Increasing your productivity is the prime way to improve your wealth and prosperity and this applies to all types of enterprise.
The art and science of productivity improvement is simply about producing more from less. It is calculated by dividing the value of your enterprise’s outputs by its inputs. A ratio of more than one means that you are in profitable territory and everyone’s happy – or are they? The answer is maybe they are – for now.
Remember that your business environment, customer needs, technology and competitors are always changing and you need to adjust constantly and invest to keep ahead.
That adjustment is made by reducing the value of inputs and increasing the value of outputs thereby increasing productivity. Your investors, staff, the market, the government and the environment will love you for it, if you do it well and sustainably.
Remember that productivity improvement activities always cost time, money and resources. You must spend money to make money! So the question is where do you apply your productivity improvement efforts and get your best return on investment?
There are two main approaches. The first is to focus on the efficiency of processes. Necessary resources are often found from operational budgets to drive innovative programmes like Total Quality Management, Theory of Constraints, 6 Sigma, Kaizan and LEAN production that focus on processes, attitudes and behaviour development.
Continuously improving your processes enables you to make many small gains, which can be considerable when added together over time.
The second is to focus on the effectiveness of business systems. This is where you address large resource and organisational projects that include looking at policy, strategy, value chains and employing techniques like ERP, CRM and other initiatives that contribute to increased economies of scale and scope.
This approach generally requires significant capital investment but leads to large returns. Both approaches can help you improve your environmental, social and economic performance in a sustainable manner.
The way forward is therefore to consider both effectiveness and efficiency approaches. You can then tailor your efforts to your particular situation, needs and budgets by selecting from the various philosophies, programmes, and tools available.
You would be wise to examine your systems and processes that add value as they flow through your organisation and understand and measure them individually and as a whole.
Understanding them as part of the whole business provides clues to which ones to address first and the mix of large and small gains to obtain the greatest return on your efforts.
The first step is to believe that it is worth the effort. The more committed you and your team are the more successful you will be. You should then attend a workshop to find out more and talk to people who have been down the productivity improvement track.
ENS is planning a workshop that will help you target your productivity improvement efforts. This will help you make optimal decisions to improve your business performance in a cost effective, innovative and sustainable manner. To register your interest go to www.ens.org.nz/workshops
• Terry Hoskins, Enterprise North Shore Chief Executive