SOURCE: Kay Sever | July 3, 2020
Last month I talked about my art/history tour to Italy that was cancelled because of the virus. In preparing for my trip, I researched the Renaissance Period and discovered that it was founded on “Renaissance Thinking”… reaching for what had never been achieved and thought to be impossible. Renaissance artists, sculptures, architects and builders worked with a “limitless” perspective that allowed them to achieve a level of perfection in their designs and quality of work that cannot be duplicated 500 years later… and they did it without computers and high-tech tools/equipment.
Last month we compared Renaissance Thinking to the thinking required to truly optimize performance. This month we will delve deeper into traditional management perspectives and what is missing from the leadership teams of most companies.
Optimization is about achieving the best possible performance with your people and your equipment. Virtually every management team would love to achieve that goal every day, month and year. Assuming this statement is universally true, why is “best possible” seldom the topic of discussion in meetings?
1) Daily, weekly and monthly department and management team meetings are spent reviewing actual performance trends and comparing them to the plan (budget/forecast). Questions focus on variances that cause budget shortfalls and instances where budget was exceeded. People in high places are held accountable for these variances. Questions will not be asked if they cannot be answered!
There are NO NUMBERS for “best possible”, so no one knows the variance between actual and “best possible” and what that variance means to the upside potential of assets and people, future expansions and maximizing ROI; as a result, there are no questions about this variance and how to minimize it to achieve optimum performance.
2) Every year several man-weeks are spent building and finalizing budgets. Management discussions center on changes from last year’s actuals, “stretch” targets and capital requests.
Management teams have NO NUMBERS for “best possible” so there are no discussions about how budgeted targets compare to “best possible”; as a result, executives cannot determine if they have unintentionally set their people up to fail.
3) If optimization has been declared an official company goal, millions of dollars for new equipment and systems are often approved to achieve that goal. With this kind of investment comes an expectation that the equipment and systems will deliver “best possible” performance. Even if equipment and systems are perfectly matched, unmeasured losses linked to the organization can continue and will invisibly offset some of the growth in earnings.
Because there are NO NUMBERS for “best possible”, executives reviewing post-installation financial reports believe that they are achieving optimization (i.e., “best possible” performance) when they aren’t.
With all this said, it’s time to link back to Renaissance Thinking and understand how this all ties together.
Renaissance thinkers have a vision that extends beyond what has been accomplished in the past. These accomplishments can become barriers that limit perspectives about what is possible to create/build in the future. Renaissance thinkers overcome these barriers to make their visions a reality by combining new techniques with materials they are most familiar with.
The “vision” of executives and management teams comes from and is limited by the numbers they see every day, week, month and year. Numbers (or the lack of numbers) can become barriers that block management’s perspective about what is possible to achieve.
Before any of the questions discussed above can be asked or debated, your management team must have a set of numbers that reflect what is possible to achieve. If there are no numbers for “best possible” performance, management can’t ask questions about it, can’t take action to achieve it, and can’t determine how close they are to achieving it… even if they purchased equipment and systems for that purpose.
Thought for the month: “Full Optimization” requires a set of numbers that reflect “best possible” performance and a strategy to incorporate those numbers into goal-setting, decision-making, action plans and communications that make a company stronger and smarter than ever before!
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Kay Sever is an Optimization Management Expert who reduces financial losses that prevent optimization. These losses are caused by weaknesses in corporate cultures and organizations. She has developed a LIVESTREAM management training system for Optimization Management called MiningOpportunity – NO TRAVEL REQUIRED. MiningOpportunity modules teach executives and management teams how to find and quantify their losses and apply strategies and tactics that stop them. Unique insights from Kay’s 3-year study of management’s barriers to change and optimization are included in the content. See MiningOpportunity.com for her contact information and several training options for your team, including the NEW “Spend a Day with Kay” option.