Intensifying competition, changing customer requirements as well as continuously increasing margin pressure - there are many reasons why businesses require organisational agility. While manufacturing companies introduced the concept of 'Lean Manufacturing' in past years, many administrative processes (e.g. marketing, innovation, finance) and service oriented businesses (e.g. financial services, telecommunications or media) still have significant potential to increase efficiency and effectiveness.
Based on our observations from performance improvement projects, the lack of organisational agility is caused by multiple factors.
Pacific Strategy Partners assists clients in identifying improvement opportunities that increase the speed of processes and ultimately the company's performance. We have developed an innovative approach that captures the most important benefits in a more efficient and timely manner than standard Business Process Reengineering projects.
Even though the recommendations and implementation plans developed in the diagnostic phase of each project are industry, process and company specific common themes emerge as to how our clients can improve agility and performance:
1. Complexity reduction
Increased complexity often goes unnoticed over time: New products or variants are developed to satisfy individual customer needs and support revenue growth; additional reports are generated for management, without reviewing or eliminating unnecessary information; 'exceptions' in organisational structures are created to keep individual managers happy at the expense of clarity around responsibilities and processes. We recommend two diagnostic activities to identify unnecessary complexity:
- A rigorous process audit analysing end-to-end process activities, including those teams involved and their respective responsibilities, and the resultant outputs created uncovers 'non-value add' activities. Based on the process audit improvement opportunities, a strategy aimed at reducing complexity and implementing lean processes can be developed.
- The assessment of product, channel and customer profitability identifies unnecessary complexity in the 'Go to Market' model. The elimination of front-end complexity unlocks significant performance potential within the organisation across the entire value chain.
2. Transparency
Organisations need to improve the transparency in three areas in order to move faster:
- Process transparency: Employees involved in cross-functional processes often do not have the visibility of the end-to-end value chain and responsibilities within the processes. Process mapping provides the teams with the necessary transparency and reduces frictions and unnecessary work on functional interfaces.
- Information transparency: Even though many companies invest heavily in compiling management reports, providing the necessary information at the right time to the right people is not ensured. Typical examples are information gaps in 'Sales & Operation Planning' processes where demand planning works from a different information base than supply planning, either preventing a reliable forecast with good forecast accuracy or causing lengthy alignment meetings between sales, marketing, demand planning and supply planning teams.
- Strategy transparency: Most of our clients believe that they have a robust strategy development process and that they clearly communicate the strategy to the management team. During our performance improvement projects we frequently realise that middle and lower management are either unable to articulate the corporate strategy or are unaware of the strategy at all. But without transparency and knowledge about the strategic direction, the different management levels are unable to make decisions in line with the corporate strategy. The result is either continuous rework to reverse decisions or long decision processes that always involve senior management to ensure the strategic alignment.
3. Leadership
The final and most important determinant of organisational agility is leadership. Clients can tailor management practices to actively drive improvements in speed by:
- Setting priorities and ensuring execution, otherwise little is implemented and the organisation loses momentum,
- Delegating decision making to an appropriate degree to middle and lower management to avoid a senior management decision making bottleneck,
- Reducing collective decision making so as to eliminate time wasted through attempts to build consensus in endless team/committee meetings,
- Setting clear and consistent KPIs which align to the corporate strategy, providing lower and middle management the guidance to make appropriate decisions,
- Providing the right resources (in number and capability) to avoid bottlenecks in processes which slow down the organisation.
The application of an 'Agile Organisation' concept resulted in significant benefits for our clients. Beside cost reductions (especially indirect costs), shorter time-to-market for innovations or increased service levels for customers, our clients were able to implement a culture of change and continuous improvement that increased motivation and satisfaction of the organisation.
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