Success Proves Elusive for Operational Improvement Initiatives

A surprising forty-five percent of respondents to the new study by Celerant and the Economist Intelligence Unit said that recent improvement initiatives “performed below plan,” and less than one-third of improvement initiatives performed above plan. These lackluster results were achieved despite wide agreement among respondents on the need to improve operational efficiency (60%) and their specific top objectives—61% claimed improved customer satisfaction as the top objective, and 49% claimed increased shareholder value.

The Celerant/Economist Intelligence Unit study covers manufacturing, oil and gas, retail, life sciences, healthcare, telecommunications, and consumer packaged goods industries. Retail company executives reported the most difficulty with improvement initiatives with a perceived success rate of 20%; the most successful sector, the oil and gas industry, still reported success in a little over half the cases.

Success is measured in terms of ROI by 75% of large companies surveyed, but only by 57% of small companies; while success is more often measured by EBITDA in the healthcare, telecommunications, and consumer packaged goods industries. A little more than one-third of respondents consider current performance management systems and processes to be effective; and 56% claim that the operating data they have is insufficient for them “to make effective decisions regarding operations performance.”

One issue that elicited widespread agreement among the study’s respondents was that communication with employees was crucial to the success of operational initiatives. At the same time, respondents also agreed that the “most difficult area to master” was communicating with frontline employees, a critical element in the reported lack of success in implementing performance improvement.

For more information on the study, titled “Strategy Execution: Achieving Operational Excellence,” call (617) 262-1800, ext. 249, or (617) 320-0738.

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