Given the turbulent economic conditions affecting many parts of the world, business leaders have to take a hard look at how they run their businesses.
Reducing operating costs and cutting unnecessary expenses, while improving the bottom line, are obvious strategies.
Using cheaper substitutes instead of premium-grade raw materials or reducing head count may not be good solutions.
The right way to improve an organisation’s bottom line is through culture change.
Every organisation has its unique culture. A positive and forward-looking organisational culture can be a major source of strength for a company.
Conversely, an organisation with weak links between management and employees fails easily in a demanding environment.
Leaders must be aware that implementing a major change in business strategy affects the culture of the organisation. They need to advocate a clear strategic vision to the entire organisation.
Leaders must walk the talk to demonstrate their commitment and garner support for the changes introduced.
Implementing culture change can take place on various fronts.
For example, employees may need to change the way they think and the way they work. By staying focused at work, they will make fewer or no mistakes and reduce the amount of time needed to complete given tasks.
There are many Lean Productivity tools that help drive culture change in an organisation.
“Lean” is a production practice that considers spending resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination.
One common tool is the 5S, which stands for:
Sort (remove what is unwanted);
Store (keep tools in appropriate locations);
Shine (keep the workplace clean and tidy);
Standardise (maintain the same standard throughout the workplace); and
Sustain (keep this new habit).
This may seem easy to implement, and if implemented correctly, it will improve productivity tremendously.
However, not many organisations are able to get it right. This is because there is no true culture change.
True culture change occurs when everyone gets out of his comfort zone and moves into the growth zone.
Through “lean” thinking and some creativity, you will be able to increase your company’s output optimally.
If you look around, you will notice many ways that you can reduce time or cost while still meeting customers’ demands.
For example, a restaurant came up with an automated way to fry food. Innovative ideas like this in the kitchen sped up the chef’s work and also saved money for the company by reducing the number of kitchen helpers required.
Leaders must be quick to spot an issue confronting their organisation.
For example, a popular doughnut shop took too long to serve its customers at the checkout counter.
This is because management required the cashier to track the quantity of each type of doughnut sold by entering a code at the point of sale.
This was done to gauge best-selling flavours, and calculate the quantity of ingredients required to meet demands. Even deploying more staff did not help to alleviate the problem during peak periods.
A better way would have been to track the quantity at another point in the process, rather than at the checkout counter, where it caused long queues.
Wrong accounting methods can inadvertently result in negative impressions among customers and loss of sales.
Remove non-value-added steps
Lean Productivity methods can be used in the office environment too to weed out steps that do not add value to the customer.
These are known as non-value-added steps and can be further divided into “pure waste”, which should be eliminated, and “required waste”, such as keeping records for audit purposes, which can be minimised.
To get this right, management must understand which processes are critical and which can be removed or minimised.
This will leave more time for “value add” activities, which are sometimes known as the “3Cs”:
• Customer care;
• Change in format or form; and
• Correct the first time.
Customers want their orders processed, turned into delivery and, importantly, have their requests done right the first time, with no rework or defects.
Improving the 3Cs will reduce the numbers of customers’ queries, cut expediting costs and rework and reduce inventory space, which will eventually save the company thousands of dollars and increase customer satisfaction.
When looking for better ways to run a business, a culture change needs to take place first.
An organisation’s senior managers must change their mindset to lead and support the strategic changes required.
They must have a good grasp of the processes involved to understand where the company can reduce waste and improve operational flow, leading to a boost in sales.
Not only must the organisation’s managers lead the change, they must also apply continuous improvements to the new culture.
Only then will the entire organisation break the shackles of its old self and build up an edge over its competitors.