Think You Know What’s Eating Your Profits? Think Again

If you can’t see it, can’t recognize it, don’t know it is there, you can’t fix it. And most companies are largely blind to the lack of clarity that is eating their time and profits. They simply don’t see it.

Why? Because they are looking through a business-as-usual lens. It’s like not seeing motorcycles and bicycles because you only expect cars. To see the confusion, you need to twist the kaleidoscope 90 degrees.

So let’s twist that kaleidoscope and shift the focus so you can see why your greatest opportunity to improve productivity and results is through clarity.

 

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In the diagram above, the horizontal axis represents distance from the “production floor.” Production activities are on the far left and executive activities are on the far right.

And when I say production floor, I’m not just talking about manufacturing. I’m talking about the activities associated with producing and delivering value to customers. In manufacturing, these processes include activities such as machining, assembly, and shipping. In a software house, the production activities include designing, coding, and testing. In a service organization such as a bank they include approving loans, opening accounts, and moving money. Production activities are the bread and butter of any organization.  The vertical axis represents the level of clarity and the curve shows how the level of clarity in any organization fluctuates with distance from the “production floor.”

Why Region A Is The Clearest

The clarity curve starts out high on the left because these are the production processes. In most companies, these processes are well defined and efficient. People know what they are trying to accomplish, what to do, and with whom they must work. This is especially true in lean and high-volume shops. Without a good level of consistency, the organization cannot meet customer expectations and make money reliably. This is Region A on the diagram.

Why Region B Is The Greatest Opportunity For Improvement

The clarity curve drops as you move away from the “production line.” The clarity of purpose, process, and roles all decrease. For example, the assembly line is well defined and tightly managed. Priorities and roles are clear. There is no ambiguity of purpose. Purchasing processes that ensure parts are ordered, received, and delivered to production on time aren’t quite as tightly defined and involve more complex decisions and more judgment.  Purchasing processes one notch farther from the floor, such as those used to select vendors, are looser still. Jump farther to the right, farther from production, and consider something like marketing. How clear are these processes and priorities? “What processes?” is the response I usually get to that question.

Part of the clarity drop is because these processes have received less attention. They aren’t as critical to production, they aren’t the focus of lean manufacturing, so they haven’t been as carefully streamlined.

But part of the difference is that as we move to the right on this diagram, the processes shift from the movement of physical objects to the movement of ideas. From physical processes that you can watch to cognitive processes that are invisible. From processes that people think of as processes to processes that no one thinks of as processes. From clearly tangible outcomes to increasingly ambiguous outcomes requiring more judgment and interaction. As we move to the right, employees spend more and more of their time making decisions, communicating, managing, planning, analyzing, and meeting, none of which follow well-defined processes. This is Region B on the diagram. With few recognizable processes, the level of clarity is low. There is usually confusion about priorities, roles, and next steps. “Everything takes longer than it should.” Productivity is low. Morale may be even lower.

Why Region C Isn’t Clearer

And then there is Region C. This is where the executives live, far from the production floor. The executives are totally immersed in cognitive processes. But that doesn’t mean clarity is low – doesn’t mean it’s high either. The extent to which the clarity curve rises at this end depends on the strength of the leadership team. And not the team as a whole, but the strength of individuals.

High performing employees on this end of the spectrum know how to create clarity. They may not be conscious of it or how they do it, they may not be able to teach it, but they do it. They make tough decisions quickly. They know how to generate commitment. They avoid indecision and quickly dismiss irrelevant detail. They take risk and conflict in stride. They manage their direct reports effectively. This individual clarity lifts the curve on the right hand side of my diagram. The clearer the top team, the stronger this upswing.

However, when working collectively, executive teams are not as effective as their most competent team members because these high performers are usually unconsciously competent, not consciously competent. No matter how effective they themselves are, they aren’t necessarily capable of creating shared process clarity and getting others on the same page. When working together, trying to move ideas and make decisions, they often stumble along much like the players operating in Region B.

As you twist that kaleidoscope and start seeing the confusion, think about these three dimensions of clarity:

Clarity Of Purpose

Every activity, cognitive or physical, produces outcomes at the end of the minute, hour, day, and year. And if you aren’t clear about the outcome you are pursuing, you won’t achieve it. You must know the answer to this question: “What must be different when we are done?”

Clarity Of Process

Every outcome is the result of a process. It may be a widget or it may be a decision. Step 1 produces an outcome. Step 2 produces another outcome. If you can’t see a progression from where you are to what “being done” looks like, you are wandering.

Clarity Of Roles

Once you have a clear purpose and a clear process, creating clarity of roles gets a lot easier. But you’ll only create huge problems if you assign responsibility to someone who is unclear about the desired outcome or unable to establish clarity of process.

The day you start seeing the confusion and establishing greater specificity of outcomes and shared clarity around the processes that move ideas, not just physical objects, is the day you will raise the clarity level, improving performance and galvanizing commitment.

 

This article originally appeared on Forbes.com on September 8th, 2015.