Imagine you have a brilliant friend. He’s always full of great ideas. Unfortunately, this friend rarely brushes his teeth, never flosses, and showers only occasionally. So when he tries to implement his ideas, he struggles: Who would ever listen to someone so disheveled and gross? Your friend’s lack of hygiene has rendered him an ineffective person.
There is a similar dynamic at play in organizations that put all their effort into strategy without first establishing basic operational hygiene.
It’s up to company leadership–including the CEO–to ensure that the organizational equivalents of showering and teeth-brushing are in place. That includes less glamorous, more “managerial” responsibilities like clear goal setting, KPI tracking, manager training, and creation of effective decision-making and communication processes.
Until those internal, operational essentials are covered, your business will struggle to be competitive in the marketplace, no matter how brilliant your strategy is.
How Operational Focus Played Out at Hewlett-Packard
Carly Fiorina’s tenure at Hewlett-Packard offers a high-profile example of this concept. When Fiorina took over as HP’s CEO, she introduced numerous new strategies, including the contentious acquisition of Compaq, and spent much of her time in the public eye.
Unfortunately, HP’s biggest problems were internal and operational in nature, as the actions of the next CEO, Mark Hurd, clearly demonstrated. By focusing on reducing costs and increasing efficiencies, Hurd delivered exceptional performance. The company’s profits increased for twenty-two straight quarters under Hurd and its stock price doubled.
Operationally Excellent Firms Perform Better
The performance boost from operational excellence extends far beyond HP. World Management Survey conducted interviews with managers at over 12,000 companies and reported that “the large, persistent gaps in basic managerial practices we documented were associated with large, persistent differences in firm performance.”
The higher a firm ranked in operational effectiveness–scored across areas like operations management, performance monitoring, target setting, and talent management–the higher its performance on “high-level metrics like productivity, profitability, growth, and longevity.”
3 Rules for Operational Effectiveness
Here are three simple ways any leader can refocus on the internal, operational disciplines that enable high performance.
1. Have a killer operating rhythm.
Your operating rhythm is the framework that ensures your team is aligned with meaningful objectives and communicating effectively. In a post on “operational ruthlessness,” Tawheed Kader describes this as the “drumbeat of your business.”
Elements of a solid operating rhythm include:
- Annual offsites to clarify strategy and long-term goals
- Quarterly executive team meetings to create 90-day goals that support broader objectives
- Weekly operations meetings to review KPIs and predict outcomes
- Monthly all-hands meetings to communicate directly with staff
- Weekly/biweekly 1:1s between managers and each of their direct reports
- Quarterly employee appraisals and growth discussions
2. Make sure your managers are good at managing.
Middle and frontline managers are critical leverage points for operational excellence. Many companies stumble here by promoting high performers to management but failing to give them the required training for the role. This leads to managers who don’t really know how to manage–they’ve never had to set expectations with employees, deliver feedback, attract talent to the team, or nurture new leaders.
Empower your managers to uphold operational excellence across the entire organization by investing in training programs, or simply choosing to promote and hire individuals who already have management aptitude. Fortunately, the fundamentals of management can be mastered by almost anyone.
3. Know how to listen to your workforce.
Finally, operational excellence depends on leadership listening to the voices of internal stakeholders–i.e., the employees responsible for executing strategy day in and day out.
As the Iceberg of Ignorance tells us, top leadership is often unaware of most of the problems that exist on the frontline. Operationally effective leaders make consistent efforts to surface employee insight and act on it. They gather not just data but human input on what’s working, what’s not working, what customers want, what the future looks like, and so on.
Every organization faces a host of external threats and opportunities. Managing those, and cultivating important external groups, will always be part of the leader’s job. However, never underestimate the immense benefits to be had by mastering basic operational disciplines. By growing your organization’s internal capabilities, you create the stability required to compete in a very unpredictable world.
First appeared on Inc.com