Breakthrough Improvement: Achieving Major Productivity Gains with Early Wins
Written by Mike Markos

The Challenge

When faced with productivity challenges, companies have historically taken one of two paths: restructuring to cut costs by eliminating jobs and/or consolidating sites, or investing in new technology to provide enormously more productivity and enormously better management information. Both of these approaches have merit and most companies have employed both methods with varying results over time.

The Options

Restructuring has usually resulted in close to the anticipated savings, at least for a while, and costs of the restructuring have been accounted for as special one-time costs, so as not to be fully absorbed in current results. The benefit of restructuring is that “fat” is squeezed out. The downside, though, is that some “muscle” is squeezed out at the same time. Additionally, there is no way to assure that all the possible opportunities are identified. Said another way, process and technology improvements are rarely part of the restructuring plan. This has significant implications. Remaining resources struggle to get the work done using the old processes, while the only attention paid to technology is usually building expensive interfaces to support consolidations. So there is little real improvement provided by the technology investment. Additionally, eliminated jobs often find their way back into organizations as“consultants” and “contractors” who are not on the full time headcount rolls. Most importantly, it is difficult to determine whether the business has really benefited from the restructuring.

New technology investment, often in the form of new ERP systems, promises to reengineer the business and integrate information across the business. The technology promises to be the vehicle to make improvements in the business not possible in the old technology environment. The first challenge is that new ERP requires huge investment of dollars and time of people from senior executives through the working levels. Historically, even the large investments anticipated have been insufficient, and projects end up significantly over budget. The second challenge is that the improvements are not felt for several years. In this time of earnings pressure, long waits for productivity improvements are not in concert with business imperatives. As a result, the technology option has achieved a less than stellar reputation.

There is a better way. Companies that have focused on process improvement, rather than technology and restructuring, have been able to recognize improvement possibilities in their businesses first, and then apply the process improvements, supported by people resource changes and technology enablers, as required. The focus is on how to run the business better. People and technology improvements ultimately become a part of it, but are a result of a careful assessment of process improvement opportunities and returns on investment from such process changes.

Early Win Process Improvement

An important element of process improvement is the “early win” approach. Skillful process engineering can yield tremendously beneficial results, just as skillful and creative engineering brings breakthrough results in automotive, electronics, and medical industries. But in administrative processes, there are often fewer barriers to making the early-win improvements. The challenge is to identify them and implement solutions quickly.

We have found that our Early Win Improvement (EWI) methodology can bring 25 percent productivity improvement or more, even in organizations that are already considered to be performing well. A case in point is a large accounting service center that was providing leading edge services and was generally viewed as highly effective. Indeed they were. However, it was a rapid growth environment and the business leader challenged the service center to gain 40 percent productivity improvement in the next year. The initial reaction was one of disbelief. How could this already highly producti ve center generate additional savings of 40 percent? That would be an incredible challenge, even for centers that were performing poorly. But business conditions demanded it, so the operations team convened to develop a plan to meet the challenge.

The operations leadership team made an important decision: to begin with early wins so some savings (they had no idea how much) would be captured quickly. And, although they were nervous about the seemingly unreachable goal, they were motivated to make somethi ng happen. They also realized that the lofty goal was not arbitrary. Rather, the market and the competition were forcing it.

The notion of tapping into early wins was intriguing to the leadership. They realized that whatever it might be, it was necessary to capture it. They just needed a methodology to tap into the early win possibilities in a manner that yielded results quickly, but also considered all the possibilities. We proposed our EWI methodology that utilizes the experience and insights of the people who are doing the work. The EWI methodology has six components:

1. Interviewing the executive and operating leaders to gain their perspectives on opportunities

2. Conducting work sessions with key team members to understand the processes, explore barriers to improvement, and generate a large number of “wins” to consider

3. Prioritizing the potential wins based on an assessment of difficulty and payoff potential and selecting a manageable number for further analysis

4. Review with executive leadership to gain additional perspective and support 5. Conduct analysis to clarify and further validate the opportunities, as well as sharpen the savings estimates

6. Develop a detailed, short-interval plan for achieving the win

How EWI Works

Here is how the methodology played out in practice. Experient consultants interviewed all the relevant executive and operating leaders to gain their perspectives and get a preliminary view of where opportunities might lie. Then a client team was formed. This was comprised of several of the operating leaders, the center’s financial leader, and one consultant. We conducted five work sessions over a period of four days. Participants in the sessions included experienced people and team leaders from the various areas of the service center. People were carefully selected for their experience, creativity and openness to new ideas. Remarkably, the work sessions generated 75 wins (improvement ideas) that needed to stand the test of scrutiny of the peer group within the meeting. All 75 ideas had at least some merit.

The project team then worked over the next week to organize and prioritize the wins. They also combined certain wins and discarded a few that were judged to require a longer timeframe to implement. The team members also did considerable work clarifying and validating the ideas. This intensive week resulted in fifteen wins to implement quickly. The review with executive leaders went extremely smoothly. There were no requests for large investments. No major IT changes were required. Improvements cold be made quickly. Policy changes that would be required seemed reasonable. It just seemed too easy! Well, it was not easy, but the team, other leaders, and the associates throughout the center saw the merit of working smarter. Many of the associates suggested that each team adopt this process every three to six months to stay on top of improvement opportunities.

Here are some of the wins:

  • Better utilizing systems capabilities that already exist
  • Eliminating redundancies· Specific improvements to communications with internal clients and external customers
  • Better capacity planning and scheduling
  • Better aligning working hours to take into account client and customer time zones
  • Better utilization of existing office space· Increasing spans of control
  • Elimination of most manual reporting
  • Better orientation and initial training
  • More decision-making authority and responsibility at team leader level

Conclusion

In addition to the 25 percent productivity improvement in less than six months, the accounting service center built a new set of skills and had a more confident, more empowered leaders. These excellent “operators” now know a great deal more about managing processes for improvement. They have built the early-win methodology into their ongoing operations.

Getting the next 15 percent to meet the 40 percent target remained a challenge for implementation, but most of the wins had already been generated in the work sessions. Additionally, they still plan a larger scale process improvement effort, and they believe improvement opportunities remain.

This accounting service center achieved greater savings in a shorter time – with very limited investment, focusing on process and using EWI – than restructuring or major IT change would have achieved over a longer time period at greater cost. Finally, the center is better tuned now to the needs of the business and is providing superior service.