Great Business Performance
The Road to Excellence Requires Vision, Time, and Fortitude
“Generally the fire, ready aim methodology does not work well however, there are areas to start that don’t take much decision making” – FitzGerald
The incredibly insightful authors Michael Treacy and Fred Wiersma performed an analysis of business and subsequently were able to group business strategies into three primary areas. These business strategies lift a business above the competitors. This starts the road to becoming a great business. They found that the strategies were:
They determined that very good companies focus on one of those three areas and become excellent in that area. Truly great companies do the same thing except that they also become exceptional performers in the remaining two areas. Implement Lean Six Sigma and therefore march ahead in desire to become a great business.
This requires a maniacal focus on decreasing operational costs and thereby increasing the profit margin.
Example: Toyota can deliver a custom configured car to a customer within three weeks, consequently, their nearest competitor takes three months. As you drive around and look at dealerships, look at all the cars on the lot that are inventory. This inventory ages, is fried in the sun, and takes up real estate. Inventory has a quantifiable cost to business. If you can deliver a car in three weeks, where most of the cars in that three-week inventory are already sold, your inventory costs plummet and therefore you are operationally efficient.
Lean Six Sigma and Operational Excellence
Every process contains activities. The activities are either value-added or non-value-added. A simple definition for value-added means that a customer will be willing to pay for it. Examples could include an okay for an order or a processing of a tax return. A non-value-added activity could be walking over to getting a stapler or excess signatures. Usually non-value-added activities take up much more time than value-added activities therefore it makes sense to focus their first.
A Value Stream determines which process to focus on. The performance of the Value Stream is much more important to know than the performance of an individual process. This is because the Value Stream contains all the processes needed to satisfy a customer demand.
This strategic focus is about creating sticky customers and customers that find you deliver exceptional value.. Lean Six Sigma uses the Voice of the Customer to guide execution, hence, make customers feel special.
Example: This is an example of a moderate sized town that cares for its citizens. Ft. Wayne, Indiana repairs a pothole within 24 hours of notification and has an online building permit request system. Both of these things strengthen the connection between the citizen and the city provided services.
Innovation or Product Leadership
Focus on Innovation and subsequently garner customer loyalty by making sure their customers have the newest, coolest products.
Example: Apple’s innovation Siri allows you to query phone applications for information. Consequently, competitors have not caught up to this capability yet.
The business strategic plan will dictate where to start. As a result of resource availability, work could be performed in multiple areas at once.