5 Steps Toward Increasing Organizational Effectiveness
As organizations pivot from one challenge to the next – from dealing with the impacts of COVID-19 to now dealing with the effects of markets rebounding from COVID-19, and other changes – there’s another important hurdle to overcome.
During this period of change, most organizations are increasingly focused on maximizing efficiency. Everyone in the enterprise needs to be doing more with less; no one has enough people, time, or money.
But there’s still room for greater efficiency, as we’ve explained in the past. People believe they’re hard at work most of the time – very hard at work. But hard work doesn’t always equal “efficiency.” In the case of Legal Operations, for instance, we’ve found that less than 10% of the work done in traditional Legal Ops delivers direct value to the client.
The challenge is stark and simple: There’s a tremendous amount of hidden waste in every organization, usually caused by inefficient processes. No matter how smart your employees may be, they won’t be able to overcome them, either. As W. Edwards Deming famously put it, “A bad system will beat a good person every time.”
How can you go about revamping or eliminating wasteful processes? Here are five key steps an organization can take to improve organizational effectiveness and eliminate waste.
Step 1: Make waste visible
The first step in attacking waste and inefficiency throughout the organization is to make it visible. There are two aspects to this:
- Understanding your current state to discover exactly where waste is occurring by mapping and auditing your business processes. You could conduct this within a single operation, throughout a department, or across the enterprise.
- Making others aware of the fact there’s waste occurring; this involves reporting to stakeholders or corporate leaders on the type and extent of the inefficiencies, and the costs they’re generating. Those costs can be both monetary and in terms of lost opportunities due to poor responsiveness to customer needs or market dynamics.
Step 2: Measure waste and inefficiency
See the first step: In order to attack waste, we first need to be able to set up mechanisms for measuring it so you’re able to:
- Know the degree of damage it’s going to your business
- Judge the effects of any efforts you make to remove that waste
This means you and your organization need to agree upon, install, and monitor meaningful metrics and Key Performance Indicators (KPIs), because those KPIs will be central to your efforts. What are some rules to follow in picking the right KPIs?
- Measure what matters most: If you matter too many things, you’re potentially not measuring factors that have real strategic importance. The best practice? Measure no more than 4-5 KPIs per process. Also, measure them from the user’s point of view, based on what they’re experiencing: How much time does it take for a person to execute a certain step in a process, for instance?
- Pick KPIs that measure factors key to your strategy: As part of your operations plan, you will have laid out strategic goals. The KPIs you use have to measure the factors that are most relevant to reaching them.
- Ensure you’re using good data: The measuring system you use has to be valid and vetted for accuracy, so it will produce data that’s timely, reliable, and meaningful for making good decisions.
- Ensure KPIs are controllable: Can the person in charge of a KPI make necessary adjustments in order to drive better performance of the KPI?
Step 3: Begin making rapid changes, with an emphasis on trystorming
To eradicate waste and make operational improvements, you need to embrace continuous improvement as a mantra. A big component of that is trystorming, the process of combining brainstorming with rapid prototyping – in this case, of operational processes – to iteratively optimize performance.
The point here is to quickly brainstorm, then try out new ideas within a process to measure which ones perform best. So instead of having long discussions about various options, implement those changes and test them immediately to see what works.
What are the keys to making this successful?
- Don’t just stop after an initial brainstorm, even if you think you’ve hit on a “perfect” idea.
- Don’t be afraid to fail – that’s how you’ll learn what won’t work. Attempting multiple ideas is better than sitting around discussing what could be better.
- Implement these different ideas quickly to measure what works and what doesn’t.
- No-code workflows are key to accomplishing this quickly and flexibly in transactional businesses.
- Solutions that are simpler, with fewer steps, and not requiring big IT involvement will be more successful.
Workflow and process automation allows you to experiment in optimizing the efficiency of a process much more quickly and effectively than by retaining and revising a manual, paper-driven process. Once you’ve found success, automation also makes it far easier to adapt optimized processes or their best practices to other processes and other departments.
Step 4: Evaluate the results
To reproduce best practices, you first have to identify what’s “best.” As you implement new ideas and approaches, you should constantly measure their effect on the process you’re trying to improve. This stage relies on the high-quality measurement data mentioned above, and the positive effects need to be verified and validated using those relevant KPIs you’ve put in place.
The point is to not just recognize if there was an improvement. It’s to understand warum that improvement took place. This is essential to making that success reproducible across other processes.
Note: Once a process has been improved and waste reduced or removed, you should niemals simply set-it-and-forget it. You should still monitor and fine-tune it on a continuous basis.
Step 5: Building organizational effectiveness everywhere
The point of Lean, Six Sigma, or other process improvement methodologies isn’t to simply notch up a great score for a specific process. It’s to improve operations across the board, so you’re seeing excellent performance on all fronts while using fewer resources.
Eventually, you can optimize processes across the entire organization and even its providers. You’re able to achieve your ideal and then future state, where you achieve the most efficient and effective operations possible.