Done correctly, effective business leaders know that sustainable operational excellence in construction can create a lower bid and still allow room for a higher profit margin. Market advantage seldom is gained by one or two well-implemented ideas. Rather, an organization that can rapidly adapt and implement multiple new ideas will create conditions for success.
No longer is it one technique or approach that gives a company an edge over its competition, but rather advantage is gained by companies testing new practices and constantly evolving. In order to create this type of advantage, companies must be great at implementing ideas rapidly. From our work with clients through the recession, there are five steps required to achieve operational excellence.
- Align operations with strategy. Tying operational initiatives to company strategy allows for a natural motivation or rallying cry to achieve results. By doing this, the leaders can focus on what is essential while the company continues building projects and remains disciplined to follow through on the initiatives they start.
- Create simplicity in operations. This starts with achieving clarity in how we are performing today. It requires integrity in information across the company. Once this clarity is established, the field and office can communicate clearly around the truth. Labor budgets, cost code tracking and costs to complete are three systems that become most clouded. Each of these, when unclear, can create drastic consequences. Simple formats are understood easily and used often.
- Lead effectively. Influence is more effective than imperatives. Influence requires great leadership in engaging others and creating a common cause or vision of the future, in order to motivate through and achieve the desired change. Leading by seeking engagement from your company requires more energy, does not happen quickly, but has much longer and lasting effects. Building a vision for the future and clearly communicating it across the organization so that those implementing it understand the value of their efforts is essential to great organizations.
- Develop best practices with the customer in mind. Every best practice should have a clear purpose and customer identified. Establishing a goal will help keep the system simple and connected to “the bigger picture” and enhances effectiveness.
- Constantly improve. The recession has created a search for improvements across the construction value chain. Vendors and suppliers of all types are eager to add value to the project by helping reduce costs. Companies that are the first to implement efficiency-laden ideas will gain immediate advantage in the market until competitors catch up, which often happens during the regular product release and fielding for the vendor when the product goes to market.
Every construction company has levers that it can pull to improve operations. These may include training, leadership, lean operations, automation, technology or many more. None of those levers is a magic pill that will make an immediate impact when operated alone. As an example, engaging project managers in training alone will not create great operations. Similarly, just providing safety training does not create a safer company. It is a good first step, but must be followed by leadership, reinforcement, accountability and more.
Knowing which initiatives and combination of levers to use for each context is critical to operational excellence. The principles above will assist in implementing change and creating an organization that can successfully adapt to the new and demanding environment.
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