-Ian Walsh, Managing Director, Intent Group.

I was recently asked, ‘why are there so few world class companies?’ This is a very good question: there aren’t that many globally and there are even fewer in New Zealand.

Before we can answer that question however, there are other questions we might consider first, such as ‘what is world class and how do you define it?’ This question doesn’t get to the nub of the issue though; it’s more a question of measurement.

The more relevant question is ‘what makes it so difficult to drive improvement and become a world class company?’

It’s not like there aren’t a few companies trying to get better. So, what separates the ones who are making progress from the ones who are not? There’s been extensive research over decades on this.

As I’ve mentioned in previous articles ‘What gets measured gets managed’ and ‘It’s all in the data’, better performing companies have well-defined measurement of performance throughout the business with a balance of leading and lagging indicators, and they are able to analyse this data to provide the right information in the right format in a timely manner.

However, while these performance measuring systems are necessary for world class performance, these alone are not sufficient to make a company world class.

This is akin to trying to climb Everest after having had some climbing lessons and bought the right gear. To make the ascent you will need more.

Research shows better performing companies have improvement structures, multi-tiered meetings which connect and align the organisation to supercharge improvement.

‘We have those!’ I hear you say, as many clients in the past have noted. Many companies have beginning of day, end of day, daily management meetings and such like.

However, some of these meetings are nothing better than a high five in the carpark. Others are a colossal waste of time with too many participants, no clear agenda, no defined outcomes, and no productive activity.

When was the last time you reviewed these meetings for their effectiveness?

A good improvement structure will capture the issues from the last shift/day, identify any deviations and what caused them, and determine whether any follow up action is required.

Many actions can be addressed at this level if the team has structured problem-solving skills, and is empowered and enabled to do so (this is not as simple as it seems).

Some actions can and should be escalated, as they are more systemic, so need some cross-functional resource. These can be addressed at a higher level meeting.

Again, this meeting should be dealing with exceptions, not everything, and should have measures appropriate for a higher level in the company (efficiency, cost, etc versus unit per minute for example)

Issues that can’t be addressed at either of these levels (likely problems of a more strategic nature), should be escalated to the highest-level meeting for appropriate resourcing and resolution.

Typically, this three-tier structure (shift-level, systemic-level, strategic-level) is sufficient for most NZ organisations.

So do you have a well-defined meeting structure which cascades from the operational to the strategic? Do you have the right people at the right level in those meetings? Do the meetings have clear performance and practice metrics with a lead and lag bias?

Are they reviewed in a timely manner with good visual management? Have you got clear definition of the escalation criteria? A well-defined agenda, good meeting place and capable people to lead these meetings? Do your teams have the problem solving skills required at the different levels to address the issues that arise?

Given these meetings are critical to driving improvement in your business, you also need a process to check the health and effectiveness of these structures. This is to ensure that the process sustains and continues to drive improvement in your business.

In fact, a regular review of all your improvement systems and structures is critical to sustaining your drive to world class.

If all this sounds like a lot of hard work, it is. And this is why there are so few world class companies. However, the rewards for this hard work are significant: better margins, better growth, more resilience, more agility.

In fact, companies with well implemented improvement systems significantly outperform other companies on just about any metric you care to look at. This is covered in “The Machine That Changed The World” which is only 32 years old!!

So, if you find yourself as a manager on a daily basis reacting to the latest ‘crisis’, and most of your time is spent making first level decisions, then you probably have some broken improvement systems. Likely, most issues get escalated, as opposed to the right ones.