Competitiveness. What does it mean, and how to achieved it.
Guest Article by Aldo Antonini, Panama
Ask to yourself, how often are politician and industrial leaders using the word ‘competitiveness’. To me, you will discover that this word is used and abused in each and every of their speeches. Which is right! Because being competitive means first of all, being able to be the winner in our more and more ‘competitive’ world.
Nations must be competitive –producing systematically goods and services able to compete on domestic and international marketplaces– in order to deliver, to each and every citizen, quality of life and low unemployment. A company must give an adequate return of investments to its investors., and just use the word ‘collaborator’ instead of ‘citizen’.
There are different understandings of what competitiveness mean, and this wouldn’t be that important, if not because definition gives you directions to become competitive and winner.
Somebody tried to synthesize it in the simple formula
Competitiveness = Quality / Price
which –accordingly to the principle of being nothing improvable, if not measurable– offers a way to make comparisons: most competitive is what offers highest quality at same price, or even lowest price at same quality level. That easy is it. Unfortunately it is not easy to compare quality, unless you exactly defined which are the criteria to do it. To be considered is even that increasing quality is not for free, and to deliver quality exciding clients’ expectations won’t necessarily make you more competitive, but for sure increase your costs.
Others say, competitiveness founds on Innovation, Quality, and Orientation to the client. Once more, this definition do not support much at identifying concretely what to do to become competitive, which actions to launch, which priorities to give, how to use best your resources, and so forth.
I’m proposing a different approach. This approach will transparently show you what to do, from now on, defining proper priorities, using available resources in the best way, and definitely increase your own performance, becoming top competitive. The proposal founds on a few banal points
- Who’s first on the marketplace can define price and quality levels competitors will have to refer to;
- Being new, product/service/whatever, you’ll have for a while 100% markets share. Competitors will have to follow, maybe working by the formula above, worsening their costs;
- Being the first on the marketplace implies that you’re running well performing processes, i.e. processes leading to result without time and money consuming loops (first time OK, which is an early indicator of the quality);
- Is point 3. true, processes will lack not only costly loops (good quality the first time), but will even have an adequately short lead time. Less time means less working hours, and definitely less costs. This is what competitors will have to fight with.
All the above leads to recognize that we’re living in a “speed driven world”, and the consequence is, that we have to work to compress the time needed to complete our processes, optimizing throughput by removing constraints.
How to realize it is described in my book “L’azienda Performante”, for the time being only in Italian, yet. Here I’ll give you a couple of inputs, which will be useful to understand the key points of the methodology, maybe even to get some first improvements.
The time an athlete needs to run hundred meters is pretty much different, if he has or not a number of hurdles/barriers on his pathway. If we remove those barriers, one after the other, the time from start to finish will become shorter and shorter, until you meet the goal in the shortest possible time, with minimum effort/resources.
So, in order to start this improvement process you have first to map your processes, as they currently are, and measure them by proper indicators (to be defined, along with the points where to measure). Once you have measured the process as is, you can start analyzing it, trying to identify how it should be in an ideal world (for instance: how long it would take to complete this process phase if we shouldn’t wait what we need from the department x, lack of synchronization, push system, poor people allocation criteria, etc.). Maybe we’ll also discover, that to complete a certain phase, sometimes we need n hours, and sometimes n/2. We’ll have to ask to ourselves why, and identify which are the barriers we are living along in that phase.
In the barriers’ removal process, indicators will clearly show improvements:
- Cycle time will drop down;
- First time OK, will increase, which means that we’ll be more and more able to achieve expected results/quality with no need of repeating one or the other process phase; and
- Process capability will increase significantly.
Just one remark on the consequences of process capability increase. The first effect is that, being able to control well the whole process, we’ll be also able to enormously improve the on time delivery, meeting the due date agreed with the client (higher customer satisfaction). But that’s not all. Knowing that we wont have surprises, and consequently unexpected delays in completing the process as required, we will be also able to introduce the concept of “late start”, which means that, thanks to starting the process as late as possible, a higher number of data and information will be available, the risk of client changing his mind will become lower, and less changes impacts favorably costs, and so forth.
The ability to control processes will give as even the chance of better planning time and resources, even when running multiple projects and using the chopper scheme (have one or a number of projects sleeping, while others run at max speed), and optimize resource allocation (once more cost reduction).
Conclusions – The methodology I’m proposing to make your company more performing, and therefore to become more competitive on the global marketplaces, is very effective and easy to implement: identify and remove barriers, prioritize them, identify and install measurements/proper indicators, lead the improvement process by measurements. Indicators will warn you continuously, and tell you if you are diverging from the shortest pathway towards the objective. Evidently you have to know how to manage barriers, which different nature implies different removing strategy and tactics and methodology and time to remove, and … just call me when you need support. With my international and multilingual team of top professionals I’m helping clients in Europe, Americas and Asia. More information by writing to firstname.lastname@example.org