Operational effectiveness is a fancy term for how well your team gets things done without waste, and with as little work as possible.
Operations are like a machine: you place people, time, and money inside and the other side produces “value”. Exactly what that value looks like depends on what you’re up to at the time.
Common project operations include:
- Landing new clients
- Gathering project requirements
- Distributing work around the team
- Reviewing your successes (and failures)
Some teams handle processes like art – slightly different every time, but magically bringing everything together with a unique style. Other teams approach ops like a science – diagramming everything on whiteboards and running advanced calculations.
Your team’s operational effectiveness matters more during a recession because…
You can make the extra profit with fewer projects
Profit is the goal of most projects – your team does some work, collects payments, and stays alive (or grows).
Recessions slow down the economy. Clients usually have smaller budgets. In some cases they end up shifting big projects to their back-burner or end up going out of business.
Opportunities grow thin.
Great teams stay profitable during recessions with incredible operations and a bit of luck (strong clients going into a recession help tremendously). Project profitability, revenue minus costs, includes time spent “working on work” – a lot of which comes from your operating model.
Better operations lead to bigger profit margins.
If your operational effectiveness is improving, the loss in potential overall profits from a smaller project load can be dampened by the additional money you’re making on each project. This concept also applies to the business – effective back-office operations reduce overhead and improve margins.
You have greater visibility into the uncertain future of your industry
Recessions impact every corner of work, usually with great uncertainty.
Besides having fewer projects, you might also have to deal with:
- Regulations or legislation passed to help the economy but impacts your industry
- Staffing changes in your clients that threaten existing business relationships
- Partners going out of business, creating a potential gap in your service offering
Operational effectiveness creates room for you to navigate the changing economic landscape.
When your operating machine hums and purrs with efficiency and automation, it requires fewer resources to run, and you’re left with extra money, time, and people who can study the horizon instead of constantly worrying about the current tide.
Having space to be proactive about the economy gives you an advantage over others who are treading water and suffocating in their sluggish operations.
Your current clients are more likely to stick with you
Relationships are everything in business.
Taking care of your current clients is arguably more important than finding new ones. Not all are the same – 80% of your profits come from 20% of your clients. It’s worth prioritizing some over others.
When times are hard, clients want someone they can trust to do the right thing. Being an efficient partner your client’s trust gives you a significant edge. Recessions will test the relationship, and surviving together forges your relationship in a trial of war.
Serving your current clients quickly and effectively is an investment in your firm’s future.
Operational effectiveness gives you a clear competitive advantage over others in your space. You aren’t spending as much time in the mud which means faster turnaround times, better collaboration, and more process clarity.
Good clients appreciate timely work with no waste. Proving your partnership during a recession gives your team the greatest chance at a long and fruitful relationship with your clients long after the economic dark period passes.
What now?
There are many ways to approach improving your operations, but everyone benefits from better technology stacks in their business.
Technology is an easy place to start because it forces you to look at your operations and projects through a framework. You can build a standard approach to important operational roles like task management and strategic planning.
Consider Tetheros.
Tetheros helps you ditch your spreadsheets, upgrade your checklists, and strengthen your team’s project delivery skills. In a recession, tools like this pay for themselves after the first time you cancel a coordination meeting because everything is clearly laid out in the tool.
There are hundreds of products on the market to help boost your operational prowess.
If nothing else, at least move away from the burden of poor/invisible/complicated project management with spreadsheets or email if your team is currently there.
Operational effectiveness will prevent certain death in a recession and allow you to thrive.