Home » Operations Management » Study On Operational Readiness, Growth And Profitability

Study On Operational Readiness, Growth And Profitability

September 12, 2023
Bill Kimball

Forecasting and covering these variable costs is easy and offers a security. You know how many widgets you need to sell to receive “X” dollars in revenue. However, when forecasting organizational growth we need to ensure that all of the operational and salaried sales functions we develop get forecast under your fixed costs. You logically understand that to grow the business, you can expect your expenses to increase. The strategic growth of a company is largely dependent on operational efficiency, which includes management of resources and productivity. Managing people, time, and finances are all key elements of optimizing efficiency and productivity that helps your company grow.

  • In the final release, each team member was trained to handle an entire order.
  • There is so much to be done, and so much that must be integrated with everything else, that years can pass before the innovation is implemented and its benefits start to flow.
  • To set the stage for operational innovation in your company, first convince managers that it will work—show them successes at other companies or pockets of innovation in your own business.
  • Other companies have made similar performance gains through operational innovations.

Companies will utilize revenue and earnings growth, on a quarterly or yearly basis, as the performance metrics by which to gauge organic growth. The pursuit of organic sales growth often includes promotions, new product lines, or improved customer service. There are many ways in which a company can increase sales internally in an organization. These strategies typically take the form of optimization, reallocation of resources, and new product offerings. As a business leader, it’s important to look for ways to enhance financial intelligence, improve operational efficiency, and build peace of mind in your business.

Achieve Operational Stability And Growth Through Intelligent Automation

Examples like these will help convince a leader that operational innovation can work. No one holds the title Vice President of Operational Innovation; it is organizationally homeless. Functional line managers are too focused on meeting deadlines to have time for or interest in inventing new ways of doing things.

operational growth

Inventing a new way of operating that achieves the target need not be simply a matter of crossing your fingers and hoping for inspiration. Learn how to become one and the questions you should ask before starting your entrepreneurial journey. GrowthForce accounting services provided through an alliance with SK CPA, PLLC.

Reframing The Value Of Intelligent Automation Investments

Leaders require a clear vision and plan for how any savings will be reinvested back into the business in order to build a case for automating operations that are not customer-facing or revenue-generating. In 1991, Progressive Insurance, an automobile insurer based in Mayfield Village, Ohio, had approximately $1.3 billion in sales. What fashionable strategies did Progressive employ to achieve sevenfold growth in just over a decade?

operational growth

Absent such specific targets, innovation efforts are likely to drift or degenerate into incremental improvement projects. Only a daunting target—clearly unattainable through existing modes of operation—will stimulate radical thinking and willingness to overturn tradition. Once the top executive is convinced that operational innovation is worth pursuing, the organization needs to focus its efforts. Because operational innovation is by nature disruptive, it should be concentrated in those activities with the greatest impact on an enterprise’s strategic goals. How do operational innovation efforts begin if no one is responsible for them and no formal channels for creating programs exist? Most often they start as grassroots movements, fostered by people sprinkled throughout organizations who are passionately committed to finding and exploiting opportunities for operational innovation.

The Role Of Operational Readiness In Growth And Profitability

Another eye-catching story was StockX laying off 12 percent of its workforce. To an extent, automation is already embedded within the systems many organizations use for email, customer relationship management , enterprise resource planning and other critical functions. But as organizations expand their IT environments beyond fixed assets to support mobile devices, wearables and an exponential growth in applications, opportunities to automate increase. There are many reasons why theoretically imitable operational innovations have staying power. Some companies, even when confronted by a competitor’s innovations, will not rush to emulate them.

operational growth

Denial of competitor superiority and a disinclination to truck with operations are powerful forces of nature, and so is organizational inertia. Some competitors who attempt to imitate the innovation won’t understand it, and others won’t be able to implement it. Companies that follow traditional implementation methodologies inevitably take too long.

Perhaps company A is the better investment even though it grew at a much slower rate than company B. Some investors may be willing to take on the additional risk, but others opt for the safer investment.

Optimization of a business focuses on continuing to improve a business’s processes to reduce costs and set appropriate pricing strategies for products or services. TBM Consulting Group conducted a survey of executives and senior operations leaders in global manufacturing organizations with revenues ranging form $100 million to $5 Billion . The purpose was to identify specific issues and challenges experienced by these companies and to better understand how and why Operational Readiness is viewed as a contributor to strategic objectives for growth and profitability. Alstom’s success with lean has become a success benchmark for other companies and industries. In addition to visitors from other divisions of the company, Alstom has hosted visitors from across Europe, including a Grand Prix company and the U.K.’s national rail authority. Moving forward, Alstom continues to use policy deployment to support its growth strategy, including doubling reliability again and extending its customer base by gaining a new maintenance contract outside the Main Line.

The Fit For Growth Index

Today, the company’s annual financial targets and expected actions identified through the catch-ball process are saved directly in Dploy Strategy. This helps ensure that everyone in the organization—from the top down to the bottom up—can track activity and validate performance. The software automatically noti es all division leaders and directors when it’s time to update key performance indicators and action plans in preparation for monthly reviews. It allows all stakeholders to monitor the progress of projects in a bowler chart, prompting managers to take countermeasures when necessary. Let’s be honest, the concept of operational efficiency probably didn’t come up too often in your management team meetings pre-crisis.

Growth And Operational Performance Improvement

Operations is generally seen as an asset to the organization because it tends to consistently deliver annual efficiency gains, meet its objectives and is responsive to changing customer needs and market conditions. This survey identified specific issues and challenges experienced by global manufacturers and helps to better understand how and why Operational Readiness is viewed as a contributor to strategic objectives for growth and profitability. To sustain its momentum, the company has tightened its management system by implementing a standard daily management process. Managers at all levels have visual performance review boards that they review with their direct reports each shift, prompting them to immediately address any issues.

Equally, consider if you still need enterprise scale solutions you selected for growth. It might come as a surprise, but very few operations leaders have a complete understanding of the processes and workflows that their teams carry out every day. With that in mind, here are 3 key factors of a successful operations scale-up that every ops leader should take in account when faced with the challenge of scaling operations in a fast-growing business. Progressive, for instance, realized that the key to its profitable growth is customer retention because acquiring new customers through commission-based agents is very expensive. And the key to customer retention is making sure customers have rewarding interactions with the company.

Deep Change: How Operational Innovation Can Transform Your Company

Maintaining such information in a central location had several other disadvantages. Off-site managers had to travel to Manchester for the review meetings, requiring an entire day away from their operations.

Financial data dominate the discourse in the modern organization, although operational performance is the driver of financial results. Many top managers are ignorant about operations and uninterested in learning more. They’ve ascended to the highest levels of the enterprise without ever getting their hands dirty. They enter the organization through finance, strategy, or marketing and build their reputations on work in these domains. When they move into their first general management role, they rely on others—plant managers, engineers, customer service leaders—to mind the details of the actual work. Their role is one of supervision, resource allocation, and direction—all vital, but all perched precariously on a foundation not grounded in the bedrock of the organization’s real work. Operational innovation has been central to some of the greatest success stories in recent business history, including Wal-Mart, Toyota, and Dell.

Standardize Processes And Kpis

One business school student recently observed to me, “There seems to be a hierarchy in the business world. A journalist at a prominent business magazine, assigned to do a story on operations, confessed that he thought it boring.

It’s your job – as the operations leader – to understand exactly what your people do and how often they do it, if you hope to succeed in scaling. You no longer need to prove that marketing can market, or that sales can sell. Right now, you need to build scalable operations that can handle your spiking growth. Even with all the benefits operational innovation can deliver, some executives may wonder if it is truly worth the effort. Why bother to be the first on the block to develop and deploy a new way of working? Why not let a competitor break that ground and then capitalize on its experiences, doing an even better job? Indeed, where is the real strategic advantage in operational innovation at all?

Alstom’s business leaders identified roughly 20 potential improvement projects to support their unreasonable ambitions. Early wins at the five maintenance depots on the West Coast line began the process of changing the expectations of everyone in the company. We help our clients’ supply chains achieve top-line growth through geographic reach and differentiated service and drive improvements in bottom-line performance through scale and efficiency. As your business grows, it will cease to be possible for operations team members to be in constant contact with management and with each other to coordinate their daily work. They’ll need processes and adequate systems in order to avoid wasting massive amounts of time and energy on coordination.

At one major PC maker, an effort to do so was suppressed by both the head of manufacturing and the head of marketing , and top leadership was too preoccupied with other matters to intervene. Toyota has confidently opened its factories to visitors from other automakers and yet continues to expand its productivity lead. What can you do if you know you are going to grow more and more anxious with the investment in your operations processes and team? Slow the progress and split some of the time and money investment in a new / additional revenue push. Can freeing your time from the operation processes allow for a business development push? Can the hours now open on your calendar allow development and launch of a long thought of quick-to-market service or product?