Improvement Strategies – Set a Clear Direction and Know the Score
In previous sections of this story, JadaTrack was struggling to maintain a viable business. The company now moves into transformation to build and grow the company rapidly. In the last episode James presented 12 Best Practices to transform the company.
4. Set a Clear Direction
“Does JadaTrack have a strategic business plan?” asked James.
The managers looked around the table at each other. Ryan broke the silence and said “No, we run JadaTrack mainly by budgets. If it’s in the budget, we do it. If it isn’t in the budget, we add it to the budget or don’t do it at all.”
“‘Setting a Clear Direction’ is vital for several important reasons,” said James. “Would you build your dream home by the seat of your pants? Can you imagine going to the building site and saying “let’s buy some steel and windows and just put it up as we go along?” No! We have an architect design the building. We review the architect’s drawings. The contractors build the home by following blueprints. It’s the same with a business – we plan, we review the plan and we follow the blueprint-in this case, our business plan.”
James moved around the room, paused, and continued to clarify his remarks. “If we don’t know what our purpose, mission and strategy are, how do we know what is important? How do we know what we are building or what to improve? How do we know a change is an improvement? We should evaluate improvements as to how well they support the business plan. The business plan itself focuses and aligns everyone to achieving certain goals. We need to know what these goals are and why. The mission and strategy are also necessary to define what the key measures are. What are the company’s core values? What are JadaTrack’s key measures? I’m sure you have some, don’t you?”
“We haven’t really defined them,” said Ryan. “It depends whom you talk to. The most important ones to me are sales, whether deliveries are late or not, and complaints. Where do you stop? I don’t want to measure everything.”
“JadaTrack’s plan must include targets which we’ve agreed to, such as revenue and profit targets. We need to have a dear focus on the real needs of customers, not just what some people find interesting:’
James replied, “One question we will ask during the strategic planning session is whether you’re getting the results you want. The response from managers and the board will tell us what the measures of success are.
“We used to have a planning process,” said Eileen Watson, the sales manager. “What a fiasco. Everyone made up phony numbers to get their budgets and there was no follow-up through the rest of the year. It also took away about three weeks of everyone’s time. It’s no wonder we stopped doing that. Now we just take last year’s nwnbers and tweak them:’
James replied, “One company in a similar position adopted a simplified strategic business planning process and reduced their planning costs and time by two-thirds. Their planning takes a few days now, rather than several weeks. The result was an understandable business plan based on consensus. It set the targets for the year.
JadaTrack should establish some specific improvement goals in its strategic plan. For example, one company set up three improvement goals:
- Decrease rework and waste by 50% in 2 years
- Reduce production costs by 4%
- Increase sales 20% per year, all using existing resources.” James continued with the next best practice.
5. Know the Score
“How will we know that a change is an improvement?” asked James.
Ryan replied, “We measure it against our goals, which we define in the strategic business plan. If our goal is to increase sales, we need to know by how much, and measure our actual performance. The scorecard will include what’s important to our customers, employees and owners. It will also include our scores on product and service quality and how well our operations run. One area that really needs attention is our measurement of customer satisfaction. We can do much better than just recording the number of complaints we receive. We will understand better what customers, employees and owners need, and find out how satisfied they are with JadaTrack in meeting those needs. Our aim is to find ways to improve satisfaction levels. This is necessary to retain customers and employees. Employee satisfaction is a critical factor in achieving customer satisfaction. Does anyone have any ideas how we can improve satisfaction levels?
Curtis said, “Give all the employees a bonus and a trip to Mexico!”