The Competitive Edge

What’s your competitive edge? What makes you or your business the “one” to beat?

If you’re like most businesses, you probably say that you’re good at what you do or that you’re better than anyone else in your craft. That’s all well and good, but why should clients care?

Here’s the thing:  Clients don’t actually care about you or your business. They only care about themselves and what you or your business can do for them. This makes sense, since clients want as much value as they can get, but they don’t typically care where they get it.  

What can you or your organization do to position yourselves to be the best? Here are four considerations: 

  1. Cost. Reducing operating costs will provide you with a competitive advantage in the marketplace. Relentlessly pursue the removal of all waste in your organization to reduce operating costs. Look at the entire cost structure of your organization for all potential cost-reduction areas. And don’t forget to pursue Lean production in all you do.
  2. Speed. Make sure you are able to deliver on your promises quickly and by no later than promised due dates. You can improve speed of delivery by improving your organization’s communications capabilities (think:  Technology) and using equipment that is reliable and right for the job. Ensure you have knowledgeable workers to assist with your projects. Also, use just-in-time production to reduce inventories and reduce risk.
  3. Quality. While some companies employ quality as a reaction to the marketplace, to compete on quality means that you and your organization use it to please the customer and not just a way to avoid problems. Since quality is different for each customer, you and your organization need to understand your customers’ needs, wants and requirements, so that you can translate them into exact specifications for the customers’ desired goods and services.
  4. Flexibility. Competing on flexibility means that your organization is able to adjust to changes in the marketplace relating to its product mix, volume or design. This means being able to produce a variety of goods or services within the same facility to meet customized requests. Multi-skilled workers and excess capacity in the business can help an organization compete on flexibility. 

Most organizations should start positioning themselves in the market by focusing first on quality. Once quality is perfected, then focus on speed of delivery, then cost-cutting in operations and, finally on flexibility. 

If your organization is not as competitive as you believe it should be, improving on all of the above competitive advantages may be in order. You will find that as you become more competitive, you will reach a point where a trade-off will be required between being better in one or another area. This will ultimately set you apart from your competition.

The leader’s role in productivity

An organization’s performance is directly linked to its leader’s effectiveness. In fact, extraordinary leaders can make extraordinary employees out of average employees while poor leaders can turn extraordinary employees into poor performers. And it has nothing to do with the organization’s systems, processes, policies, or procedures.

Employees are impacted by their leader’s behavior. In a McKinsey Global Survey published in October 2009, nine critical leadership skills were identified. Inspiring employees ranked number one (Leadership through the crisis and after: McKinsey Global Survey Results, October 2009).

Inspiring employees is crucial if they are to serve customers in the best possible way, all the time. Since they are the organization’s front line to customer service, employees are the organization’s key to success. Empowered employees will perform their best to achieve their organization’s goals. The leader’s role in positively influencing this behavior cannot be overstated.

To sustain inspiration and empowerment, employees need recognition and reward. Both monetary and non-monetary reward can be used. Some employees may need a bonus to settle personal debts, while others may appreciate a more flexible working schedule. Ask your employees how they want to be rewarded and act accordingly.

While difficult to measure, strong leaders can impact the work environment by contributing to improved employee morale through a “snowball effect” of positive outcomes. It takes just one employee to hinder change, but it also takes just one employee to create positive effects. It starts with leaders.

There are five areas that every leader should consider to better influence productivity in their organizations. These areas are:

  1. Defining goals and objectives. Clarity around organizational goals and objectives and how projects fit within them needs to be provided. When employees understand the projects on which they are working, they are better able to identify and close gaps between the projects and the organizational goals.
  2. Assigning ownership. For any work undertaken in the organization, there should only be one owner of the work. When one owner-employee takes responsibility for the project, there is a greater chance of project success. If there are multiple owners or if ownership is not clear, efficiency and productivity suffers.
  3. Managing employee expectations. This includes ensuring employee job satisfaction and providing incentives and rewards. If employees are empowered and receive appropriate support (e.g., training, resources, etc.) to complete their work, their job satisfaction increases. In addition, recognizing and rewarding employees helps increase their self-esteem and further strengthens their resolve to continue working hard on behalf of the organization.
  4. Communicating. This is a two-way experience. Leaders need to be clear in their communications with employees, but they also need to listen to their employees and act on what their employees are telling them. By engaging in open communication, leaders build trust with their teams, further empowering productivity.
  5. Innovating. Without innovation, organizations will not grow. Leaders need to embrace innovation and encourage innovation and creativity in the workplace. Same old, same old has no place in organizations that want to be successful. Creating or inventing/re-inventing new markets, products and services—this is how successful organizations thrive.

Leadership competency models provide boundless traits and behaviors that differentiate between good and great leaders; they are all useful. But when higher levels of productivity are desired, straightforward behaviors—defining goals and objectives, assigning ownership, managing employee expectations, communicating, and innovating—can be achieved by every leader.

A core business goal, productivity is under the direction of leaders. Leaders who are able to motivate and inspire their employees will be the leaders of successful organizations. Those who do not may soon find themselves out of work.

 

Establishing the Need for Improvement: Benchmarking

One of the key requirements of implementing a continuous improvement program is to first establish a need for improvement. You may think this is quite easy, since you already “know” what needs improving. But establishing a need for improving services or products may be harder than you think. If you can’t show the need for improvement in a clear and meaningful way, it will be extremely difficult to get support for making change.

One of the best ways to establish a need for improvement is to benchmark; that is, compare one entity to another for the purpose of improving internal processes. There are four types of benchmarking:

  1. Process benchmarking is about reviewing and comparing process best practices of other companies. For example, the process of issuing building permits – how are other organizations managing this process in comparison to your organization? Are they faster? What is their cost of operations? Are their customers satisfied with the process?
  2. Performance benchmarking relates to reviewing companies that you know are doing a better job than you are overall. When performance benchmarking is undertaken, it is generally undertaken on competitor companies.
  3. Project benchmarking is about evaluating best practices on projects that are similar in scope to your project(s). This can be done with projects both internal and external to your organization. Do your projects generally run over schedule? Over budget? If so, why? What do others do to enable them to stay within schedule and budget? If the Empire State Building was able to be built in 1930 under budget and ahead of schedule, what’s preventing your projects from being equally successful?
  4. Strategic benchmarking relates to observing how other organizations compete. This type of benchmarking is not industry specific and therefore, non-competing organizations are more willing to share their best practices for similar business processes, products or services. In addition, organizations can learn from all operating units within their own organization.

Once you know what type of benchmarking you need to undertake, there are five steps to follow. They are:

  1. Determine your organization’s current practices in your selected problem area and identify your organization’s key performance indicators. This will give you your staring point.
  2. Identify the organization(s) from whom you will be obtaining benchmark data.
  3. Analyze the data that you’ve gathered, comparing your organization’s current practices to the best practices you have observed in other organizations. What are their best practices in this area? In what ways are they better than your organization? Are they faster? What is the cost of the operation? Do they produce a higher quality product/service? How is their customer satisfaction rating in this area?
  4. Model the best practices to fit your organization and present a business case to management for why modeling these best practices is necessary in your own organization. And when approved, implement the change.
  5. Repeat the process. This step is very important, since continuous improvement is not a one-off implementation project. It is a plan-do-check-act cycle that never ceases.

As a management tool, benchmarking cannot be underestimated. It helps you know “how well” your competition or internal units are doing and enables prioritization of change. If your organization does not include benchmarking as part of its continuous improvement mandate, it is likely that your organization is frequently fighting fires and focusing on the present. Instead, use benchmarking to help your organization become and remain profitable by having more time to think about improvements and focus on the future. Leave the firefighting to the fire department..