Managing the Productivity Cycle

Leaders are always challenged to improve the productivity of their business. Historically, they thought of productivity as the output of the people in the organization. In reality, productivity is about realizing more with less: fewer people, less overhead cost, less working capital, and other measures. Managing the productivity cycle is how leaders make that happen.

How to Measure Business Productivity

My view is that you should measure the productivity of your business in dollars of revenue per dollar of cost. The higher the number, the better your productivity.

Productivity = $ of revenue ÷ $ of cost

Productivity is no longer just about people. It is about people, systems, and processes across your entire business: the back office, supporting functions, sales, marketing, product development, the shop floor, and the supply chain. As a result, the productivity cycle shown in the diagram applies to any business process.

Step 1: Map and Redesign the Process

At Group50® Consulting, we start with Value Stream Mapping and the Brown Paper Exercise. First, we work with process owners to identify what doesn’t work in the current state. Next, we define what the process must do to support the future state of the business. Then we redesign it. Our business process improvement work follows the same path.

Redesign is where most productivity efforts run into trouble, because process owners want to keep doing things the way they do them today. Therefore, we also look at the systems that support the process, and we redesign it to use current or future systems. After all, technology is a collection of millions of best practices, yet most companies don’t use their technology investments effectively.

Step 2: Manage the Change

Implementation is the second area of trouble. Redesigned processes and systems require people to change how they work, yet teams rarely consider the requirements of change management.

We use the Business Hierarchy of Needs® as our change management framework. It gives teams a standard approach to engage process owners in redesigning processes. It also helps them think through the change management requirements of their recommendations: people, process, technology, and performance measurement.

Step 3: Repeat with Continuous Improvement

After the new process goes live, the Continuous Improvement model tells you when the productivity cycle needs to start again. In turn, that keeps your competitive advantage intact. For more, read our guide to making continuous improvement a reality.

Why the Productivity Cycle Gets Harder as You Grow

The concept is simple. However, the larger the business process, the harder the productivity cycle is to manage, especially when everyone in your business uses a different approach.

We have used these methods in companies from the lower middle market to large multinational conglomerates, saving them hundreds of millions of dollars. You can see examples in our case studies.

Keep the Productivity Cycle Running Every Week

A productivity cycle only works if someone checks it every week. Otherwise, redesigned processes drift back to old habits, and your revenue-per-dollar-of-cost number slips before anyone notices.

Two kinds of work prevent that slide. Judgment decides which processes to redesign first and what to protect. Experienced operating executives supply it. Vigilance, by contrast, is the weekly work of checking every commitment, chasing overdue items, and flagging every number that slipped.

Technology can now carry much of that second load. BHNOS runs the weekly review cadence between advisor visits, and AICOS, its AI Chief of Staff, handles follow-up and pattern recognition. Consequently, leaders spend their time on decisions instead of status updates. To see why programs stall without that weekly follow-through, read why cost reduction programs fail.

Build a Scalable, Repeatable Productivity Cycle

If you want a productivity cycle that is scalable and repeatable, give me a call at +1 (626) 644-9746, email info@group50.com, or request a conversation. I look forward to speaking with you about it. You can also see how BHNOS keeps your weekly cadence running after the redesign is complete.

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