There is a growing distance between those who affect the physical world and those who manage information. Affecting the physical world relates to folks who build things, repair things, move things around and the like. I am talking about assembly line operators, pickers and packers in distribution centers, truck drivers, doctors, pharmacists, farmers… These are the people that create the goods and provide the services upon which our lives are supported.
Managing information relates to folks who create market and transaction efficiency, support operations by creating demand and managing transactions, run the systems that drive activity and create those systems. These are accountants, managers, stock brokers, passive investors, customer service representatives, financial advisors… These are people who help make this happen on a large scale and at incredible efficiency.
Neither group would fare well without the other. And while there is some overlap along the borders, the majority of individuals fall into one group or the other.
The gap created here is not directly intentional. Most are not even aware that a gap exists. And therein lies the problem.
In the many organizations we have worked to create value, we have identified places where this gap is most impactful and closed it. The most common disconnect has been between those who schedule production or distribution and those who execute the work. However, this disconnect exists on many levels and in nearly every discipline.
Sometimes, those who are removed from the primary activity of the organization become disassociated from the realities of the environment. A sales forecast may accurately pinpoint demand. Even if that forecast is “perfect”, meaning it is exactly what demand will be ordered, it is only achievable if the product or service being sold is available. Forecasting 10,000 units of volume for the year, knowing that is exactly the demand for a product, is worthless if the business is only capable of producing 8,000 units. Further, if the capacity of the business is 10,000 units per year but the sales all hit in March, that plan is not possibly going to be executable.
Another major disconnect can be seen in finance and accounting. Cost savings programs that reduce headcount often ignore the fact that, as inefficient as an operating unit may be, someone still has to do the work that the displaced employee did. Without changing the environment and the processes that make the unit inefficient, just cutting the headcount only risks meeting the service proposition.
While the list of examples is exhausting, the solution is simple. Those that execute the work need to work with those that support them to build an operating model that addresses the future needs of the business. The anticipated output of the business needs to be incorporated into operating plan, processes to meet those needs must be developed and the support functions need to be aligned to support that operation. Too often, businesses will develop a new IT infrastructure to meet the needs of the sales organization without addressing the scheduling and information needs of the operation. The folks that do are expected to produce without the tools needed to maximize the effectiveness and efficiency of the shop floor. In the end, without providing the goods or services the business was created for, a business cannot survive. Customers, the source of revenue that allows and entity to exist, do not care how well you can forecast, how efficient your accounting processes are, or even what your balance sheet looks like. Customers create a revenue stream because of the salable output of the business. The product is the lifeblood of the organization.
Take a look at your organization. Is the product the main focus of improvement initiatives? Are all your projects to improve the business geared to improve the quality and capacity of your output, or to support that? Cost saving initiatives are fine as long as they are not impeding your ability to generate throughput (the generation of cash through sales). If protecting or increasing throughput is not your primary focus, you are getting the cart before the horse.