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Oper­a­tional Excellence

Tam­ing organ­i­sa­tion­al chaos: From fire­fight­ing to ‘fire prevention’

April 21, 2021

If organ­i­sa­tions were ships, many of their cap­tains would be unaware of the con­stant fire­fight­ing going on below decks to keep things running.

Ships depend on numer­ous rou­tines, tools, and sys­tems to ensure that every­thing is run­ning as expect­ed so that the des­ti­na­tion is reached safe­ly and efficiently.

The rou­tines, tools and meth­ods used to ensure that busi­ness process­es run as expect­ed are gener­i­cal­ly termed: “Man­age­ment Con­trol Sys­tems” (MCS).

Organ­i­sa­tions, like ships, need well-designed MCSs to run effi­cient­ly and reach their goals. While most organ­i­sa­tions have MCSs, they have often been evolved and are not well designed or man­aged in a sys­tem­at­ic way. As a result, they may find them­selves lurch­ing from one emer­gency to anoth­er, hit­ting ice­bergs that seem­ing­ly come out of nowhere.

An MCS is con­cerned with the gov­er­nance of the process. To gov­ern a process, we need fore­casts, plans, con­trols and reports.

Fore­cast

A fore­cast asks: What do you want to do?

Before the ship leaves a port, it needs a des­ti­na­tion, it needs to know the dis­tance, how much fuel will be required – will the weath­er make for head­wind that means we will need more fuel? What speed and fuel effi­cien­cy will we attain? And so on…

For most organ­i­sa­tions, a fore­cast usu­al­ly means finan­cial pro­jec­tions of sales rev­enues and bud­gets, but that’s not all we mean in the con­text of an MCS.

The fore­cast should include how a company’s strat­e­gy will be trans­lat­ed into real­i­ty; it should be a strat­e­gy plan­ning tool. Typ­i­cal­ly, organ­i­sa­tions have a mis­sion to ver­balise why a com­pa­ny exists, a vision which describes what long-term suc­cess will look like, and key strate­gic goals, or end-states, set at 10‑, five- and three-year hori­zons. These goals should then be trans­lat­ed into quan­ti­fied objec­tives (KPIs) and tar­gets for the year ahead – for all units and indi­vid­u­als in a com­pa­ny. That’s what we mean by a fore­cast in the con­text of an MCS.

Plan

A plan asks: How are we going to do it?

We now have a des­ti­na­tion. But how do we get there? Do I have an able-bodied crew that is suf­fi­cient in num­bers and knows the ropes? Do I have the maps, instruc­tions, spare parts and tools to main­tain a safe and steady course?

In the plan, we go from a high-level, bird’s eye view and head clos­er to the ground as we trans­late fore­casts into con­crete directions.

This means ask­ing, “How are fore­casts rolled down from the annu­al tar­gets into month­ly, week­ly, dai­ly and even hourly tar­gets across the dif­fer­ent departments?”

This includes the acqui­si­tion and allo­ca­tion of resources, and the sched­ul­ing of work.

For ships, the lack of ade­quate plan­ning can be dead­ly. The RMS Titan­ic left port with only 20 lifeboats that could only accom­mo­date 1,178 peo­ple. There were 2,208 souls onboard.

Con­trol

The con­cept of con­trols is an abstract one. By con­trol we ask: What is the best way to do things? And are we doing them in the best way?

Whilst the weath­er is fair, the crew fol­lows well-known rou­tines, such as the mon­i­tor­ing and main­te­nance of equip­ment. And if a storm approach­es, the crew knows how to bat­ten down the hatch­es and ensure everyone’s safe­ty. But if those rou­tines are not fol­lowed things can quick­ly become dan­ger­ous. An engine fail­ure due to poor main­te­nance in the mid­dle of a gale is not what you want!

That is why strin­gent pro­to­cols or “con­trols” need to be in place to ensure the cor­rect, effi­cient and safe ways of working.

The Titan­ic sank because it was too fog­gy to see the ice­berg. For organ­i­sa­tions, it’s often “too fog­gy” to see what’s hap­pen­ing on the shop or office floor. The cause is not weath­er but lack of process vis­i­bil­i­ty. This is espe­cial­ly prob­lem­at­ic for busi­ness process­es. In man­u­fac­tur­ing, a super­vi­sor usu­al­ly has live per­for­mance met­rics. Often, these are entire­ly lack­ing, or reviewed on an ad-hoc basis in sup­port and ser­vice func­tions. As a result, “ice­bergs” or prob­lems seem to appear out of nowhere. The truth is, the prob­lem has always been there, mere­ly con­cealed by the thick fog of inad­e­quate mea­sures and inef­fi­cient processes.

When recruit­ing a sailor, you would expect that the abil­i­ty to swim is one of the selec­tion cri­te­ria. Yet in the busi­ness world, often the approach to man­ning a sta­tion is “sink or swim”. Lack of on-the-job coach­ing is anoth­er cul­prit of poor con­trol. It’s depress­ing­ly com­mon how work­ers are thrown in at the deep end when start­ing a new job. The front-line work­force is where resources are con­sumed, and val­ue cre­at­ed – insuf­fi­cient atten­tion to the com­pe­ten­cies and prac­tices at the front line is a major rea­son for low pro­duc­tiv­i­ty and loss of competitiveness.

Knowl­edge and expe­ri­ence must be passed down method­i­cal­ly, and this can be done via work instruc­tions (doc­u­ments that describe how to con­duct the work prop­er­ly) and on-the-job coach­ing. Super­vi­so­ry rou­tines must also be estab­lished to detect and address vari­ances to procedures.

Report

A report asks: How did we do? And how can we do better?

A ship’s fuel con­sump­tion is mas­sive­ly affect­ed by the weath­er. The cap­tain depends on a series of reports, whether dig­i­tal or ana­logue, to ensure that the ship is not going to run out of fuel.

The adage: “You can­not man­age what you can­not mea­sure.” Is an apt one. All too often when we look at per­for­mance mea­sures, what man­age­ment is focused on are what we call out­put indi­ca­tors – these are the out­comes of the process­es, such as num­ber of parts made, or sales rev­enue achieved. The prob­lem with these mea­sures is that they are lag­ging indi­ca­tors that lead to reac­tive man­age­ment. The weath­er report the cap­tain uses to antic­i­pate his like­ly fuel usage is an exam­ple of what we call an input indi­ca­tor. For our exam­ples on parts made and sales rev­enue, input indi­ca­tors could be raw mate­r­i­al inven­to­ry lev­els and num­ber of booked sales calls – these are “lead­ing” indi­ca­tors that help us pre­dict how well process­es will perform.

This is some­thing of a con­fus­ing con­cept – reports have to include indi­ca­tors that tell us not only how well we have done, but how well we are going to do so that we can antic­i­pate a prob­lem before it happens.

All indi­ca­tors, of course, need to be reg­u­lar­ly reviewed against tar­get lev­els. Any gaps in per­for­mance should be inves­ti­gat­ed, root caus­es iden­ti­fied and cor­rec­tive actions put in place.This is how we move from “fire­fight­ing” to “fire prevention”.

Con­clu­sion

In our expe­ri­ence, com­pa­nies with poorly-designed MCSs are miss­ing some of the ele­ments list­ed above. The impact of this is very real; organ­i­sa­tions become less pro­duc­tive and lose prof­its and com­pet­i­tive­ness in the market.

If an organ­i­sa­tion is con­stant­ly wag­ing war with bro­ken process­es or bogged down by red tape, it can be a sign that its MCSs are broken.

But this can be turned around.

We have built and installed MCSs suc­cess­ful­ly across all indus­tries, all over the globe. This is almost always trans­for­ma­tive for many of our clients. They become more effi­cient and pro­duc­tive, and this results in cost sav­ings and big­ger prof­it margins.

The effort in build­ing MCSs is always worth it.

Learn more about build­ing MCSs in our white paper, Prim­ing Busi­ness Process­es for Excel­lence: Digi­tis­ing Man­age­ment Con­trol Sys­tems.

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