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Summary

Highly competitive organizations focus on increasing productivity and shareholder EVA. They align organizational resources to achieve their strategies in a highly competitive global environment. This moves them closer to competitive goals. These are carefully selected to also increase customer experience metrics such as a net promoter score, which correlates to repeat-purchase intentions and customer satisfaction. Project linkage is where some organizations lose momentum. The alignment process and execution require concerted effort and transparency. There must also be accountability for both good and poor performance. Some organizations have execution cultures. These organizations move strategy down to a team and an individual contributor level. Employees understand the impact of what they do on higher-level goals. Therefore, they work on the right things. In this context, communication is critical at all levels.

Organizational productivity is calculated as an efficient utilization of labor, materials, and capital versus the revenue received by their conversion and sale. It is calculated by taking a ratio of outputs to inputs based on inflation and economically adjustments as shown in Figure 7.1. It is calculated as a year-to-year index. There are several approaches for identifying improvement projects using financial reports to increase productivity. Project charters help describe productivity projects. A charter describes the problem and its extent (i.e., the scope), its impact on the organization, costs and benefits, its deliverables that are tied to strategic goals, its sponsorship, the leader of the team, the team, resource requirements, and the schedule. To fully document the costs and benefits, a project charter should have a separate section that shows the assumptions of the financial analyses of the project’s cash inflows, outflows, required investment, applicable financial ratios such as payback and IRR, as well as their impact on customer satisfaction and productivity.

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