As CEO, one of your most important jobs is to maximize the efficiency of your operations. A big part of that mandate involves identifying and eliminating bottlenecks.
A bottleneck occurs when there is a disparity between the rates of inputs versus outputs. This interruption to your business can lead to missed deadlines, lost revenue, unhappy customers, even legal problems. In a manufacturing setting, bottlenecks along the logistics chain are often more easily identified. Are your trucks idling at the loading dock, waiting to be filled? Examine production line capacity. Can’t finish assembly due to missing parts? Look for additional suppliers. In a corporate office setting, however, the causes and solutions may not be as obvious.
Most bottlenecks can be traced to one of two root causes: processes or people. Sometimes these are short-term blockages, as when the one person that knows how to use that program or machine goes on vacation for a week. Simple cross-training will eliminate that problem before you have to deal with it. Similarly, introducing a new piece of software can slow everything down for a short while as people learn how to use it. In those cases, you could train one or two people at a time, deliberately stop work for a day or two of intense instruction, or institute a longer transition period.
“Most bottlenecks can be traced to one of two root causes: processes or people.”
Bottlenecks can also be long-term, as when one department is consistently late with their month-end reports, or seasonal demand outstrips production every year. Recurring issues such as these warrant a closer look.
The Elimination of Process
From simple whiteboard flowcharts to fishbone diagrams to the Six Sigma “Five Whys” technique, there are many tools available to help CEOs isolate problems within their corporate procedures. According to recent surveys, the top three process bottlenecks are:
- Poor Communication – can manifest in many ways, such as lack of leadership from the C-level, departments not receiving critical information in a timely manner, or not knowing who is responsible for a particular project goal.
- Unclear Prioritization – occurs when projects are mismanaged, employees report to more than one department head, or there are several “fires” at once.
- Lack of Integration – the chief complaint when each department uses a different software suite, none of which are completely compatible with the others. This also dovetails into the first bullet point above.
What to do: Chances are, if your bottlenecks occur in one of these areas, you’ll discover redundant or superfluous processes are to blame. Purging these can boost the speed of the information moving through your company. Make sure your Org chart, project assignments, and lines of reporting are clear. Consolidate your software suites as much as possible, so everyone is working from the same system and has access to all of the necessary information.
A key to company growth is expanding your market share. Methods for doing so include continually adding new services to your clients, positioning yourself as being on the cutting edge of your industry, or both. However, either of these actions can lead to severe bottlenecks. Some of the more common headaches are:
- Low Capacity – you don’t have enough people to handle the existing workload efficiently, or you can’t spare anyone to offer a new service or establish a foothold in a new market.
- Back Office Infrastructure – the day-to-day business of answering phones, filing paperwork, and other overhead is taking too much time away from your core services.
- Shallow Talent Pool – somewhat related to both of the points above, you lack enough people, or the people you do have don’t have the necessary skills or training to effectively service your clients.
What to do: Traditionally, the only two choices a CEO had were to either invest in long-term recruiting, training, and building, risking significant capital investment against market shifts, or outsourcing, risking loss of direct control. However, outsourcing has drastically improved over the years, especially in companies that strive to be true extensions of their partner’s teams, as opposed to mere vendors. This improvement has sparked the emergence of a new and improved way to outsource, where companies can take advantage of “virtual office” models, in which the outsourcing firm offers clients its own dedicated team committed to meeting client standards as if it worked for the company full time. Utilizing outsourcing in this way increases productivity quickly without sacrificing quality of work and saves money on overhead costs.
You don’t know what you don’t know.
Sometimes you won’t be able to identify the root cause of your bottlenecks. Sometimes you’ll find them easily, but won’t know the best way to eliminate them. What then? Fortunately, CEOs also have training and mentoring available to them, in which other business leaders lend their expertise toward helping you streamline your workflow, eradicate bottlenecks, and position your company on a solid foundation for growth.