“Brilliant thinking is rare, but courage is in even shorter supply than genius. . . . In the most dysfunctional organizations, signaling that work is being done becomes a better strategy for career advancement than actually doing work.… [Addressing the needs of a company is not based] on a manual or a record of knowledge but an exercise in thinking.”
Peter Thiel (founder of PayPal)
Zero to One: Notes on Startups, or How to Build the Future. 5-11 [context added]
When we engage as operational consultants our job is to challenge the owner and the operators of the business to think and act differently. We share what we think the owner needs to know and not what they want to hear. The owner must courageously accept that things can be better and then be willing to accept that some painful changes might be required.
As operators, we subscribe to the tip of the iceberg theory of life. One of the first things we do is spend time on your production floor, in your offices or in the field observing. Usually, only a few hours are sufficient. We almost always see a business practice, usually several, that increases costs or misses a revenue opportunity. We quickly conclude by extrapolation that there exists a significant opportunity to improve performance.
Examples of What We Have Found on the Workfloor-
The welder we observe walking halfway across a factory to put a finished part on a pallet and then sauntering back is not contributing optimum value to his company. He only truly creates value commensurate with his pay rate when his time is spent at his highest best use.
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The operator who is re-working a part when we happen to be present is never an isolated event. In that company, we discovered an open secret . . . 25% of orders had some level of rework.
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The order that gets set aside because all of the required components are not available at the point of production has a cascading negative effect on the business: double handling, excess labor, work in process impeding the flow of other orders, late deliveries, and poor customer satisfaction. This is usually part of a repeated pattern. In this company, we recognized a tremendous opportunity . . . over $1,000,000 in labor savings.
All companies of every size are resource constrained. With that in mind, we focus first on those opportunities that 1) create visible change and 2) generate more resources with which to make more changes.
As outsiders, we see things that are accepted as “normal” or “the way we have always done it” as correctable deficiencies . . . AKA “opportunities.”
Hundreds of thousands and sometimes millions of dollars are at stake. Usually, correcting the “opportunities” provides a very substantial return on the investment required.
Accepting Change Can Be A Challenge
Change is often uncomfortable since it requires a willingness to rethink deeply-seated business practices and a willingness to challenge sometimes powerful individuals or groups that have a vested interest in the status quo. In the best cases, enough of the right people embrace the new direction. In the worst cases, some valuable but intransigent long-term employees have to find a new place to work. We know that failing to challenge, coopt and overcome entrenched interests is a recipe for certain failure.
Change is often uncomfortable since it requires a willingness to rethink deeply-seated business practices and a willingness to challenge sometimes powerful individuals or groups that have a vested interest in the status quo. In the best cases, enough of the right people embrace the new direction. In the worst cases, some valuable but intransigent long-term employees have to find a new place to work. We know that failing to challenge, coopt and overcome entrenched interests is a recipe for certain failure.
Circumstances where Operational Consulting may be useful:
- Trustees in need of preparation for sell-side support
- An owner tired of the “definition of crazy” and who wants different results.
- Transferring ownership to the next generation
- Shareholder disputes (3rd party objectivity)
- Financial Distress (liquidate or fix it…before it’s too late!)
