes executives’ innovative creativity and teaches them to
embed methods for breakthrough change in their companies’ standard operating procedure.
Under our guidance, professionals master the art of authentic dialogue and reap the benefits
that issue from this.
In Conclusion
Companies that achieve Operational Excellence in service of their Value-Directed™ Shared
Vision and Strategy can move their company into the top valuation quartile in their industry in a
relatively short period of time.
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Appendix A
512-213-2008 (Office Phone)
512-293-3275 (Mobile)
512-327-9977 (Fax)
Denary LLC
4611 Bee Cave Road, Suite 108
Austin, TX 78746
www.Denary.com
[email protected]
© 2014 Denary, Inc. All rights reserved. Securities offered through Independent Investment Bankers Corp. a broker-dealer, Member FINRA / SIPC
Office supervised by: IIB, 2900 N. Quinlan Park Rd., Suite 240, Austin, TX 78732 | Phone: 512-266-9701
Denary is not affiliated with Independent Investment Bankers Corp.
©Denary LLC – All Rights Reserved
Page 9 of 10
©Denary LLC – All Rights Reserved
Page 10 of 10