In the book, Bare Bones Change Management: What you shouldn’t not do, Bob Lewis explained the seven must-have elements for any change management effort to have a chance of succeeding. Here are my takeaways from one of the topics discussed in the book.
Bob suggested there are three levels of business metrics: 1) Bottom-line improvement, 2) Business outcomes that drive the bottom-line improvement, and 3) Internal effectiveness improvements that support the business outcome.
When it comes to the improvements of internal effectiveness, Bob suggested there are only six areas to focus our effort.
1) Fixed Costs: This is also known as non-discretionary spending or sunk cost. Fixed costs are what an organization spends to keep the lights on and to operate at a minimum capacity. They are also the costs that come before making any products or delivering any service to customers.
2) Incremental Costs: This is the increase in costs of producing more products or delivering services to individual customers.
3) Cycle Time: This is the time that elapses between something triggering a process and the time when the process finishes.
4) Throughput: Throughput measures the quantity of output produced in a unit of time.
5) Quality: Quality is the quantitative measure of the presence/absence of defects. From an industrial perspective, quality reflects the degree of products and services adhering to specifications.
6) Excellence: Excellence measures the qualitative elements. The presence of desirable features, ability to customize or tailor outputs to specific needs, and flexibility to adapt to changing circumstances.