Building Business Value | Corporate Management Strategies

Increasing Operational Effectiveness

Incremental improvement gets you to par value, but not to premium value.

Ron Jones, while Senior Vice President of corporate development for Veridian, oversaw the company's revenue growth as it exploded past $1 billion before it was acquired by General Dynamics at a premium valuation.  Jones, now a Board Member with Global Strategies Group North America and the architect of a number of successful midmarket growth strategies, says that "improving daily operational performance is necessary to achieving superior results, but it is not sufficient."  Amen to that.

Michael E. Porter, who leads Harvard's Institute for Strategy and Competitiveness, puts it this way; "managers must clearly distinguish operational effectiveness from strategy. Both are essential, but the two agendas are different".  As you go through a value building process, you will see how your company can increase its operational effectiveness even as it looks toward the future to create explosive, exponential growth.  Leaders will certainly need to focus on filling the holes, sealing the cracks, re- pairing the foundation - whatever metaphor you choose to illustrate the idea that you've got to take care of the smallest details to foster an opportunity to create big change as well.

As you begin to tackle both the big things and the little things, consider choosing tiger teams of junior managers, your next-generation leaders, who may not be involved with the planning process, to handle the initiatives that increase operational effectiveness while the senior people continue to drive the process and look at the big picture.  The junior team members will feel they are part of the planning process and take an ownership role that will be critical to making your changes stick.