The Secret Sauce to Business Performance

Photo by Matt Ragland on Unsplash

Part 5: The 5 P's of Operations Management, Performance

This blog is the fifth in a 5-part series where I’m breaking down the 5 P’s of Operations Management.

1. People 
2. Processes 
3. Products 
4. Partners
5. Performance + Profit = Productivity

Before We Get Started

One word about the Performance P before we get started. 

If you don’t have all the other “P’s” in place, and optimized, then the performance P will not work. 

You need a strong operations management foundation before you can actually produce anything in a sustainable way and with excellence. Especially, if you are a startup or a small business. 

So, if you have not read the first four blogs in this series, take the time to start at the beginning.

I linked them all in the list above, for your convenience. 

Now let’s get started.

Defining the 'Performance' “P”

To kick things off, let's get a clear understanding of what the performance P really means. 

It's all about how effectively and efficiently your operations run. In essence, it's the heart of Operations Management.

In my 3P Operations Framework I call the performance P, productivity. 

This is why. 

In order to increase productivity you need great products that people love, and strong partners so that your business is empowered to perform at a high level, which leads to increased performance and profits, right? 

So, in my opinion, productivity encompasses all of these aspects.

In some models you will see profit as being the 5th P, however that implies more of a lag measure result rather than a proactive lead measure action, in my opinion.

Now that we have the foundation set for today’s blog, let’s move on and get into how to increase business productivity.

How do I Increase my Business’ Productivity?

This is one of the most common questions that growth-minded business owners and executives have. I’m sure you agree. 

However, I actually believe the better question is, “How do I measure my business’ productivity so that we can increase it?”

From small startups to large corporations, understanding and optimizing productivity is critical.

In this blog, I am going to break down four key elements of productivity that every business leader should know about. 

1. Measuring
2. Innovating
3. Refining
4. Owning
   
   
5. Measuring Key Metrics for Productivity

First, you can't improve what you don't measure. 

Depending on the size of the company you need to choose 5-20 key Performance Indicators (KPIs) to see what kind of gaps there may be that are hindering productivity.

Think of this as your dashboard on your car that monitors the performance of the vehicle to ensure you get where you want to go. 

When something goes wrong an alert will go off so we can take the necessary steps to fix it and get where we need to go.

When you decide on these metrics be sure they are lead measures not lag measures.

Let’s Define The Terms

Lead measures are real time activity based measurements that show what is actually happening in your business workflows.

Here are a couple of Lead Measures:

• Sales calls made per week
• Units produced per hour
• Customer Surveys completed per day

If these start to dip, in any way, then it can be addressed immediately to correct it.

Lag Measures are “after the fact” measurements that can’t be changed on a daily basis. Therefore, they are good for goals but not good for productivity measurements.

Here’s a couple of examples of Lag Measures:

• Monthly Closed Sales
• Quarterly Customer Satisfaction
• Annual Gross/Net Revenue

These are the accumulation of your Lead Measures. They make great goal metrics but terrible KPIs.

So, get a great set of KPIs for each department and you will have what you need to identify and solve issues so that you can grow.

2. Innovating for Maximum Productivity 

In today's digital age, technology plays a crucial role in enhancing performance. We can do a lot with tech solutions like software, automation, data analytics, and now AI has taken all of this to a whole new level, so that businesses can streamline operations and boost productivity.

Also, every business has challenges to overcome. 

Challenges like managing the tension of always trying to optimize performance, troubleshooting bottlenecks, increasing profit, to name a few.

The key thing to understand here is that you need to solve the problem first then look for an innovative tech solution to help you get it done. Not the other way around. 

Tech is great if it has a specific purpose to solve a specific problem or enhance a specific situation.

Don’t get sucked into the new thing if it’s not a great fit for your solution. This is a profit killer!

Now, let’s dive deeper into the tension of continuous improvement.

3. Refining for Continuous Improvement and Performance Excellence

If a company has a growth mindset, then there will always be tension in this area.

Why?

Some people will get comfortable with the business’ current and past success and believe this is good enough.

Others will understand that you will have to continuously improve. 

This is a good thing if it stays healthy.  What I mean by this is, if your team stays unified on the mission and vision of the company then everyone will take ownership of innovating together.  

But, because we are human, sometimes we “step on people’s toes” in the process. As long as your team understands that the intentions are good, to keep their feelings out of the process, then they will enjoy success as they learn how to improve together. 

The ultimate goal is to continually offer quality products so that customer satisfaction stays high. 

This process will help your business discover strategies for ensuring your products or services meet or exceed customer expectations, leading to increased loyalty and positive word-of-mouth.

Lastly, it takes innovation to stay efficient to strike the right balance by reducing wasted product and time so that operational costs are in check.

This will ensure your profits stay where they need to reinvest back into your business for constant innovation to scale.

4. Creating a Culture of Ownership

Your employees are the “backbone” of your business. The fuel to your “business engine.”

So, if they are empowered, they will be highly engaged, and then take personal ownership of the business along with you, the actual business owner.

This is also the only way to scale your business. 

You need everyone highly invested in every aspect of the business or you will be doing it all yourself while they all collect a paycheck. 

I like to say, you need to move your team from “clock punchers” to “owners.” 

Does this mean that everyone is going to be an actual owner or executive leader?  No.

But it does mean that everyone can take personal ownership in producing high quality work that helps move the business forward every day. 

What does this look like?

A person who takes ownership will be willing to be accountable for their daily productivity. 

For example, 

• They come prepared to meetings to share what they have accomplished. 
• They own up when they don’t meet their goals. 
• They desire to engage in constructive conversation to help them hit and exceed their goals.
• They bring new ideas to the table. 

The best part is, they don’t need to be threatened with losing their job if they don’t do these things. They understand that if they don’t do these things then everyone loses their job. 

At this point they are taking ownership just like you, the actual owner of the business. 

This is the secret sauce to all of the 5 P’s of operations management, taking ownership, but the most difficult to get accomplished with all your employees.

However, if you foster a strong culture of ownership, then your business can grow to sustainability, and handle the operational stresses to scale efficiently, maintain consistent - high quality, and meet increased customer expectations. 

Also, all the planning and process work will be well worth it because with a culture of ownership those plans will not just sit on a shelf or in The Cloud. They will actually get executed to scale your business!

The Good News

Optimizing productivity is the core of successful operations management. 

So, if you focus on these four key components of the 'Productivity' P, you can scale your business to the next level of success and sustainability.

1. Measuring
2. Innovating
3. Refining
4. Owning

These key components can also help any business, regardless of its size or industry, thrive in today's very competitive environment.

If you want to go deeper into more strategies to increase your business’ productivity check out my previous blog called, “What Increases Productivity and Growth for Businesses?"

Enjoy the Process!

Grow more. Risk Less

How I Can Help you Grow More & Risk Less

• Invest in your key leaders to grow your business with the 3P Boot Camp
• Business Owners Join the Strategic Growth Forum to Grow your Business
• Schedule a FREE Strategy Session
• Do you need to keep your sales team to stay focused and increase sales? It's time to put how you sell at the core of your business. Membrain is the B2B Sales Enablement CRM that helps businesses to consistently win. Make how you sell, why you win. Contact Me to see how I use Membrain in my sales process and how it can work for you!