Hidden Profits Blog

In the last couple of days 2 non-related experiences have emphasized to me the importance of looking at business differently.

Sunday after the Super Bowl (fabulous game) I watched the new reality show ‘Undercover Boss’.  In the episode last night Larry O’Donnell the president & COO of Waste Management went undercover to see how his company functioned at the operations level.  He found that several of the cost cutting, productivity enhancing policies he had enacted had unintended consequences.  These unintended consequences for the most part created hardship on operational employees primarily because they were designed and implemented by employees that had never worked in operations.

Yesterday morning I had coffee my friend Bob McCormack.

http://www.linkedin.com/in/robertmccormack

 I worked with Bob for several years when he was CIO of a major company. Bob is now a member of Pasadena Angels and has invested in several new technology companies.  Today we discussed how things have changed in the technology world in just a few short years and the impact that those changes may or may not have on traditional corporate thinking about how to use technology in business. 

Bob gave the analogy that traditional corporate IT departments operate with blinders on and stay on their ‘railroad track’ strategies.  By that we mean they stick to the tried and true processes that a company has a big ERP and CRM systems, top tier1, because those are the best.  These ERP systems are hosted at the company offices and supported by big IT staffs. Then the company has big accounting staffs that enter and manipulate all the data.  Over the last 30+ years the software vendors have stuck to that paradigm and they just continue to make the monolith bigger and a little easier to use.  It moved from mainframe connected terminals to client/server technology to web-based user interfaces.  However, in the end the process is still the same as the original manual processes that were replaced by computer systems to begin with.

However, in the last few years the advancement in wireless technologies, communications, internet, document management systems, smart phones and other devices have made it possible for the game to change dramatically.  The capability now exists that is relatively inexpensive to have data entered into an electronic medium at the source of the business event and never be touched by a human again.  The less human activity in a business transaction the cheaper that transaction is and the more productivity can be increased. 

Many of these types of transactions are topics we have discussed before in discussions on lean business processes. Some game changing ideas are

• Using smart phones to enter and receive Purchase Orders for companies with significant field operations.
• Creating expense reports on smart phones or web-based applications that are integrated with credit card websites and other applications to automatically download expense transactions and the projects to which they are to be charged.
• Creating and sending receivable invoices electronically to customers immediately upon fulfillment of the sales transaction.
• Utilizing electronic banking applications integrated with ERP for vendor payments, bank reconciliation, cash application, etc.
• Receiving and posting payments electronically from the bank so that customers never have to create and mail a check.
• Receiving key performance indicators regarding your area of business via a smart phone application. 
• Using document management systems to transfer paper into electronic images and provide electronic workflow integrated with smart phone or email applications
• Hosting applications with a separate hosting company and utilizing outsourced IT personnel on an as needed basis to reduce the expense of highly specialized IT personnel

These are just some of the game-changing technology and processes that are available. They are not just for large companies, in fact many of the new technology companies have business models that make these new technologies very cost effective. 

 However, these are not magic bullets and the implementations will not look the same in every business.  To implement these ideas and reap the benefits of reduced cost, improved productivity, happier customers and employees and increased profitability, requires you to leave the ‘railroad track’ mentality behind, and look at how the operations of the business function, what problems exist in the operations and seek out new solutions for those challenges. It requires that operations personnel be involved in the design of new solutions with or without technology to ensure that the new solutions support the operations of the business as well as the desires of management and stockholders. 

Contact LJR Consulting Services at 818-227-5025 for information on how to utilize new technologies and process in your company.

In the last couple of posts I talked about the importance of looking at the organization differently, expanding thinking beyond our day to day limited view to find ways to change processes and technology to improve the business, successfully navigate the current economic situation and become more profitable.  This post is a continuation to discuss how to get started. The idea of creating a lean organization is a concept that today many executives are talking about.  You could almost say it is the new fad!  I am a very strong proponent of lean thinking and do believe it is the next level for business to improve productivity.  Most companies have the core business systems needed to function and so the benefits of just implementing technology have already been integrated into the organization.  So using Lean principles to get the next level of productivity is important especially with the current economy.  However, like many new ideas or concepts, it is easier said than done.

So what are some of the challenges that companies face when they want to take on lean projects.

•  Resistance to Change and Skepticism
•  Lack of Expertise in Lean Process
•  Lack of Exposure to other Technologies and Processs
•  Lack  of Time – Too Busy Chopping Wood To Sharpen the Ax Syndrome
•  Lack of a Decision Process on Policy Changes, Project Priorities etc.

These are all very real challenges and not unlike the challenges faced when new technology is implemented. The first thing for organizations planning to apply lean processes is to realize these challenges exist and plan how they will be addressed.  I will discuss each challenge individually in future posts.

The next step in getting started is to pick a pilot target area. This should be an area in which the lean process has strong support at all levels of management. It should also be an area where there is significant pain in the processes.  For example, a process in which the competition has an advantage over your company.  Or an area where employees are working significant overtime, have high error rates and/or can’t keep up with the volume of work.

Once the pilot area has been identified, you need to determine the team members that will be involved.  It is very important to have team members from different areas of the company, not just from the selected business area.  If the team consists of just personnel that work in the area to be addressed there is a very strong tendency to make very limited changes.  You should include employees from departments that are touched by the area to be made lean.  The goal is for the team to understand the entire business process from the beginning to the end, not just the area that seems to be the problem.  It is also very beneficial to include on the team personnel that have experience at other companies.

Finally, bring in outside support.  You do not want an outside consultant to do all the work, however, you Do want an outside consultant to provide input in the following areas:

• Project Management 
• Envisioning possible new processes
• Mentoring team members 
• Change Management

 The consultant should be a firm  who has experience with lean techniques, the business processes, technology solutions and change management.  By doing this it enables you to overcome some of the change resistence, keep the project moving forward and provide insight into new process options and supporting technology.

Get started with your project. Keep moving forward and Be Successful!!