Lately I’ve been thinking about operational efficiency and decision making, partially due to a recent proposal being made by our state government to increase taxes on business. Rather than raise taxes or cut programs, is there an alternative to increase operational efficiencies, hence improving productivity and reducing costs.
It was a long time ago that I started my career in the Australian federal government and I’m sure many of the practices I saw then, that not only led to inefficiency but seemed to encourage it, are still in place today. I’m referring to multiple layers of management, a hierarchical approach to decision making, the “use or lose it” approach to budget spending etc. These inefficiencies are not limited to government organizations, so the question is how to improve efficiencies in larger organizations. I believe this is through ensuring that daily operational decisions are streamlined and made with as little friction as possible.
Out of necessity as a young fast-moving company, we have a flat organization structure and try to empower every one of our people to make the best decisions in the shortest possible time. As organizations get larger the conventional wisdom is to add management layers, seeking to normalize “scope of control” across the organization. But this approach inevitably leads to multiple people wanting to be involved and “add value” to decisions in order to justify their role in the organization. This may be appropriate for longer-term strategic decisions, but it adds friction to the operational decision cycle. In physics, friction slows things down, retards forward progress and generates heat and wear on components. The same characteristics can apply within an organization.
So how do we avoid introducing friction into the decision making progress? This would lower latency and increase the velocity of a decision cycle from the time an event occurs to the time appropriate action is taken. James Taylor has written some great blogs on the topic. The key is ensuring that the people in the best position to take a decision have timely, relevant, actionable data they can use to make the best possible decision in the shortest possible time. In most cases the people in the best position to make an operational decision are front-line people or maybe the first line manager. This means all of these people need continuous and immediate access to relevant information rather than having to wait for periodic reports, an analyst to interpret data or senior management to issue an edict.
Providing information broadly within an organization (suitably authorized and constrained by relevancy) ensures rapid, informed decisions with minimal friction and delay. This leads to higher productivity, happier more empowered people, better outcomes and improved efficiencies. That is what operational performance management enabled by operational BI delivers – and is of course the mission for myDIALS.
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