Deliverables: Current Reality Assessment®

(initially published on Escape from Averageness® in October 2014 as the fourth in a six-part series;  republished here as part of our retrospective, “Above Average: The Best of Escape from Averageness®, 2009-2021”)

A process of continuous improvement is just what the term describes – it is a constant, never-ending quest for improvements in operating performance and business outcomes.

But – what do we improve, and in what order?

For a homebuilding company setting out on this journey – and it is a journey – these questions need to be the first ones asked and the first ones answered, before anything else is considered, before any other decision is made.

Every situation is different, and situations can change, but you always start an improvement process with an understanding of where you are right now;  you start with an understanding of current reality.  You start with an objective analysis of your specific current condition, with an objective assessment of your current performance, resources, and capabilities.

To be clear, SAI performs two different types of assessments:  a Competitive Assessment and a Current Reality Assessment®.  Both involve looking at outcomes, checking facts, and drawing conclusions, but a Current Reality Assessment® is specifically designed to be the demarcation point for a focused process of continuous improvementa series of initiatives conducted in consecutive order with short durations, aimed at producing targeted, measurable improvements to a specific economic outcome.

It is the same type of rapid-cycle improvement program we use in our Results-Based Consulting® arrangements.  It is also tailor-made for use with an RB-C®’s recommended team-based approach to performance compensation.

Sometimes involving interviews and surveys, and always involving a working group, a Current Reality Assessment® focuses and prioritizes your improvement effort, and establishes the baseline for continuously improving your operating and business performance.  In doing so, a CRA® draws conclusions about the order and priority of initiatives, based on dependencies, based relationships of cause-and-effect.

It is an assessment deeply-rooted in an understanding of how systems work and how they are improved.  It is root-cause analysis directed at identifying core problems and identifying the limitations – identifying the constraints – to the business outcome being sought.

Systems-thinking is about improving the performance of the entire system;  it is not about improving the performance of a system’s pieces or parts  – not any of the parts, not some of the parts, not even all of the parts, independent of one another.  The way you improve a system is by focusing the improvement efforts on identifying and resolving the problems that limit the performance of the entire system.

It would be a mistake to look at the facts and measures from a picture of your current reality and conclude that these are a set of equally-important-yet-independent, related-yet-isolated measures.  It would be a mistake to conclude that the best way to improve your current reality is to spend time and effort improving the outcome of each and every part of it, whether one-at-a-time or all-at-once.

You cannot improve everything, everywhere, all at the same time;  you cannot treat everything as the problem.  If you do, you will spend most of your time and effort treating what amounts to the symptoms of the problem, without ever resolving its cause.

If you are fortunate, you might succeed in improving performance in some areas, and you might relieve the symptoms and effects of some of the problems.  But – you will likely never solve the one problem that right now is preventing your company from achieving the outcome it seeks, and the unintended consequences of separate actions on different parts will likely make the situation worse.

The business environment in which you must operate does not provide you with unlimited capacity and resources, unrestricted capital, or limitless opportunities, which means that any effort at overall improvement has to be prioritized, has to be focused.

It means that solving some problems, exploiting some opportunities, must wait until more important problems are solved, until better opportunities are exploited.

What comes out of a Current Reality Assessment® is a plan:

“This is where we are, right now.  These are the problems, and this is the priority in which they will be addressed.  We will attack them in this order, and only in this order.  With the first initiative, we will likely be able to eliminate the following additional issues, because we have established their cause-and-effect relationships, tied it back to the most important factor.

“We have x-days to get this first initiative done;  we will work on no other initiative until this one is finished.  We are going to assign the right people and resources to this initiative;  in the meantime, everyone else focus on doing your jobs.

“When we are done with the first initiative, this will be our second initiative.”

And so on.

 

Next:  Deliverables:  Team-Based Performance Compensation

Want to learn more?