All businesses rely on operating procedures to run efficiently and effectively. They are the invisible power behind what your business does. The better the basis of your business, the easier it is to grow revenue, maximize profits, retain employees and keep customers happy.
These procedures are easy to overlook, and enhancing them demands focus and effort — but the rewards can be tremendous. A 10 percent improvement in how your business works can create big, compounding improvements throughout the organization.
In this guide, we’ll explain how to enhance what your business does and give some advice on various areas you might want to explore.
Simply put, operating procedures are how your business “does stuff.” Every time you make a product, respond to a customer inquiry, onboard a new client, price a service, send out an invoice or do just about anything operational, you’re using an operating procedure.
We typically describe this as “Business As Usual.” These are the tasks you and your employees perform every day to keep your business up and running. Compare this with “Project Initiatives,” which are typically one-time events that have a specific beginning, middle and end.
Enhancing your operating procedures is known as “Business Process Improvement (BPI),” which is a large discipline of skills, toolsets and technology designed to help your business run better.
As the name suggests, BPI is all about optimizing what your business does every day. There are lots of frameworks and methodologies for BPI, but one of the most reliable and popular is known as “Six Sigma.” When it comes to BPI, Six Sigma breaks things down into five phases:
• Define: You understand exactly what you are trying to improve and the business processes that can impact that.
You need to enhance customer satisfaction and retention, so you start by looking at procedures for handling customer service calls and complaints.
• Measure: Once you know the processes you need to improve, you put measures in place to understand how they are performing right now.
You decide to measure how long it takes to answer the phone and the number of issues that can be resolved the first time a customer calls.
• Analyze: You take your measurements and carry out analysis to find problematic areas and the causes of the problem.
You discover that you have the longest wait times and lowest first-time fix ratings between 11 a.m. and 1 p.m. This is due to experienced staff going on a lunch break.
• Improve: You make improvements, typically one or two at a time to help processes work better. After this, you would measure and analyze again to see if the changes have had the desired outcome.
You provide extra training to junior staff and provide incentives for your more experienced staff to vary their lunch breaks. You see significant improvements in call handling and complaint resolution the first time a customer calls.
• Control: Once you have the right improvements in place, you create operational measures to prevent things failing again and take action if they're in danger of doing so.
You get your customer service supervisor to review call handling times and first-time fix rates on a weekly basis. If you see negative trends, you can dig into the data and take action.
BPI is designed to improve your processes and procedures in various ways.
If you get too many defects in your products and processes, that creates unnecessary waste, product failure or a need to rework. BPI looks at processes to introduce high-quality outcomes and substantially reduce waste.
Time is money, so BPI can be used to speed up slow processes. It aims to remove bottlenecks, reduce handoffs and speed up processing time. Optimizing just one or two sub-processes can reduce the end-to-end time to get something done.
Inaccurate and clumsy processes can result in significant errors and problems. BPI aims to reduce the ways things can go wrong — less “garbage in" leads to less "garbage out.”
BPI can build customer and employee loyalty by focusing on the “moments of truth” that impact how people feel about your business. It makes those interpersonal moments more satisfying for everyone involved.
You might wonder why we haven’t talked about maximizing profits yet — the reason is simple. All the above areas directly or indirectly translate into increased revenue, less customer churn, happier employees and more efficient processes. That all has a big impact on your bottom line. In other words, there are very few business processes that focus purely on maximizing profits to the exclusion of everything else.
Although every business is unique, there are several common processes you can explore to see how they can be improved. Try asking questions in these categories:
As you can see, there’s a lot to learn when it comes to enhancing your operating procedures. It’s best to start small, so you can practice the skills and discipline needed for BPI. Once you have a couple of successes, you can then look at other parts of your business and tweak until you have a beautifully streamlined profit machine!
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