Business owners seeking to improve the long-term success of their firms understand the importance of running effective and efficient organisations, but just how important this can be, and what the drivers are, is often underestimated.
Operational excellence is about delivering on the promises your business makes to clients, while driving growth through operational efficiency and effectiveness.
To achieve this, you require a clear vision for the business and the drive to inspire your co-workers to deliver on your goals. In addition, your business activities and processes must be aligned to support the firm’s strategic objectives, which will ultimately deliver your vision.
So, how do you know if what you are doing is working?
Both operational efficiency and effectiveness are key drivers in measuring the extent to which a business’s strategic objectives, goals and processes are succeeding.
They can be monitored through the use of indicators, such as key performance indicators and management information.
Embracing technology
Technology can support analytics and business intelligence, which can help to monitor and drive operational efficiency.
Developing a customer relationship management system can provide essential business intelligence. From client demographics, to product choices, fund options, family connections, referrals ands breaking down the number of clients and revenue per segment, data provides crucial information for business owners, managers and advisers alike.
Businesses ultimately need to decide what indicators make sense to them, dependent on the types of results they want to achieve. In practice, it seems sensible to identify the fewest number of indicators that require the least effort and expense to track, but will still inform leaders whether or not they are moving towards their intended goal.
These indicators must be monitored frequently enough to gain insight and allow changes to be made. They should be used as a place to begin asking questions about the business activities, to see what processes could be adapted to improve the indicators.
Client relationships
To what extent can operational efficiency drive success? Real business value is about truly understanding the extent to which the business runs efficiently and effectively.
However, operational efficiency is not about simply reducing costs, it is also about other business objectives, such as service and quality of advice, which focus on the client relationship and help improve the persistency and quality of revenue streams.
An industry study in 2016, ‘RIA Benchmarking’ by Charles Schwab, looked at numerous factors that contribute to the growth, strength and resilience of registered investment advisers.
