Editor's Note: If you are interested in becoming an expert on Performance Management, take a look at Flevy's Performance Management Frameworks offering here. This is a curated collection of best practice frameworks based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. By learning and applying these concepts, you can you stay ahead of the curve. Full details here.
Getting Ready for the 21st Century Resource Revolution: Are We Ready?
Featured Best Practice on Performance Management
* * * *
Resource Utilization and Productivity is the 21st century Business Strategic Model. Resource Revolution represents the biggest business opportunity in the century. However, to be successful, this calls for application of new approaches by Management.
Companies that stick to the old “2% solution” will soon be obsolete. The “2% solution” is an old adage where performance just needs to be improved by 2% annually and the company will be fine. This does not hold true today for effective Performance Management.
The Impact of Underutilization
Resource underutilization is becoming rampant. Only 20% to 40% of the transmissions and distributions in the United States are used at a given time. Power plants are used at 40% capacity only. The heat-rate efficiency of the average coal-fired power plant has not improved in the past 50 years. Automotive fuel efficiency improvement has consistently lagged behind.
Cars spend more than 95% of their time sitting in garages or parking lots. Roads are likewise extremely inefficient. Most roads reach anything like peak usage only once a day and typically in only one direction. These basic examples of underutilization resoundingly call for the need for a Resource Revolution. Resource Productivity will be the major focus of the Fourth Industrial Revolution (4IR).
The Pillars to Resource Productivity
The pillars to Resource Productivity can build capacities to upend traditional competitors. Employing the pillars individually or in combination can already make a big difference to revolutionizing Resource Productivity.
1st Pillar: Substitution
This is the replacement of costly, clunky, or scarce materials with less scarce, cheaper, and higher performing ones.
In Substitution, every resource used in core products and every resource that customers use or consume must be considered. We must then look for higher performing and less expensive, less risky, or less scarce materials that might work as a substitute.
2nd Pillar: Optimization
This is embedding software in resource intensive industry to improve it dramatically. This is how companies produce and use scarce resources. In Optimization, we need to ask what expensive assets, pieces of equipment, or energy intensive equipment should be integrated or used. Either way, it should lend themselves to IT solutions that optimize routing, timing, loading, or sharing.
3rd Pillar: Virtualization
This is moving processes out of the physical world or simply not doing things because they have been automated. Virtualization will happen whether companies like it or not hence we need to be prepared.
We need to constantly ask ourselves and virtually imagine what could possible happen when time comes that everyday item soon disappear and turn virtual. By then, is it only then when we act and improve resource utilization?
Resource Utilization requires a huge change in the way companies operate, organize, and behave. The biggest initial challenge for companies is system integration. This requires embedding software in traditional, industrial equipment. When this happen, this can be the biggest managerial challenges of the 21st century.
Are we ready? Do we have a practical knowledge and application of the Guiding Principles that will enable our companies to better implement the 3 Pillars of Resource Productivity? Have we mastered the 3-step approach to maximizing Resource Utilization? Either way, it is about time our companies must take on the big leap and be ready to take on the challenge to Resource Productivity.
Interested in gaining more understanding on Resource Utilization and Productivity? You can learn more and download an editable PowerPoint about Resource Utilization and Productivity here on the Flevy documents marketplace.
Do You Find Value in This Framework?
You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:
“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”
– Bill Branson, Founder at Strategic Business Architects
“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”
– David Coloma, Consulting Area Manager at Cynertia Consulting
“As a small business owner, the resource material available from FlevyPro has proven to be invaluable. The ability to search for material on demand based our project events and client requirements was great for me and proved very beneficial to my clients. Importantly, being able to easily edit and tailor the material for specific purposes helped us to make presentations, knowledge sharing, and toolkit development, which formed part of the overall program collateral. While FlevyPro contains resource material that any consultancy, project or delivery firm must have, it is an essential part of a small firm or independent consultant’s toolbox.”
– Michael Duff, Managing Director at Change Strategy (UK)
“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”
– Roderick Cameron, Founding Partner at SGFE Ltd
“Several times a month, I browse FlevyPro for presentations relevant to the job challenge I have (I am a consultant). When the subject requires it, I explore further and buy from the Flevy Marketplace. On all occasions, I read them, analyze them. I take the most relevant and applicable ideas for my work; and, of course, all this translates to my and my clients’ benefits.”
– Omar Hernán Montes Parra, CEO at Quantum SFE
Want to Achieve Excellence in Performance Management?
Gain the knowledge and develop the expertise to become an expert in Performance Management. Our frameworks are based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. Click here for full details.
Performance Management (also known as Strategic Performance Management, Performance Measurement, Business Performance Management, Enterprise Performance Management, or Corporate Performance Management) is a strategic management approach for monitoring how a business is performing. It describes the methodologies, metrics, processes, systems, and software that are used for monitoring and managing the business performance of an organization.
As Peter Drucker famously said, "If you can't measure it, you can't improve it."
Having a structured and robust Strategic Performance Management system (e.g. the Balanced Scorecard) is critical to the sustainable success of any organization; and affects all areas of our organization.
Learn about our Performance Management Best Practice Frameworks here.
Readers of This Article Are Interested in These Resources
106-slide PowerPoint presentation
85-slide PowerPoint presentation
About Joseph RobinsonJoseph Robinson is the Vice President of Strategy at Flevy. Flevy is the marketplace for best practices in business management. Learn how the Fortune 100 and global consulting firms do it. Improve the growth and efficiency of your organization by leveraging Flevy's library of best practice methodologies and templates. The documents at Flevy (https://flevy.com) are of the same caliber as those produced by top-tier management consulting firms, like McKinsey, BCG, Bain, and Accenture. Most were developed by seasoned executives and consultants with 20+ years of experience. Flevy covers 200+ management topics, ranging from Digital Transformation to Growth Strategy to Lean Management. You can peruse a full list of management topics available on Flevy here. Prior to Flevy, Joseph worked as an Associate at BCG and holds an MBA from the Sloan School of Management at MIT. You can connect with Joseph on LinkedIn here.
Top 10 Recommended Documents on Performance Management
» View more resources Performance Management here.
» View the Top 100 Best Practices on Flevy.