Operational Measurement

Capability is very difficult to measure in quantifiable terms, Congress asked the Department of Defense to show how much the US Military capability had increased after five years of budget growth, and the Department of Defense had considerable diffi­culty responding to the question. The same difficulty would be encountered by any business operation required to demonstrate in numbers how much more capable their organization is today than it was five years ago.

The problem is how do we measure Business Capability? We all know that process capability is the ability for a particular machine or operator to produce consistently high quality products or services. In the same way we need to assess the capability of an organization to deliver market winning products and services. It is not just a question of one time results, or occasionally winners, but the ability of an organization to produce consistently winning products and services over the long term.

How do we know—

• If our business is capable?

• If we have the right organization structure?

• If our workers are smart?

• If the climate we have developed within our organization is a healthy and productive one?

These concepts are vital to the long-term health of our organiza­tion as a viable enterprise. Many previously successful companies have failed to adapt to a different business context, they continue to produce the products that used to sell, in a market that has moved in a different direction. They have failed to listen to the input from their customers and so have not become learning organizations. Many of these companies are not around today, or are operating at significantly decreased profitability and have considerably reduced market share.

Companies that fail to adapt to the changing business world today will soon be out of business. We are operating in an environment of global competition. Global competition means competing against companies who have achieved 40% growth last year and are striving for 100% growth this year, doubling profit, doubling sales, in twelve months!

There are more customers in the global market than ever before. Yet despite that, businesses are having difficulty providing jobs for people. The economists tell us we are out of the recession, yet consumer confidence is at the lowest point since the 30's. The reality is that economic growth no longer means job growth. The United States produced 5 times more manufactured products in 1992 than in 1946 yet employed the same number of people in manufacturing. The impact of technology is beginning to be felt in the service industry where computers are replacing people at a rapid rate. To survive as a business we are faced with the challenge of increasing the value of our goods and services, speeding the pace of innovation, expanding niche markets, all of which require increased investment while at the same time we must cut costs under the threat of stronger competition. This business pressure forces us to increase our capability in organization, people, and technology.

To be Continued

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