If you have ever questioned a senior manager’s ability to execute well, it is because they are highly skilled in their functional area but lack any real operational experience.
If there is one thing that business people are good at is reacting to things. They react to market conditions as if they were not in any way predictable. They react to employee sentiment even when that sentiment is driven by rumor. They react to client demands even when clients are demanding things that they are not willing to pay for. They react to new management as if they are certain that new managers will ruin everything they have worked for. They react to uncertainty as if they are certain that the sky is falling. Business people of all flavors today tend to be reactionary.
Business people are reactionary mainly because they are not sure how else to behave when everyone around them starts to react. In the absence of a better plan, they react as well for fear of being left behind even if they don’t fully understand what they are reacting to or why. The only thing worse than reacting to nothing, it seems, is being perceived by others as not reacting fast enough.
The reality is that business people react to nearly every variable in their world because they have been conditioned to be responsive above all other things. Another way of stating this is that they do not necessarily understand how else to behave. In essence, their toolbox is empty, or worse, their tool box is full of only one kind of tool. Usually that tool is based on how things have always been done.
You might argue that sales people sell, procurement people purchase things and finance people pay for things and track progress in dollar terms. Marketing people generate leads and customer service people answer client inquiries. I could go on. While all of these things are true, the reality is that all of these areas of focus are really just different forms of operations. Put another way, all areas of a business that are dependent on processes in order to scale and achieve desired results repeatedly over a long period of time can be classified as “operational”.
This fact does not in any way undermine the value of specialists. What it means is that specialists can be more effective if they also understand how to implement excellent processes with a high degree of discipline.
If an operations manager has the tools to successfully analyze a function that they are responsible for in order to identify flaws and opportunities, envision and articulate the end state and design a program that will achieve the most desirable outcome, then he or she can be successful in any discipline that does not require highly specialized technical knowledge. Unfortunately, many strong salesmen and women do not see themselves as operational. The same can be said for marketing people, finance staff and client services representatives. Because of this, individuals and departments or even entire businesses can struggle to maintain high-performance levels over the medium to long term. Basically, the things that they do well are not scalable, repeatable or transferable to others.
Businesses in this more global and more competitive economy need to focus on operational excellence in order to survive and prosper. It is no longer acceptable for a company to be organized in functional silos and be staffed with people who believe that this model is ok. That level of organizational complacency will strangle the life out of even the most vibrant company, regardless of the industry in which it operates.
Oftentimes, it takes some sort of systemic issue to get a company to focus on its core operating practices. An economic downturn is usually a great time to see companies’ productivity soar as their headcount declines and they still manage to maintain their market position. Wall Street might applaud management for making changes and maintaining profitability and shareholder value, but what that demonstrates more than anything else is that the company had been operating “fat” prior to being forced to make changes. Even during the applause for the right-sizing of the company, we should consider that the right-sizing is happening under some form of duress and as a result is really taking place in the least productive manner. That is a failure of leadership that should be concerning for investors and business owners. It means that the company’s leadership reacts to things instead of plans for things. In other words, the company was not really prepared.
Being able to react well to the unforeseen circumstance is a valuable skill, of course. But having a thoughtful plan for contingencies that are likely to happen is much better. Looking at history, any business leader should be able to predict that their company would eventually need to deal with some sort of economic or competitive upheaval even if they could not predict when or how that may come about. Allowing a business to run fat or to be inefficient until that upheaval happens means that the company loses the opportunity to capitalize on the weaknesses of their competitors during a period of upheaval because they need to shift the focus inwardly in order to ensure survival. That inward focus saps momentum, kills creativity and is difficult to recover from.
Culturally, companies tend to be reactive to outside forces. When times are good, many companies invest in growth initiatives such as new products as a priority. During these times top line growth tends to drive overall profitability. When times are more challenging, companies are forced to look inward to their core operations to find efficiencies in order to achieve growth or maintain stability on the bottom line as top line growth becomes harder to come by.
For a company whose growth strategy is dependent on acquisitions instead of organic growth, the need for operational excellence
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