In a world of constant disruption, is consistent, sustained performance improvement even possible? We believe it is—and to get there, we suggest a path based on frontline workgroups adopting business practices—focused on new value creation—that aim to help both workers and companies get better, faster.
Under mounting performance pressure, many corporate leaders are looking to business process reengineering to improve performance, and in many ways that makes sense—after all, processes give shape to an organization and are often useful for coordinating routine flows across large organizations. The routine work of a company should be done as efficiently as possible, which increasingly means incorporating automation.
But organizations may be missing a much greater opportunity to improve performance.
Here’s the thing: Much of the work of many organizations today—at least the work that typically offers the potential for differentiation—is no longer routine or even predictable. When conditions and requirements shift constantly, processes fail. While process optimization can still certainly help reduce costs and streamline operations, leaders should consider a different kind of organizational rethinking for significant performance improvement.
And in an environment of accelerating technological advances and rapid and unpredictable change, constant performance improvement is a must. Competition can come from anywhere—doing well relative to the competitors on your radar isn’t enough. Many barriers to competition are falling, and many boundaries, between industries and between markets, are blurring. Consumers have more access to information and alternatives than ever, along with a coincident increase in expectations. Workers have more access to information and alternatives—and increased expectations. At the same time, many employees, in all kinds of environments, face increasing pressure to reach higher levels of individual performance. The useful life of many skills is in decline, creating a constant pressure to learn fast and reskill.
Many companies have struggled to effectively respond to these pressures since long before the Internet of Things and cognitive technologies added new layers of complexity. The average return on assets for US companies has declined for the past several decades, and companies find themselves displaced from market leadership positions more often than they used to.1 While the price-performance improvement in the digital infrastructure has increased exponentially, most companies are still capturing only a small fraction of the value that ought to be available through the technologies built on this infrastructure. Existing approaches to performance improvement appear to be falling short.
It begs the question: In a world of digital transformation and constant change, what does performance improvement mean? Where will organizations find performance improvement instead?
Fortunately, many companies have a largely unexplored opportunity to not just improve performance but to accelerate that improvement, breaking out of the trap of diminishing returns and moving onto a performance curve of increasing returns. And it isn’t an opportunity only for the organization but for the workers as well.
If an organization is to take advantage of this opportunity, it may need new business practices—focused on new value creation—that help it get better and better, faster. The opportunities to identify and create significant value will likely emerge on the front lines, where workers are encountering changing market needs and dynamic conditions almost every day. These unexpected demands, or “exceptions,” fall outside of the standard processes. As the demands and conditions become more complex and unfamiliar, frontline workers could have to work together in order to address them, since an individual alone will be less likely to effectively solve an issue or develop an opportunity.
An opportunity for companies, then, is to shift to cultivating the workgroup practices that can accelerate improvement in the operating metrics that seem most relevant to a company’s performance. These groups’ ability to accelerate their own learning and impact as they encounter exceptions can be key to improving their own operating metrics, which in turn could be critical to overall corporate performance.