…Who’s in charge here between the chaos and control?
In the late 1970’s, Wal-Mart was a niche marketer, with over 200 stores. Over the years, Wal-Mart has gained market shares at the expense of the previous market leaders and it has now become one of the largest and most profitable retailer in the world.
Also in the 1990’s, Boeing company ran into trouble when it could not meet production deadlines. As a result, Boeing lost some orders, which had serious negative impact on earnings and stock price. We can equally take a study through the history of some collapsed Ghanaian organizations and those that continue to thrive and have remained resilient in spite of the several challenges that threatened their survival.
In the Ghanaian context, failure by some organizations in satisfying regulatory capital requirements, organization governance issues, poor planning and implementation structures with the emergent wave of the COVID-19 pandemic have rendered many organizations dead and incapable to compete for growth and dominance.
The question however is, why do some companies thrive while others struggle or fail even in the midst of chaos and uncertainties? There are a variety of reasons to be cited for. However, an important key in a company’s success or failure is how well it manages its operations. Therefore, I will use this series to deal with the chaos and control of operational leadership performance in a typical organizational context.
Key trends and issues in business organizations
To begin with, there is this well-known mantra: “revenue is vanity, profit is sanity, cash is reality” which resonates with too many businesses and as such haven to fall foul of this cash trap. Owing to this, a substantial amount of leadership needs to be spent on making sure that the organization knows how to drive the cash through the business.
Operational leadership seeks to manage the very best return from the current business and drives its fundamentals to achieve results. In view of this, operational leaders often work together with other business leaders to enact change programs within the organization for this course.
The work of operational leaders however is to develop systems, policies and procedures for the organization performance. These systems help in maintaining performance objectives, run smoothly and function effectively across all divisions of the organization.
That notwithstanding, the contemporary business organization has proven that operational leadership goes beyond individual leaders doing their best to transform and improve performance.
Great organizations, however, during difficult times need accelerated operational strategies, process improvements, performance management, monitoring and evaluation and a high-performance leadership team to maximize capability and ensure operational excellence for the future the organization so desires.
To that effect, real performance excellence at the level of operations seeks to drive change collectively and consistently across the organization to ensure success.
Much so important, business organizations must also be cognizant of the current trends in the global world of business and take them into account in their strategic operational planning.
This is because advances in information technology and global competition for instance have had greater influence on these major trends and the need to stay strategically competitive is absolutely essential.
Although different organizations have different priorities and hence differently affected by various trends, a representative list of major trends include the internet and e-business, management of technology, globalization, outsourcing, agility and ethical behavior are great considerable factors to assimilate.
These would ensure that, between the chaos and control, organizations and their operational leaders are able to position themselves to address the question of planning, acting, doing and checking to gain competitive advantage over the fierce competition just to stay operationally effective, relevant and excellent.
Operational leadership and responsibility
The quest to rethink operational leadership within the organizational structure or framework underscores the significant role and effect operational leadership impacts the organization’s results and performance.
Every organization functions best with a well-organized systems and structures that influence its strategies, design and management practices. The responsibility to pursue the vision and to explore efficient and effective ways to achieve operational results is summed up to an effective operational leadership backed by leadership at both the Strategic and Team levels.
The key to operational leadership roles is in knowing what drives the cash on both costs and revenues. It is also about knowing how the drivers of cost and revenue in one area of the business impact cash in other areas of business.
Therefore, operational leadership is about joining the dots through the company on how customer value is added at each stage of the value chain (R & D, purchasing, production, distribution, marketing and sales, administration and finance). Operational leadership ensures the alignment and the consistent measuring and improvement on the core activities that add customer value in the organization.
Effective Operational Leadership for Results
The critical viewpoint about Operational leadership and management of processes is the maintenance and assurance of efficient and effective operations. The symptomatic expressions of organizations lacking the multi-level operational leadership skills needed to succeed, failing to provide adequate training to foster new capabilities in managers who move up, the continual repetition of mistakes over and over and the lack of permanent implementation plans for solutions is the opportunity cost it suffers.
Admittedly, because of the global nature of modern business, organizations now have to operate in continuous, competitive environment that requires refined operational skills at all levels to succeed.
To create a competitive advantage that organizations can leverage in the marketplace, those leading operations must develop and improve their leadership skills to a point of excellence that stands out above the competition. To do this, operational leaders must build their capabilities in:
An effective operations leader must be able to articulate both the vision and strategic direction of the business as well as how they plan to accomplish that vision. They must also have the ability to communicate with their teams in order to get actively involved in problem solving, solution creation and helping in everyday business functions.
Much more, Operational leaders must have the ability to think system wide to a point where they can see the broader picture of the business and processes and how everything interconnects (how the pieces interact and fit together). Having done that, they must be able to use that information to drive performance and improvement for overall results throughout the business.
This involves knowing how the business works, how it makes money and how it serves its customers. They must understand what levers will drive improvements in financial performance, cash flow, customer retention and more. It’s important therefore to know what operational improvements will deliver the biggest results. Operational leaders with strong business and financial acumen are constantly connecting operational improvements to financial objectives. For this to happen requires quick thinking and the ability to use data and facts to get the root cause of any challenges.
Leadership especially at the operational level need a bias for action and must be driven to achieve results. They must keeping a constant eye on metrics, improvement opportunities and be problem solvers. They must think creatively and take action. A good operational leader in this instance would always create a sense of urgency and empower associations, networks and employees to get on board in driving and delivering the targeted results.
An Appreciation and Understanding of Global Diversity
Globalization has had a significant toll on the skillsets needed for operational leaders. Therefore, leadership at the level of operations must have the ability to manage across large footprints or across multiple cultures with an appreciation for diversity in mind, not only in their business but also among customers. They equally must ensure a consistent management process, adopting to a common metrics and encourage frequent communications which may go a long way to engaging associates in different regions who must work together to meet customer needs. Those who manage internal teams across the globe must learn to be effective and get the desired results while keeping in mind what makes a diversified team tick.
Having said that, let me move to deal with the associated risk factors of operations and effects of such risks on operational performance.
Effects of risk on operational Intelligence and Excellence.
Central to organizational decision making process is the cost of inputs or factors used to produce services both on and off the balance sheet. Crucial to the efficient management and combination of these inputs (which result in financial output at the lower cost) is technology. Operational risk normally arise when existing technology malfunctions or back office support systems break down. As already apparent, the risk of losses resulting from inadequate or failed internal processes, people and systems or external events is considered operational risk. Operational risk typically may result from the following sources:
The backbone of every great organization is a well- functioning technology and the systems that support its operations. When these systems deteriorate or the technology breaks down, it has serious ramifications on its operational efficiency. Human errors and internal fraud by employees equally pose risk challenges. Again, good quality customer relationships save the organization the risk of contractual disputes and negligence. It is equally possible to have the organization affected by catastrophes and other destruction like fire and external fraud which may have greater negative impacts on its assets. Nevertheless, adopting strict implementable measures and plans as a means of controlling and reducing these risks would improve and enhance the operational fortunes and efficiency of that organization.
Making operational decisions in change response
That notwithstanding, the obvious conclusion is that, the world is changing fast and well-documented business and economic changes, such as the growth of outsourcing and internet retailing are increasingly affecting the way organizations will see these trends as creating opportunity and adapting to take advantage of them. Others will try to deal with these trends with a minimum of change but will still have to face competitors that are using these trends to their advantage. Given the importance of information systems to most organizations, all organizations need systems smart enough to handle their operations in this new environment to remain competitive and thriving.
According to Dr Michael Porter of Harvard Business School, the essence of strategy is choosing to perform activities differently than rivals do. He laid emphasis on the claim that, unless the organizations activities reflect its strategy it cannot succeed. Critical to behaving differently is an ability to decide differently. Deciding when to omit or add an activity and when and how to change the way the organization performs an activity are essential. A strategic advantage must make an impact on strategy, which means it must change its decisions whenever necessary.
The importance of operational decisions smart systems deliver effective automation of the decisions that drive organizations’ day to day operations. Although organizations have automated standard processes with enterprise software, these operational decisions haven’t been the focus of investment. Embedding business processes in systems to streamline operations but not managing and improving these decisions leaves half the opportunities for improvement untouched.
Consequently, operational decisions which are high impact organizational success factors reveal the effects they have on profitability. Again, making the right decisions with a high degree of accuracy and precision ensures business continuity. The problem of ensuring that operational activities match strategy is exacerbated by the need for business agility. In this sense, business agility is seen critical to survival in a rapidly changing world so the strategy can’t be static. The strategy must constantly be refined and updated to keep up competitors, shifts markets and guarantee consumer preference and satisfaction. Agility must contribute to strategic alignment which must be seen in the organizations’s operational or front line activities. Indeed, divergent agendas and miscommunication between those working on an organization’s strategy and those carrying it out operationally normally are the chronic problems. These disconnects can hinder operational leadership access to information about what’s really going on and their ability to effect change in organizational behavior when they see the need.
Operational Excellence and Implementation Plan
The way to operational excellence is to get a structured management processes in place. This is because, when problems happen again and again suggest that, they are not solved. When managers take a fire fighter managing approach to managing daily problems without ever addressing the root causes for the recurrent forces mostly because they are too busy putting out the same fire presents a chaotic situation for control and solution. Moreover, to deal with this dysfunctional operational deficits is for the organization to adhere to:
Assessing Capabilities and Abilities
When a business recognizes there is a void in their management structure and systems, they are able to evaluate and consider how to make improvements. Since many of these changes involve shifts in philosophy that begin at the executive management level, an outside perspective is invaluable. The first step on this pathway is getting a properly structured management system (operating system) in place. An efficient operating system dictating how the business must run and defining the company’s culture.
Soft Skills development
The development of soft skills at all levels of the organization must be critical to efficient operations. With the improvement of soft skills leaders are able to better delegate, create a positive learning environment, maximize staff utilization, motivates the team and communicate effectively.
Operational Readiness that leads to growth
The readiness of any organization to pursue operation excellence informs its strategic objectives for growth and profitability. These strategies often times see operational functions as an assets to the organization because they deliver annual efficiency gain and are responsible to changing customer needs and market conditions. The greatest opportunity for improvement in the operations of organization is the development of soft skills. Leadership development and training are a point of focus at all levels of the operations organization.
In conclusion however, I submit to say that, when operational leaders fail to grabs the systemic source of problems, they are left to push on symptoms rather than eliminate underlying causes. Therefore, the dynamic agile strategy to decide to act differently and be able to apply decisions that adapt to global trends, formulate policies and design structures and process to support operational drive are the core essence of operational leadership.
Discovery…. Thinking solutions, shaping visions.
ABOUT THE AUTHOR
The writer is the CEO and Strategic Partner of AQUABEV Investment and Discovery Consulting Group. He is an Executive Director and the Lead Coach in Leadership Development and best Business Management practices for Discovery Leadership Masterclass..
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