The Four P's

We understand the relentless challenge facing every manufacturing and industrial service business: how to improve performance, productivity, and profitability. We believe people deserve equal attention, which explains our use of the term "people-driven business consulting."

The key to unlocking improvement lies with work process, the means and methods used to perform the work of the organization. Work processes transform the organization's "good ideas" — its technology and know-how — into its business results. More often than not, poor results are a function of poor work processes. Process improvement is the common element in improving any of the Four P's, and it serves as the principal focus of Balmert Consulting.

Performance

Competitive sports are all about statistics, the absolute and undeniable measurement of competitive performance. Score the most runs, win the game; swim the fastest lap, win the race; shoot the lowest score, win the tournament. The numbers separate the winners from the losers; reasons and excuses, the saying goes, are for losers.

Which is exactly how it is in today's competitive market place. Customers care about the statistics: price and performance. Compete and earn the business; perform and keep the business. Lose an account, and nobody is interested in listening to the reasons.

In this world of tough competition, we think there's much to be learned from the methods of world class athletes. Their regimen might best be summarized as "learn, train hard, and measure."

Competitive athletes start with the knowledge of the competitive benchmark and they know exactly how their performance stacks up against it. What's their personal best in the event? What's their competitor's performance? What will it take to be the champion? Goal and performance measure becomes intertwined; the gap between the two fuels the drive for performance improvement. Judging from the numbers of people competing at all skill levels in all kinds of sports, it's obvious this is powerful stuff.

Motivation to improve by itself is not enough. Someone defined insanity as "expecting different results using the same methods." The best athlete's are really "learning and performing machines." Every relevant aspect of performance is measured and analyzed. Find a world class athlete, and there's always a top-notch coach close by doing just that. World-class athletes put a premium on learning, and they recognize they can't do that all by themselves. For good reason, the coaches are now as recognizable as the athletes.

We believe the fundamentals of competitive performance, "measure and learn", apply just as well on the shop floor. There are many business processes that don't get the attention they deserve — often because they aren't measured well — or at all. When they are, it's hard to know what to do to improve. You don't see performance coaches on the factory floor.

It need not be that way. Every aspect of operations performance is capable of being measured, analyzed, and benchmarked against competition. An improvement strategy can be devised for any process that matters to competitive business performance. The knowledge about how to improve exists. With the manufacturing world getting only more competitive, it pays to find out what isn't "world class performance" and figure out what to do about it.

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Productivity

"Everything gets cheaper forever," says John Chambers, CEO of Cisco Systems. Competition keeps forcing itself through the product value chain, with the best in class setting market prices. If it's not your competitors driving your prices ever lower, it's your customers. You can explain it by globalization, the Internet or competition at the retail sales level. The situation will only get tougher.

To survive and prosper a business has to improve productivity: getting more output from the operation, or putting fewer resources in. It is that simple.

Making this happen, though, is anything but simple. Technology, ever improving, offers some relief. It's been a major force in improved productivity on a global scale, and it's been a great investment for improving business. 

Where does all of this great new technology come? Much can be bought in the market. But there are also numerous examples of process and product breakthroughs coming from those working inside the business. New product ideas, like Post-It Notes, and process improvements, have come from the ranks of employees usually overlooked by management: those doing the work. These folks are a great and largely untapped source of productivity improvement ideas. Sometimes, all it takes to get them is to ask.

Unquestionably, productivity improvement needs the benefits of technology. Advanced technology demands improved skills by the workforce. Give better technology to a poorly trained or unmotivated workforce, and the return on the investment may well be zero. Install better technology but couple that with ineffective work processes like planning and scheduling, and productivity improvement may be hard to find.

For all the money golfers spend on technology, there hasn't been a reduction in score by most that play this game. Lessons are always a better investment.

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Profitability

Get performance and productivity up in your business, and you can be certain the dollars will follow.

Often, knowledge about profitability doesn't find it's way out on the shop floor. We think that is a mistake: inside every employee ticks the heart of a small business owner. If only they understood the profit implications of their work - and could do something about it — they might well take a different approach.

All too frequently there doesn't appear to be any connection between the work people do and the money the business generates. Calling functions "cost centers" hasn't helped. Internal functions always have counterparts that can be found in the Yellow Pages. It isn't that difficult to compare any function to a stand-alone business, and set up a profit model. It's easiest for production, where a model of profit per hour or per unit is readily calculated and understood by those operating the equipment.

Beyond the obvious benefit, sharing this information makes employees feel like they matter, a vital part of the business. Treat them like owners, and they start to behave that way.

We know technology and innovation can increase profits. Chances are that any technology you can buy is also available to your competitors. The problem with that is that the customer is the most likely beneficiary of industry wide technology improvement. That is not the case when the innovation comes from within and isn't available to the competition: those benefits stay with the business.

Turning on the creative genius of your workforce will produce useable ideas to make your business better. Doing that successfully requires more than a suggestion box — you'll have to invest some time in encouraging, analyzing and perfecting. Sharing the credit for a good idea is necessary too.

Your workforce can be your best ally in improving profitability.

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People

Your workforce is an asset — some say that human capital is the only asset that counts in today's economy.

It may not always seem that way. Employees are human, and getting optimal performance from our species is far more complex a proposition that of managing machines. But human assets can be evaluated using proven techniques just like any other factor of production. What is their capability? What is their cost? What is their current performance level and how does that measure up to the competition? Doing such an evaluation can reveal improvement opportunities, ones that increase performance, productivity and profitability.

Nonetheless, the workforce is a high maintenance asset. To be on top of their game, employees require constant attention, recognition and development, which goes far beyond a paycheck. That's one of the explanations for the increasing number of businesses that are focusing in on their "corporate core competency" and outsourcing the rest of their functions. These firms are giving up on the idea that they can achieve "functional excellence" in all the components it takes to succeed. Instead they are identifying the principal value their firm adds to the product value chain, and handing over the management of many other traditional business functions to those for whom these represent core competencies.

This is not a particularly new concept. Firms doing automated payroll have been around for nearly forty years. Outsourcing maintenance has been going on far longer than that. It's the acceleration that is merits attention: "staff leasing" by firms specializing in human resource administration; computer "application service providers" becoming common in the Information Technology business; equipment rental in maintenance and construction; outsourcing manufacturing of everything from precision parts to chemicals to golf balls.

The implications for the workforce are huge. The point we'd like to make here is that a company that concentrates its efforts on what it does best has a far easier time than it's "do it all" competitor. That is most evident when it comes to managing its human assets. Providing management care and attention, justifying training and development, and providing recognition for work well done is not that hard when dealing with those in the business who really are "the difference that makes the difference."

Finally, human assets have one feature that gives them huge advantage over any other asset your firm owns: creativity. Unlike fixed assets, your workforce has the ability to solve new problems, take on new challenges, adapt to change, increase skills and performance to levels that surpass their "nameplate capacity." Equip them with competitive technology, effective work processes and necessary skills and knowledge; get them immersed with you in the competitive marketplace, and you your business will compete and win.

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Balmert Consulting is in the business of business process improvement. Our consulting focus - no matter what the problem or where it is found - will always "follow the money" to The Four P's.

© 2000 - 2007 Balmert Consulting