Transformation Advisors, Inc.
B.I.G. Strategies for Business Excellence

OPERATIONAL EXCELLENCE: A STRATEGIC IMPERATIVE.

At least once a week there are articles and blogs about insurance pricing and the return of the hard market. It’s big news because it means increasing profits for the industry. As you review the news, though, it’s clear that even the most optimistic recognize that the pendulum will not swing as far or as fast as it has in prior cycles. Tough classes of business will be the first to tighten and desirable classes will stay competitive unless and until there is an “event” that changes everything. Just waiting for things to get better (whatever that means) is not a growth strategy.

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Pamela A. Millard, CPCU

Pamela A. Millard, CPCU 530.295.1083

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There are two ways to gain an advantage in the market-place:  have the lowest price or be noticable different from the rest. Since for most independent agents price is a non-starter, or should be, differentiation must provide the competitive edge.

Differentiation can come in many different ways. One of the most common ways to distinguish your agency from the competition is based on the service you provide to your customers.  

In order to provide outstanding customer service, service that stands out, your operation must be outstanding.

Does the way you do business give you a competitive advantage?

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“We are what we repeatedly do. Excellence, then, is not an act, but a habit.”
           ~ Aristotle

When you have very little control over the price, operational excellence gives you the ability to differentiate your business through the way you do business rather than the price of the product. In a marketplace where 24/7 and “on demand” have become the norm, operational excellence is a strategic imperative.

More than just “good” customer service, operational excellence involves all the moving parts of your business. It embodies efficiency and effectiveness, employee engagement and customer satisfaction, profitability and business value.

Three things are required to support and sustain any business that wants to set itself apart from the competition, not on the basis of price but by delivering what the customer wants on time every time.  Consistent process, “lean” thinking and an engaged workforce, provide the foundation for operational excellence. All three are necessary.

Think of your excellent operation as a three-legged stool.

Operational Excellence

Structure and stability are provided by:

Consistent Process
Lean Thinking
Engaged Workforce

Add strength and support with:

Continuous Improvement
Customer Focus
Leadership

Take away one leg and it cannot stand.

Consistent Process.
Quality service cannot exist without consistency. If there is no “right” way to do it, how can anyone ever get it right?

  • Consistency reduces exposure to errors and omissions that could harm your customers and your business.
  • Efficiency and cost-effectiveness cannot exist without consistency.
  • Consistency facilitates replication, scalability, which is necessary for growth.  

Without consistent processes, your operation will tip right over.

Consistency comes with a caveat. Being consistently bad, or even consistently mediocre, is not the way you want to differentiate yourself.  “That’s the way we’ve always done it,” is hardly ever the right answer to the question, “Why do you do it that way?” It may indicate a lack of imagination, but it most certainly indicates a disconnect between the worker and the job and, very likely, the worker and the customer.

You’ve got to be able to quit things that don’t work. Moreover, things change. As customer needs change, so must process change. And it's important that, as changes are implemented, consistency is maintained. So consistency needs to be supported with continuous improvement.

Lean Thinking.
“Lean” in this context means “without excess” and thinking lean is probably something you already do, at least in terms of economies. When extended to the way you do things, thinking lean focuses on eliminating waste and improving work flow. Primarily a manufacturing philosophy, lean thinking considers it wasteful to use resources for any goal other than creating value for the customer. So lean thinking is really about customer focus and it applies whether you're delivering a product or a service. If your customer doesn’t know about it and wouldn’t pay you for it if he did, it’s waste, and you probably want to get rid of as much of it as you can.

It’s not enough to be consistent if you’re consistently doing things that don’t improve the experience for the customer. Lean thinking will stimulate continuous improvement. Lean thinking will help you guard against waste and redundancy, but only if you’re focused on the customer.

Neither consistency nor lean thinking alone will ensure operational excellence. Even if you’re practicing both, you’re still missing something vital.

Engaged Workforce.
Sustained excellence doesn’t just happen. It takes people. People who care about the customer – people who care enough to consistently follow processes that work and look for ways to improve processes that need to change. Employees who are engaged enough to care about your business and your customers.

Employees who care know what is expected of them and they know what they can expect from you. They know that what they do matters and they know what’s in it for them. That means hiring the right people. Perhaps even more important, it means providing the values and leadership that an engaged workforce needs.

For a good example of how consistency, without lean thinking and empowered workers, can drive customers crazy - or worse, away - read the case study at OwnYourOwnJob.wordpress.com.

Operational excellence puts you in position to differentiate yourself in your marketplace, whether you are delivering innovative programs to narrowly defined niches or basic protection and security for individuals and businesses in your community. Operational excellence relies on standardized processes to ensure consistency - standardized process without unnecessary complexity and without blind adherence to existing processes that don’t serve the worker or the customer. Consistent process supported with continuous improvement. Lean thinking focused on the needs of the customer. An engaged workforce inspired by strong leadership.

Do your excellent operations give you a competitive advantage? Are your employees engaged in keeping your customers delighted and bringing more in the door? Can your team deliver on time every time, even when things don't go just right? If you're not satisfied with the answers to these questions, call or email pam@transformationadvisors.com.

If you would like more information about taking your organizational excellence from theory to practice, Operational Excellence - From Theory to Practice. And if you'd like to see an example of what can happen if when, even with consistent process, everyone has to Own Your Own Job to make it work.

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