When average beats perfect
/A business runs well when many concurrent activities are in simpatico and interdependencies align.
In other words, you're only as good as your weakest link, however much you excel elsewhere.
Back when I was at school, I took a course in Operations Research. I don't recall whether it was an option but I doubt it - I hated the subject. Lots of those complex, multi-line formulae that we now have smartphones to solve. As I walked out of the exam, I shared my one takeaway with a friend - a business is a system that is only as good as it's weakest link. 5 average-quality steps will beat 4 excellent steps with one lousy bottleneck. Like the hare and the tortoise.
I've had many opportunities to test that idea in the years since. It still holds true.
When we implement business computer systems, we try to systematize the business. We take complex, varied problems, simplify what we can, then write code to enable people to conduct their work faster. This forces us to look at the sequence of steps a business goes through to process its transactions. Find a prospect, close a deal, build the product, deliver to the customer, then provide the service required to keep them happy.
Everything hums if those processes run seamlessly, information flows freely between the teams, and no step delays the next.
If we have one area of excellence, it's wasted if other areas are poor. If we sell a ton of product but can't deliver as expected, the customer is disappointed and we can't recognize revenue. If we could churn out product immediately but don't have enough orders on the books, part of our organization lies idle waiting for work.
Centres of excellence are a nice idea, but we'll build a much better business by raising the average until everything is good enough.
HOW GOOD IS YOUR AVERAGE?
Take a look at your operation:
List the 5-10 steps in the sequence that you follow to deliver value to a customer, starting with finding the sales lead.
Grade your business's performance against each step, 1 is poor, 5 is best.
What's your overall score? If it's over 20, you must be happy with the business - how will you get better? If it's under 10, there's work to do.
Which areas should you be improving first? If you have one or two 5s and the rest are under 3, can you move resources around to raise the average?
I've done this exercise with several hundred businesses. Send your results to me at graham@primeFusion.ca and I'll give you a benchmark.
If you missed these related articles, take a look now:
Production Lines and the Bottleneck Effect
Let Information Flow
Feel Your Pulse
When Better Beats Best