“Businesses that don’t focus on operational efficiency are vulnerable to competition,” Lajevardi notes. “One day, someone who is leaner and more productive could come and take your business because they are able to generate more value from their resources. We see that all the time.”
The first step to becoming leaner is to assess your current level of efficiency, including how your company compares to the competition or the rest of your industry.
Such an assessment will show you where to focus to achieve some quick, high‑impact wins. You can then build on your success to take on further improvements.
Identify sources of waste
“The goal is to identify the sources of waste or, in other words, unproductive activities,” Lajevardi says. “Since most entrepreneurs are focused on daily operations, it often makes sense to bring in an outside specialist to identify and help implement improvements.”
When he’s assessing a company’s efficiency, Lajevardi first sits with the entrepreneur and key managers to learn about the business, including its context, strategies and value proposition.
Then, he asks about production and value-creation problems and discusses ways to address them.
Rate your performance
Next, he tours the business and rates 25 key operational factors on a 0‑to‑5 scale. These include inventory management, workplace organization, quality control, scheduling and planning and equipment maintenance.
Using his assessment, he prepares a report that includes three to five priority improvements and road map for implementing them.
An efficiency assessment is equally valuable for manufacturing and service businesses, he says.
Lajevardi says entrepreneurs should aim to make assessing and implementing operational improvements a continual process—part of the company’s culture.
Monitoring leads to improvement
The best way to do this is by creating a system that allows managers and supervisors to continuously monitor key performance indicators using dashboards.
“It becomes natural to start every day by asking how you did yesterday and how you can get better. It’s a cultural change,” Lajevardi say. “You become more observant and challenge yourself to improve.”