July 31, 2005

The Impact of Operational Excellence on Corporate Essence

This Sunday morning while I reading the New York Times I came across an article that resonated with me. It was in the Travel Section. Some of you know the travel section is not normally a part of the paper that I review. The piece was entitled: "Some Ask if the Disney Magic Is Slipping" Note - you will need to register in order to read the article.

I immediately put the paper down and started writing this post. The article is about Disney and the deterioration of its magic. My contention is that there is a wider threat . This is where organizations focus on processes that enact operational excellence to the n'th degree. These programs methodically cut corners in every operational aspect of products/services and the business models that support them. Plus these organizations implement "improvements" together with reductions in headcount for a more dramatic impact to shareholder value.

According to the New York Times this is what's causing service issues at Disney. It's in the recent announcement of the 15,000 jobs cut at Hewlett Packard and the 200,000 layoffs in the US economy this summer alone. Economists argue this indicates a tipping point and the end to a growth cycle. Shareholders argue they get reduced bottom lines.

What keeps me up at night is the impact of operational "improvements" on a company's very essence and competitive advantage. What if the reason you became a client of company went away as part of their operational enhancement? What would you do? Chances are you'll do nothing since you're in a "sticky" relationship with the organization and are too busy to change. This is exactly what companies think you'll do.

This isn't just about whether your 5 year old will have a memorable experience at a theme park...whether we're in a B2B or B2C scenario, we're in for a rough ride. Longer hold times, lost reservations, missing shipments, billing errors, and impersonal customer experiences. Yikes!!!

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