How can organizations achieve a quantum jump in bottom line in a short time?
It was in seeking an answer to this question that "Doubt" met "Vision" at the crossroads of management philosophy one day.
Vision (looking at the graph): Which improvement curve is more practical - the red or the green curve?
Doubt: The green curve is more practical to implement. A quantum jump in the bottom line and in a short time! Does it not sound preposterous?
Vision: But if we look at the consumption power of the world in the last five or even ten years, we definitely see a red curve. Even the stock owners expect their company to grow faster than the industry average and do so consistently year after year. Well if this is the expectation and if a company actually meets the expectation year after year (a growth rate above industry average) - what curve will it be on? The red curve!
So, as I see things, the question today, is not whether companies should aim at the red curve. The real question is: how to be on the red curve without taking real risks and how to do it in a very short time? In other words, make it more practical.
Doubt: I agree that it is a normal expectation but then I am not very convinced that it is easy to achieve consistently year after year!
Vision: It is not easy but then do you want an easy life? Well, let's think deeper. One can achieve a rapid growth in profits, if and only if, the sales grow at a much faster rate than the growth in operating expenses. Correct?
Doubt: But in most environments, rapid sales growth would require a significant rise in expenses - more capacity, more labor, more marketing expenses, and new markets? Isn't it? How can sales grow faster without matching the growth in operating expenses? Many times even such increase in expense cannot guarantee a dramatic jump in sales. This is not practical...very risky!
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Other topics covered:
- Due date performance on committed dates
- Pressure due to lead times
- High WIP and large order backlog
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