Wednesday, October 27, 2010

How to Build Business Agility

According to Wikipedia:
In business, agility means the capability of rapidly and efficiently adapting to changes.
Change is coming faster and faster. If you want your business to survive then you need to make your business agile. And yes, it is easier said than done, especially when "we've always done it that way."

Right now there are obstacles in your business, countless impediments in the flow of work. Maybe it's an old procedure that's outlived it's usefulness or an unnecessarily long, repetitive task that can be simplified. These are all restraints on efficiency and agility.

This is done by examining the way you work. Preferably an outsider with a fresh perspective needs to follow every step of your business. From sales prospecting to collections. From purchasing to fulfillment. Every last job that gets done every day needs to be studied, mapped and diagrammed.

They also need to conduct interviews with everyone to understand the limitations they deal with every day. Sure some are going to complain about petty issues, but most will give you actionable information. A little bit of good judgment will go a long way to filtering out the ego issues from the real problems. I think of it like panning for gold -- it's worth the time if you get just one valuable nugget.

Once we have all this information collected and studied, we diagram everything. The flow of every last process from beginning to end is laid out in every gory detail. This bird's eye view of your company becomes a very valuable tool. This is where you start to identify the bottlenecks in the orderly flow. This is where you immediately see the repetition, the breakdowns.

The next step is to prioritize the problems. We usually rank them based on:

  1. how quickly the problem can be fixed
  2. how much it costs the company to keep the inefficiency
  3. how much it will cost to fix
Now, in my experience, all business agility problems can be broadly categorized as either systemic or procedural. Systemic problems are related to computers. Procedural problems means there is something broken in the way work gets done. 

Typically, systemic problems can be fixed quickly. Sometimes it's a bad setting or an inefficient piece of equipment. However, there are some cases when there really isn't a simple solution. These fixes can get expensive and time consuming to the point where it might be worthwhile to just live with the problem. 

For example, we identified a major inefficiency in one customer's accounting system. Their homegrown accounting software was printing and mailing zero dollar invoices. It took 15 minutes to change their software code to eliminate $25,000 in yearly costs. That was a simple systemic problem. The complex systemic problem was the homegrown accounting software itself. 

Procedural problems are fixed by redesigning the job. Every job has some kind of step-by-step sequence that carries it from start to end. If those jobs require judgement, instinct or talent, then you need human beings to perform those jobs. If they are repetitive, mathematical or mind-numbingly boring, then let the computers handle it instead. 

The human-only jobs need to be properly engineered. We have been known to recommend reorganizing workspaces to improve efficiency. The key is to eliminate repetition, condense tedious tasks and to reduce the total number of steps to the barest minimum. From my experience, most of the best recommendations come directly from the workers themselves. Those gold panning interviews always pay off.
In some cases, you need better computing -- if you don't have timely, reliable information at your fingertips, then you can't make good decisions. In other cases you change the way people work -- if it makes more sense to move the paper from left to right, then you move the paper that way.

In a nutshell, that is how you achieve business agility. You find the ways to increase efficiency and improve procedures. You automate the dead head stuff and free your workers to focus on the tasks that require that human touch.

And all you need to do to get started building an agile business is to call me. (305) 423-9575

R-Squared Computing | Lou RG | Nearly Free IT | Firm Wisdom

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