Productivity: A Competitive Tool

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continued from: The Competitive Edge

Most productive companies, however, take a slightly different path from the usual run-of-the-mill approach, focusing on the overall productivity aspects of their businesses, rather than merely looking at profitability in terms of financial statements. There is an old saying: "Smart people don't do different things, rather they do the same things differently." This is very much applicable in the case of the most productive companies. They take different routes to achieve the same goal, and it is the selection of these different routes/paths by these companies, which brings a lot of difference to the end result.

The first thing which differentiates a productive company from a non-productive one is the company's ability to understand the true meaning of strategy and tactics. According to Jason, it is this realization that enables these companies to stay more focused on their goal. There are several companies which put themselves into trouble by mixing their strategies and tactics together. In productive companies, the goals to be achieved by a particular group of people are kept very simple and easy to understand. It is the employees who have to perform; if they are confused and not clear of what exactly they have to do, they will not be able to give their 100% to the job. It is this power of simple and clear objective which made Ikea, a Swedish furniture superstore chain, achieve 50% more profit per employee, that too, in the low-margin discount furniture business. It is the power of this simplicity which enabled the New Zealand-based warehouse chain of discount stores to score over the world's No. 1 retail, Wal-Mart, on many different counts.

Focus is vital for profit maximization. However, many corporate leaders today lack this attention to focus. Kmart, the US retailer, went bankrupt due to its management's inability to focus on its core competencies. Other major firms which collapsed due to lack of focus are: Arthur Anderson, WorldCom, Enron, Xerox, to name a few. Any organization which complicates its business by concentrating on needless issues tends to lose its focus and purpose in the market, which negatively affects its production, and thus the business as a whole.

Managing your employees is an important aspect in increasing productivity. It is only when a company manages to get its employees focused towards a particular goal that it can think of obtaining more with less. Openness to the company's goal or mission helps in achieving the purpose more easily. The organization should be transparent with its ideas, goals and expectations from its employees. It is this openness which made Yellow Freight, the world leader in transportation services. This is what made SRC holdings, a diversified manufacturing holding company, post 15% growth each year, irrespective of the slow growth rate in the industry.

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