By the time you finish this seven-step process, your business will be more efficient, more effective, and more profitable — without relying upon the vagaries of instinct, gut feelings, and overreactions to current events.
Your Step-by-step Guide
1. Establish a thorough analytics platform
Any well-considered business optimization endeavor relies upon accurate information about that business. It’s imperative that companies looking to optimize not only equip themselves with the tools necessary to gather data at the strategic, tactical, and operational levels, but ensure they have the tools to parse that data into meaningful information.
A wall of numbers means nothing if you can’t sort it into something useful.
2. Identify key performance indicators
Once you have the numbers in front of you, you’ll need to determine which ones matter. While many indicators of success hold across multiple businesses, others will be unique to your industry, the way you do business, and the goals you choose to pursue. This might require original research, or you might find that there’s extensive research on the subject for your industry, business model, etc. What’s important is that you look at the numbers which really matter instead of the ones which seem to matter.
3. Determine short and long term business goals
Business optimization requires firm, testable goals to work towards in the short and long term. Without concrete goals you can measure progress towards, you can’t apply the careful, methodical changes your business needs to achieve its potential. Short term goals should support long term goals, and long term goals should be resistant to the need for revision; if a single shift to the industry might render your long-term goals meaningless, you might wish to reconsider optimizing your business towards that end.
4. Shift project emphasis to pursue goals
Many businesses engage projects with an astounding lack of awareness. Stop and think: how many of the projects currently consuming company resources, time, consumer goodwill, etc., work to support your long term goals, or even your short term goals? A project which seems like a ‘good idea’ in a vacuum might be a wasteful endeavor when you look at the big picture. High level business optimization revolves around eliminating these deceptive wastes of effort. Similarly, projects which promise to bring your business closer to its long term goals should be emphasized within the company—every project doesn’t need to be solely beneficial in the long term, but you should be utilizing assets more mindfully.
5. Tweak tactics according to data and long-term plans
As you optimize at the strategic level, you’ll also want to begin looking at the tactics you’re applying within projects and endeavors. How are you planning utility infrastructure, managing work forces, etc.? When you make decisions at this level, do you consider the impact up and down the line to the strategic and operational levels of your business? If you established a thorough base of data gathering and analytics, you should be able to make confident, informed decisions at the tactical level. Don’t be afraid to change tactics when necessary—it’s the nature of this level of business that the ideal solution changes frequently, without undermining efforts at the strategic or operational levels.
6. Optimize operations
Operations should ideally be refined in parallel with your other business optimization, as the sheer flexibility a company faces in matters such as cash management, scheduling policies, etc., creates big openings for inefficiency and big opportunities for savvy planning. By engaging operations as a part of the greater whole and not as an afterthought, you’ll attain far more optimal operations and help your business towards its short and long term goals.
Business optimization with a holistic, data-driven approach will always produce superior results.
7. Stay flexible, but don’t overreact
While certain aspects of your business shouldn’t be optimized around moment-to-moment occurrences, you will want to stay aware of shifts in the industry and make what changes you can to stay effective and efficient without compromising your long term goals. A shortsighted adjustment which undermines your business in the long term isn’t worth it. Major changes can wait for hard data; with the right analytics tools, you won’t have to wait long.
In the end, the best trick for business optimization is a thorough understanding of what true optimization looks like. It's not guesses. It's not whim, or thoughtless cuts and expenditure increases. Real optimization happens when to take a step back, gather in data from top to bottom, and use that data to improve the whole. Keep that in mind, and you're sure to succeed.