The traditional approach to productivity in your business is going to dry up, if it hasn’t already. At some point, every department will have squeezed out what they think are the last remaining pennies by cutting overhead costs, improving yields or utilizations, applying lean/six sigma to their areas of responsibility, or squeezing their suppliers one more time. When productivity begins to dry up, so does the funding for growth. Before that happens, companies need to innovate their approach to productivity.
Typically, in each business cycle targets are set and department heads in the supply chain as well as marketing, finance, HR, IT, and others go after productivity. In turn, these leaders push the targets down into their organization. The end result: over several business cycles each department in the company optimizes its performance and becomes more efficient. However, with each cycle it becomes harder and harder to find the productivity the business demands.
Optimizing each department in the business does not optimize the whole. In fact, it often leads to sub-optimization. But a new set of opportunities are available by applying innovative new approaches to cut across silos to capture “white space” productivity, rethink resource deployment, and challenge the strategic design of the business.
Conducting “End-to-End” Assessments – When you turn the hunt for productivity on its side and look across silos from supplier to consumer, new significant “white space” opportunities can be found. In fact, the opportunities are so significant, Kraft Foods is depending on this new approach to generate billions of dollars in productivity over the next few years.
Play-to-Win Resource Deployment – After analysis, one CPG company found brand management resources spent more time doing financial forecasts than the time spent in marketing and new product development processes combined. Using a “Play-to-Win” approach to resource deployment allows companies to realign their workforce to things that matter, reduce time spent on things that matter less, and outsource contextual work where it makes sense.
Strategic Business Redesign – A static business model is a ticket to failure. Note this recent article in Forbes regarding Blockbuster. On the other hand, companies can strategically redesign their business (like Mattel did in Europe) and give themselves a new, dynamic platform for success in the future.
The traditional approach to productivity will eventually succumb to the law of diminishing returns. Innovating the approach to productivity before that occurs will ensure an ongoing stream of productivity to fuel growth initiatives.