We hear about all of this cool and exciting new technology every day. Blockchain, Artificial Intelligence, Drones and Autonomous Vehicles, Virtual Reality and Augmented Reality, Big Data and more.
As such it’s easy to become enamoured with the prospects of implementing these brand new technologies in your company.
But for many companies they are struggling each and every day just to get the basics right. Ensuring deliveries are on time, making sure purchase orders are placed, changed, and acknowledged, keeping track of and reducing inventory levels, managing forecasts and forecast accuracy, and training and retaining resources are just a few of the basics that companies are working vigilantly to address every hour of every day.
Given pressures to reduce costs, improve productivity, increase competitiveness and increase asset velocity what should your strategic focus be?
Shiny new technology or boring old basics?
Our Day to Day Paradigm
It is not a new phenomenon to be attracted to the next shiny new thing. As a child you may want the latest toy. As you get older you may want the latest smartphone or gaming system with all of the latest bells and whistles.
And the ongoing development of new and more interesting gadgets and devices embeds this attraction into your very DNA. Millennials have grown up in a period of time with the greatest technological advances in human history. They expect new technologies and systems to appear on a regular and ongoing basis.
As the population ages and more and more Millennials enter the workforce this is their paradigm. New and exciting technologies are what should be available and accessible to all.
On a personal level it is one type of decision to buy the latest smartphone for instance. But on a business level it is quite another level of decision to invest millions of dollars in the latest technology and system.
Despite the latest technological advancements a lot of businesses, and I can’t emphasize a LOT enough, are just struggling with keeping their businesses functioning effectively. They are stuck with trying to just get the basics right and they can’t even get their heads above water long enough to think about adding the latest system.
So how does a business determine where to focus its energy given personal paradigms and business priorities?
Should they invest in the latest, shiny new technologies or focus on getting the basics right?
Look to Your Key Performance Indicators
The first place you should look to determine where your focus has to be is your metrics dashboard, your KPIs.
If you are truly managing your KPIs it should be obvious where your problems are, or aren’t. If you don’t even KPIs then the answer is equally obvious … focus on the basics and get metrics in place first and foremost.
If you are late on deliveries, if you have systemic quality problems, if your inventory levels are out of line, if your cost per purchase order is too high, if your forecast accuracy is really out of whack, if your cycle times in manufacturing or distribution are too high, or if your negotiating success is too low, these are all some indicators that you have work to do on the basics.
Several times we have been able to achieve Industry Leading results just by focussing on improving the basics with no systems or technological improvements whatsoever.
There is a fundamental principle to keep in mind:
If your metrics and operating performance are out of line and you are thinking that you just need to install a new system on top of your current processes you are dead wrong.
You must improve the underlying process as best as possible BEFORE you introduce a new system or any kind of automation. Otherwise you are just going to speed up or lower the cost of making the same type of mistakes over and over again.
Value stream map your current state and future state processes, exclusive of new systems assumptions, and implement these changes first.
As you look at your KPIs you should also consider whether the KPIs are both necessary and sufficient. Are you tracking KPIs that are really necessary or are some of them redundant? Are the KPIs tracking sufficient to meet your needs and the overall organization’s objectives? Depending on how you answer it may be time to rework your KPI dashboard.
Look Beyond Your KPIs
Even if you have a robust set of KPIs and you are tracking well that may not be enough. Looking at your performance versus internal targets can be interesting but inadequate. You may be blowing the doors off of your internal targets but if your results are far below those of your competition then you are really just fooling yourself.
Benchmarking is critical. Look at the performance of your peers, your competitors. Look to industry associations for benchmarking information. And even look outside of your industry, perhaps to those whose performance your admire.
And finally consider the feedback and perceptions that surround you. How does your Executive team feel about your organization? Are you vital to the company’s success or are you just contributing to be a necessary evil?
What are your customers telling you? Are they happy with your delivery performance, quality, cost competitiveness, and your ability to respond to demand changes?
The competitiveness of your organization is also a driving factor in determining where you should be focussing your energies. If your services or capabilities or financial performance are falling short of expectations then this should inform what you need to do next. If you remain uncompetitive long enough your company will not survive making the entire conversation mute.
Driving Principles with New Technology
In helping you determine whether you should invest in new technology or just get back to the basics we believe that there are a set of driving principles that should help shape your decision making process:
- Never automate a bad process. We mentioned this before and it’s true. If you think that a new system is going to make all of your process issues go away you are wrong. Automating a bad process will only make the same problems occur faster and more frequently.
- Do a reality check on your resources. It can cost a lot of money and consume a lot of resource to invest in new systems and technologies. You may be able to stretch this out in the vein of “short term pain, long term gain.” But if this is too much to ask of your organization consider going back to the basics first.
- You don’t have to do everything yourself. There are a tremendous number of companies who are experts in their field. They have already invested in the latest technologies. Outsourcing parts of your organization to these companies can give you immediate, cost effective access to the latest capabilities allowing your organization to focus on its core competencies.
- Keep it Simple Stupid! There is no question that new technologies can improve productivity and make your organization more competitive. But do you really need that technology or can you get just as much leverage by focussing on basic process improvement techniques?
- Are you a leader or a follower? In asking the question we realize that people may immediately jump to answer “Yes I’m a Leader”. That is fine if it is true. But it is also ok to be a follower. Depending on the size of your company and your place in the market you may be on the bleeding edge of offerings or you may be in the pack. Being in the pack is ok if leveraging technology will not gain you any discernible marketplace advantage.
New Technology in Conclusion
It can be very easy to covet the shiny new technologies that we hear about every day, and envy those who have those technologies in place. But you need to really consider your environment holistically and determine whether you are best served in implementing new technologies.
Very often magnificent achievements can be accomplished just by focussing on improving the basics through fundamental process redesign. It doesn’t mean that you shouldn’t invest in new technologies in the future.
Consider that your strategy is a roadmap of the journey that your organization should undertake. This journey should start with fixing the basics and evolve to incorporate more technological improvements over time.