Long and short term organisational objectives often collide around creating value, supporting innovation and organisational culture. All industry sectors are awash with offers from management consultants and technology partners promising to improve productivity and slash costs. These promises are largely based on organisational restructuring, business process improvement initiatives and technology solutions. But companies need to choose carefully as many solutions are costly, time consuming and the net results patchy. Very few solutions foster innovation or enhance organisational culture.
Business improvement consultants often identify costs savings and productivity initiatives with uplifts of 10 to 30%. It sounds impressive in the report, however realising the benefits can be much more difficult. For example, who inside the company is going to implement these initiatives when the consultants have also recommended downsizing the operational and technical teams?
Often solutions only provide temporary benefits. For example, reducing warehousing space or maintenance labour can save money in the short term, but when there is a supply chain issue or maintenance activities are pushed to the right revenue can be lost, customers are lost, and costs can suddenly spike. By the time teams identify and accept that “they” have a problem and then react most of the projected cost savings have largely evaporated. The underlying truth is that long term benefits are very hard to realise when the engineers and managers accountable for operational performance do not own the process of both identifying and implementing the productivity initiatives.
Similarly, technological solutions can be slow to implement and the payback for major innovation projects, such as process automation, can take years. In some cases, the benefits are entirely consumed by unforeseen cost overruns and project delays. Many promising projects are not supported by the operational management – perceived as “too risky” by those accountable for meeting a demanding schedule or operational plan. The company’s business improvement team become increasingly frustrated trying to find low risk, low cost, high return and fast to implement business improvement initiatives that will be supported by conservative management. In this context, management consultants offer an attractive service to a c-suite who are under pressure to improve returns.
The role of organisational culture in fostering innovation is critical and sadly misunderstood. Bringing in a set of business improvement consultants or a technology “silver bullet” solution is most unlikely to create a culture of innovation. Culture is much more resistant to change. An innovation culture requires an appetite for risk taking within the organisation combined with a clear understanding of the value proposition of each initiative. In companies where risk taking is perceived as a recipe for a short stay, innovation will be talking about with little real action. In these organisations, managers will be secretly relieved to have the c-suite bring the consultants in and then blame the same consultants when productivity improvements fall short.
Culture change is difficult but not impossible. Importantly it can be led by technology, when that technology transforms the way the business operates. For example, better communications technology can improve teamwork, and better safety systems can improve the safety culture in the organisation. One of the key questions to ask for any business improvement or innovation proposal is “how will this impact our organisational culture?” If it doesn’t foster the development of a culture of both innovation and accountability, it might be better to come up with a different proposal.
At Concerto Analytics we embrace these principles with our enterprise deployable value modelling software, Concerto. Concerto is a tool for business analysts, engineers and managers within the business to identify, assess and monitor business improvement initiatives. Concerto shares one version of the truth on how value is created across the entire enterprise, empowering those directly accountable for enterprise performance.
Concerto Analytics’ partners work closely with organisational teams to create a supportive culture where their participation and ownership of the process and the outcomes is respected. Long term the organisation has better tools and capability to sustain the value creation process.
Stephen Willams is co-owner and CEO of Concerto Analytics, a technology company that improves their clients business performance. His blogs cover a wide range of topics from software to organisational business dynamics and relationship management.