Businesses are facing a variety of market challenges – and that means they need to change and ensure they have maximum operational efficiency. But what are the challenges associated with making operational improvements, and how can an organisation identify and implement the changes that are needed?

Ross Dawson, Partner in the Operations, Procurement and Supply Chain Practice at Eton Bridge Partners, discussed this issue with four senior figures with deep insight from their experience across a range of industries.

• Allyson Johnson was most recently Chief Operating Officer of OPEN Health and awarded Top 50 Women Leaders of New Jersey.
• Dominic Proctor has extensive senior experience in operations and lean methodology and has worked as an interim COO for many years, most recently at Aqualung Group, in the capacity of Group Manufacturing Transformational Director
• Nick Racster has spent decades in manufacturing and supply chain operations leadership and turnaround and has developed an app called KaizApp to use in his work leading and executing complex transformations.
• Simon Presswell has an impressive background in commercial leadership, growth, transformation and restructuring in the media and entertainment space and is currently Group COO of Technicolor Creative Studios.

Understanding and categorising the issues your organisation faces

So many organisations need a detailed review to understand what the root causes of their issues are, rather than just putting plasters over gaping wounds. The market continues to be challenging, and cash is tight. But unless businesses deal with issues properly, they will not be able to move forward.

As Simon expressed it, issues facing a business can be classified as situational, symptomatic and behavioural. Situational issues are long-term and have become embedded into the business over many years. Symptomatic issues are actions that have become habitual, whilst behavioural ones relate to things leaders, staff and customers do. “When you classify the issues in that way,” added Simon, “they can be ordered quite nicely into things you can do immediately, in the near term, and those that will take longer to address.”

Challenge existing assumptions

In organisations facing problems, there is a common pattern in that one or more people – particularly in the management team – manage according to assumptions that turn out to be wrong. As customers, markets, and technology change and clinging on to those assumptions can hold you back.

To address this, Nick said, you should start with your leaders’ KPIs and then look at how the company is being managed.

“You have to ask, ‘what is it that people are assuming that’s now completely wrong, and is dragging your performance down?’ Until you learn that, and change it, your team can’t lead the business to a new level.”

Dominic described the process that he led in this context at Aqualung in the aftermath of Covid-19, which identified the root cause as underperformance in the company’s plants. This enabled the leadership to reskill their teams, and to bring much of the manufacturing capability back to Europe to offset post-pandemic issues in the global supply chain. “We focused purely on KPIs, particularly OEE, in terms of improved productivity and increasing capacity. Once we understood the root cause, and devised a strategy around it, it created a ripple effect on the whole supply chain.”

Change is inevitable – but it’s not always easy

As Simon put it: “As humans, we are not naturally disposed to change. Very few people come running to the change-giver saying, ‘Give me more ambiguity and uncertainty, and decouple me from the icons and artefacts I have always held on to’. Change creates anxiety, so it is quite a psychological cultural practice trying to get people to be open to change.”

The challenges of the post-pandemic world offer industries across the board an opportunity to be agile and responsive, rather than stagnant and fixed. Change must be adopted as a behaviour. Modifying your business is essential, not least because changes in consumer tastes that used to take 10 years to take effect now happen in 10 months or even 10 weeks.

This means two cycles are out of sync. The world is changing more quickly, whilst industry is not changing fast enough to adapt.

The gap between them was a pothole that was covered by the continual flow of cash in business; but, thanks to the pandemic, that pothole has become a sinkhole that will swallow organisations that fail to react.

Dominic agreed, saying: “It’s only when there’s a correction that the stream dries up and suddenly the rocks appear. That’s perilous, and businesses that aren’t robust enough or open to change will struggle.”

Allyson observed that the different ways in which varying generations of workers operate can cause problems. “The most senior people tend to be less inquisitive; they do their job and leave work behind each day. The most junior need to understand their purpose and must align with the values of the company. This opens the doors for efficiency leak.”

An external eye can expedite change

Most businesses underestimate how long transformational change will take. For a new way of operation to become embedded, it has to be done for 20 consecutive days. Problems can arise when people go on holiday, or on secondment to another part of the business, and then you have to start all over again.

Bringing external support in will generally help businesses to get there faster. An external eye can see where change is needed, but it can also focus on it rather than being distracted by the in-tray.

The buy-in of multiple stakeholders, and particularly the leadership, is key to the process, in particular their ability to analyse and interpret data relating to a proposed transformation.

If you have an experienced leadership team that has been in an industry for many years, they can slow the process through assumptions. This is, as Dominic observed, where “you may need to bring in someone objectively as a third party, to help facilitate that discussion if that’s lacking in the team”.

Change is, said Simon, a high-stakes game; “The bringer of change is often the lightning rod for resistance. You’ve got to have sponsorship support.” Changing processes can become very personal to some individuals, which means the person overseeing that change must be robust and resilient – and able to adapt if it becomes clear you are pursuing a route that fundamentally cannot be changed.

Allyson agreed: “Organisations need to have believers in data in order to make and implement sound, data-led decisions. If working with a generation of leaders who were not brought up using technology or data as the foundation to decisions, their resistance could be detrimental to future success.”

Founders or CEOs should lead an aligned co-creation process

You will rarely achieve alignment on a transformation process if you do not co-create it. Ideally, the process should be led by the founder of a business, or its CEO.

Nick said: “You have to have that leader, that champion of co-creation, and without that you won’t quite get that alignment.”

Ideally, that leader should own the process but should enlist the support of others, including external observers, who can bring the clarity to a strategy that will get the work done.

To be successful as a driver of change, you need to have emotional intelligence, good linking skills, empathy – and credibility. Dominic said: “You can guide them through the journey, collaborate with them, understand when they’re on the fracture and things are getting overwhelming for them. With those linking skills, you can be very successful in the transformational arena.”

Act now if your business has issues that need to be remedied

It’s unlikely that we will go back to the era of relative stability that we enjoyed before the pandemic. So organisations should act sooner rather than later – and have the humility to bring in a third party to assist in a transformation.

As Simon put it: “Change can cause paralysis and overthinking, but look at your short term, near term and medium term, and focus on now. Assume the best, and plan for the worst, but make your decisions quickly – because a decision is better than no decision.”

While it’s tempting to prioritise activities with the highest return, in practice companies should make changes that are best for their people.

Allyson said: “Taking the population on the journey will reap more reward and collaboration than simply telling the group to change their ways.”

Having witnessed the paralysis encountered by many senior leaders this year, through fear of making the wrong decision, yet knowing operational efficiencies need to be realised, it is apparent that prioritisation of tasks through detailed root cause analysis, assurance of purpose, clear strategy, empathic and change focused leadership, and confidence to drive activity is key to ensuring your business thrives rather than purely survives.

For more information about Procurement, Operations & Supply Chain, get in touch with Ross.