We are just one quarter into 2023 and it is certainly shaping up to be a tough one. We have already seen disruption in the tech sector with layoffs amounting to a whopping 140,000 people in three months. More recently, the financial sector has also been affected and all eyes are on the possibility of a contagion effect across sectors.
Throughout my years of overseeing global operations, I have witnessed the benefits of doubling down on operational excellence amid stormy economic conditions.
When you think of operational excellence, you may link it to concepts such as Kaizen, a Japanese term meaning “change for the better” or ‘Six Sigma’, a form of quality management that is widely used to govern organizational improvement efforts. These concepts, among others such as Total Quality Management or Lean Manufacturing, have one thing in common – and that is to pursue constant improvement in every facet of an organization. According to a paper published by the Quality Management Journal, continuous improvement and operational excellence programs helped companies save on average, 1.7 per cent of total revenue and more than $2 for every dollar invested in the programs.
Resisting a fully defensive strategy in desperate times
In tough times, it is tempting to default to defensive strategies such as reducing operating costs, eliminating discretionary expenditure, and reducing headcount. While this could help the company tide over short-term challenges, the organization may find itself unable to capitalize on the recovery given its weakened position.
Based on a study by HBR on strategy selection and financial performance in a crisis, companies that take on an optimal combination of defensive and offensive moves to improve operational efficiency achieved the best performance in sales and profits post-crisis. This research clearly shows the importance and advantages of expert operational efficiency strategies such as reconfiguring supply chains and reducing operating costs on a permanent basis over simple cost-reduction plans.
Develop playbooks for long term success
For boardroom strategies to translate to the operations floor effectively, companies must first develop clear processes and strong operating models that serve as guidelines and guardrails for the organization. Think of a complex clockwork with myriad gears and components; every single one must harmonize and collaborate seamlessly to bring forth a smoothly operating masterpiece.
Playbooks provide a standardized approach to various operational processes, which helps to ensure consistency and quality. With a playbook in place, team members can follow a predetermined set of steps, reducing the chance of errors and increasing efficiency.
In addition, playbooks can be used to promote collaboration and teamwork. By providing a common framework for tasks and processes, team members can work together more effectively and efficiently.
Such an approach enables companies to reach operational excellence and sets the stage for unparalleled success.
People at the heart of operational excellence
People are essential to achieving operational excellence. In fact, they are often the most critical factor in ensuring that an organization’s processes are optimized, efficient, and effective.
People design, implement, and execute processes and hence, the quality of the work performed by people is critical to the success of any process or system.
We take a similar approach at TDCX. We place a strong emphasis on building and maintaining our people-centric culture as we believe that our people are crucial to our success. Through our engaged workforce, we are more agile in responding to market changes as we can implement the necessary strategies more quickly. As such, it is important to continue investing in training and creating a healthy and competitive culture that encourages people to strive for excellence. According to a LinkedIn report, effective employee development can increase performance by up to 25 per cent.
Boost efficiency through outsourcing
As organizations reassess their priorities, reorganize their structures, and reallocate their budgets, outsourcing partners can offer a quick and easy way to boost their operational efficiency.
Outsourcing enables companies to scale up or down quickly in response to changing business needs. For example, companies that outsource their customer experience needs to a specialist provider such as TDCX can be assured of their ability to maintain customer satisfaction levels during peak periods.
An empirical study by Business Technology Labs also found that companies delegating their services obtain more benefits than those that do not. The study showed that by outsourcing and offshoring, organizations obtain savings ranging from 25 to 40 per cent and improve talent and market access.
Additionally, outsourcing offers other benefits such as freeing up internal resources to focus on core capabilities.
By building a strong culture of operational excellence, companies establish a strong foundation that enables them to weather market conditions more effectively.
As companies recalibrate their strategies to navigate the current economic climate, it is helpful to go back to basics and to iron out any internal processes or gaps that the company may be facing. While mastering operational excellence is no easy feat, companies can however, look to outsourcing partners to help them on this journey.