No matter what business you are in, achieving operational competency is critical. If you produce widgets, your employees must become competent in the operation that manufactures those products. If you operate a retail store, your team must be highly competent in buying, merchandising, and selling your wares. If you run a bank, you must become operationally excellent in providing the financial services you offer.
These sound like no-brainers, but you’d be surprised by how many businesses are just eking by due to a lack of operational excellence. If such companies were to reach their operational potential, they would experience greater success and profitability.
How, then, is operational competency achieved? First and foremost, it must be a quest. Owners and key executives must recognize that the pursuit of operational excellence begins with them—and it never ends.
Second, it should be a function of the organization’s purpose—its why. When employees see their jobs as putting in eight-hour shifts rather than achieving a high organizational purpose, operational competency inevitably suffers. Clock-watching drives out motives of the operating and customer outcomes that ultimately lead to financial success and the achievement of organizational purpose.
Consider a bank I worked with a few years ago. The CEO (and primary owner) expressed his concern for the operational competency of his team of seven Small Business Administration (SBA) lending officers. Only one of these “loan salesmen” (as he called them) was continuously bringing qualified borrowers to the bank’s lending committee.
My question for the CEO was simple: “What does the successful guy do that the others do not?”
For the CEO, the answer was not so simple. He replied, “We don’t know; he’s just good at his job.”
What I heard in this answer was “he is operationally competent.” In other words, he works a process that delivers desired outcomes.
With that thought in mind, I asked the CEO if I could interview the star loan salesman to find out his process. The CEO agreed. The results of those few hours together rendered the following insights:
First, this young man didn’t see himself as a “loan salesman”; he saw himself as a “facilitator of funding for successful entrepreneurial ventures.”
Second, because of this purpose, he sought ways to get in front of budding new entrepreneurs. He positioned himself as a solution-provider for capital, and he acquainted them with the SBA lending process and what to do to enhance their likelihood of passing muster with the lending committee.
Third, and perhaps most importantly, he didn’t abandon borrowers who were initially rejected by the lending committee; he reviewed the reasons such borrowers were denied and suggested ways to overcome those concerns. Because of this, he helped get loans for many who had been earlier rejected.
Finally, he enjoyed a steady stream of referral business from the clients he had helped.
When the purpose of “facilitating funding for successful entrepreneurial ventures” became the bank’s SBA lending why—and the processes of prospecting, advising, and follow-up were adopted by the other six SBA lending officers— operational competence sky-rocketed. SBA lending rose seven-fold, becoming a significant profit center for the bank.
To what extent do you enjoy operational competence at your business? How might it be improved?
These are important questions for every business. Even so, I find that we are often too busy with the day-to-day demands of working in our businesses to take the time to work on the critical issue of operating competence.
Take, for instance, the way most small-to-medium sized businesses (and many large ones) bring new people on board. They are typically given a basic orientation that involves the mandatory paperwork, followed by a bit of on-the-job training.
Unfortunately, the nature of most of this training relies on what I call “learning by osmosis.” In other words, new employees get a brief opportunity to sit at the elbow of someone already doing a job similar to their own before being thrown into the fray. Rarely is the why shared, and often even the fundamental operating processes are left uncommunicated.
As a result, the new hire starts with no operational competence, and with a decidedly tough road to ever achieving it. Because of this, we unwittingly often set up new employees for failure.
Over my 40+ years of working with companies to achieve success, I have learned that every employee should have a sense of high organizational purpose and how their job contributes to that purpose.
Further, each should be carefully taught the processes inherent in their job that correlate with desired operating and customer outcomes. These are the fundamental, essential elements of bringing about operational competence and, ultimately, business success.
Richard Tyson is the founder, principal owner and president of CEObuilder, which provides forums for consulting and coaching to executives in small businesses.