The study clearly shows that it is indeed possible for Canadian business to close the productivity gap, more then just cost cutting, improved profitability is found through effective implementation of these 5 levers," said David Schincariol, Sr. Partner
Burlington, ON, Canada (PRWEB) October 16, 2013
Maremonte Group, a leading provider of innovation, commercialization and productivity improvement solutions, announces the results of a three year study of productivity improvement initiatives across Canada.
For many firms, cost reduction has been the primary business method for improved productivity and indirectly improved profitability for the last 4-6 years. This tactic, while simple and intuitively direct, is rapidly decreasing as an effective tool as businesses find it harder and harder to make substantial cost reduction gains.
The study conducted by the Maremonte Group has shown that businesses that have been primarily focused on cost cutting are in fact suffering for failure to invest in innovative process, new technology and training.
Today more then ever, the data shows that improving business productivity and thus profitability is now a complex process of manipulating multiple change levers in concert.
The study finds the five key levers for sustained productivity improvement are:
1. Balance the cost base
All businesses are used to cutting areas of high cost, but it is much more important to strategically manage the structure of the cost base (balance labour costs vs automation costs, fixed and variable, operations vs overhead, etc.). As senior managers the key is to ensure the trends are structured to change in the right direction rather then simply making sudden cuts or changes.
2. Optimize at the team level
Top down realignment of the business with a new strategic direction or improved productivity plan may be common but can be disruptive. The data is in fact showing this common practice may not be the best way to address productivity issues. Coaching teams to analysis their process and empowering them to determine the optimum configuration of the teams (skills and responsibilities) and allocation of work (steps in a process) is proving to show sustained benefits that exceed top down planning. The data shows that the business unit teams are the experts in what works and doesn’t work. Encouraging the teams themselves to self organize through a formal process with rewards that maintain a focus on the aspects of business productivity that are most important is key.
3. Understand knowledge management
Knowledge management is both a discipline and a process which is often discussed but usually relegated to recommendations and reports that rarely make much impact. The data shows that effective knowledge management is in fact one of the most powerful levers in productivity improvement. This lever provides companies with the ability to capitalize on knowledge as an active ingredient in day to day operations. Capturing knowledge at every stage of a process for reuse, such as is commonly understood in applications like closed loop marketing and three sixty performance reviews. But equally important in less understood areas like product development and bringing diverse functions together to share information in a common format, such as to optimize the use of information across the entire internal value chain. Not only does this result in productivity improvement from better products and services but it also delivers productivity improvement in the process itself.
4. Practice effective business process reengineering
Business process reengineering methods such as LEAN, six sigma and Theory of Constraints produce direct results. This lever is well understood by business and continues to be used effectively. However, the challenge for business is how to maximise the value-add from knowledge based activities as distinct from automation of more standardised, repeatable activities. Success with this leaver requires new ways of thinking regarding skills development and training of staff in order to achieve productivity improvement that is sustained and self enforcing.
5. Proactively align technology
The world of business IT options is vast. One thing they all have in common is big promises, big investment and big risks, So much that many businesses simply fail to implement effective IT solutions at all. Starting to proactively integrate IT into management processes and leverage automation opportunities created by IT are key to productivity improvement. How to de-risk the investment is the challenge.
This three year study shows these levers, unlike periodic or one-off cost reduction initiatives, must be orchestrated in concert within the framework of an embedded continuous improvement process. To achieve the promised productivity and profit growth results, each of the levers needs to be integrated into business culture and staff need to live the change as much as repeat the mantra.
Maremonte utilizes a revolutionary new proprietary innovation process that can substantially improve success in the innovation and productivity of existing company processes, commercialization of new products and ensure positive impacts from company-wide change initiatives.
Maremonte proprietary methods can be applied across entire firms, including engineering, administration and project management departments, as well as manufacturing and service divisions.