Posted by: James Murray
business stages, Efficiency, Modern Network archtitecture
So now the business has grown at an incredible rate. Many business owners feel that at this stage all problems are good problems. In a sense they are because the owner feels like the business has grown to a point that there is just too much work. On the other hand this is where businesses topple over. Imagine a tree with so much overgrowth
Imagine as a new entrepreneur you believe that the competition is missing one step in servicing their customers. That step takes an extra 15 minutes that the competition doesn’t take. With one customer and extra 15 minutes is no big deal. With 10 customers that’s still only an extra couple hours. As the business grows though, that fifteen minutes grows to ½ an FTE. With a little more growth that 15 minutes grows to a full FTE. Eventually 15 minutes for one customer can grow to a full department.
Now that the original customer added 15 minutes here and 15 minutes there to the overall process. Scaling the business amplifies all the inefficiencies in the small business process. Adding FTE’s and departments adds indirect costs to the overall customer process. Now that 15 minutes becomes a liability when competing. The costs of new departments, leadership and supporting overhead cost resources. Resources other competitors don’t have to spend. What was a competitive advantage now becomes a competitive liability.
In the efficiency stage the business takes these 15 minute processes reduces or eliminates costs associated with those 15 minutes. Business process automation becomes the strategy. If there is a competitive advantage in having that extra 15 minutes of work done for clients reducing the time spent on that 15 minutes, but providing the same level of service quality. That’s the goal of business automation.
There is often confusion over the difference between efficiency and innovation. In the efficiency stage the goal is to find a way to do what the business is already doing with the same level of quality. There is change involved, but not the kind of change involved in innovation. In efficiency we identify the present process and make it better.
As an example:
A Sales person makes a sale…
- The process is to create a checklist of tasks in a notepad.
- Call the home office to check inventory
- Call the production manager to check the schedule
- Uses a calculator to add the costs and produce an estimate
- Then gets and agreement from the customer
- Takes a check as down payment
Then sends a memo to the manufacturing to start the process for the customer
In this scenario it’s easy to see where efficiencies might be gained in this process. What worked when the owner wore all the hats not becomes cumbersome when working with a team.
The answers don’t involve changing the process though. Rather the answer is automating the process. The automated process allows the sales person to quickly process the customer. Instead of paper, process each request through a handheld computer on the customer site. Instead of making calls manually the information is already provided online through the handheld computer. The agreement starts the production process with a click on a computer.
The computer still creates the checklist, checks inventory, checks production, calculates the estimate and schedules the process in about 5 minutes from the customer site. The process does not change, Instead of the old way that required hours of manual calls and attempted contacts with each division.
For the technology architect, efficiency systems involve understanding the process flow of the data. Following that flow and looking for the bottlenecks in the process. Most small businesses build systems that look like a series of bottles. Each bottle fills the next bottle in the line. Efficiency turns the whole process into a single bottle. With a single bottle neck that controls the flow of information through the entire process.