What is OPTIMIZE!tm ?
OPTIMIZE!tm is a methodology, approach and philosophy to enable transformational improvements in operational performance and corporate valuation. The method is simple to understand, yet challenging to implement. NO management-speak or techno-centric jargon. Straight forward words to result in action and measurable improvements.
The breakthrough in the methodology is the result of management and technology consultants seeking the answer to the question of how to successfully implement real-time performance management systems, improve predictability of the project / business outcome and dramatically increase the valuation of an enterprise. OPTIMIZE!tm is the synthesis of over 35 years of operational and consulting experience in high performance enterprises.
The major components of the methodology are:
1. Understanding the fundamentals of Organizational Valuation
2. Implementing a Process Centric Organization
3. Performance Management Model: A dynamic, objective approach
4. An information and technology architecture to enable performance improvement
Organizational Valuation – One of my most remarkable observations is just how little most executives understand about the fundamentals of business valuation. This is a major cause of organizational dysfunction. As a result, performance measurement becomes based upon subjective and personality based criteria.
To be successful, an executive team must have a fundamental knowledge of business valuation. Only then, can leaders drive the processes, activities, organizational inter-dependencies and metrics to improve performance. The result is incentive compensation and performance measurement systems based upon objective criteria. The relationships between shareholders, executives and employees become Win/Win.
Process Centric Organizational Model – A lot of lip service is given in management literature and practice on this topic. Virtually all companies today are organized along traditional bureaucracy, functional, academic oriented models. People go to college and learn about engineering, finance, accounting, law, marketing, computer science, chemistry etc. Organizations tend to be organized in similar, functionally oriented manner.
However, the current model neglects the reason the organization is in business. Organizations exist to serve a Customer. As a result, an effective organizational model and chart needs to be radically re-drawn. As a result, there should only be Four Ciritical Processes, or operational units, reporting into the CEO as follows:
- Marketing: Includes both Product and Corporate Marketing
- Sales
- Product & Service Delivery
- Customer Support
A fifth unit should also report to the CEO, Compliance. One executive needs to be responsible for planning, monitoring and providing feedback to CEO and directly to an Audit Committee on the organization’s degree of adherence and related risks with financial and legal compliance activities. This role should have enterprise focus and lead by a Chief Risk Management Officer or Chief Compliance Officer. Over the long, successful compliance with Sarbanes Oxley will require an enterprise perspective over risk and compliance with all applicable laws and rules.
Any other business funtion exists solely for the purpose of providing value to the processes of designing, selling, delivering and servicing the customer. Objective goal setting and measurement systems need to be implemented to support these functions and measure the respective contribution to enhancing business valuation.
Performance Management Model – Again, many organizations appear to be intimidated by implementing and driving the business with a Performance Management model. Typically, an annual Plan / Budget and loosely coupled sales / executive incentive compensation plans are created. Then, the organization hopes for the best.
The company executives need to understand what creates value and the related strategy. Critical decisions are made on how to invest resources to improve valuation. Goals are set across the Four Critical Processes to result in improvements in performance and valuation. The executives then go through a process of determining specific, actionable and measurable plans to realize the goals. Significant discussion is held across the Four Critical Processes to identify and assess independencies.
The Metrics that drive valuation are understood and goals across the Four Critical Processes are decomposed in order to implement early detection systems to support realization of the goals.
The process of planning and performance is constant, dynamic. The organization can no longer wait until the end of the month or a quarter to assess performance.
Information & Technology Architecture – Most information systems in a company today have emanated from an antiquated, backward looking accounting model. Other major systems supporting areas other than accounting are based on a parochial, functional view of supporting a specific functional requirement. As a result, the business, information and technology infrastructure is cost / result inefficient.
Fortunately, the difficulty and cost of enabling technologies are falling dramatically. Organizations are capable of creating a Management and Technology Road Map to support the basic enterprise mission of increasing valuation and enabling a truly Process Centric Organizational Model.
Copyright 2005 Bristen, Inc - All rights reserved. Any use or reproduction without express written permission is prohibited.
posted by John Fink at 1:14 PM
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