News Column

Efficiency Creates Opportunity

June 2002, HISPANIC BUSINESS magazine

Scott Williams

Efficiency is the basic ingredient for any business,” says Francisco Aleman, CEO of the construction firm F.R. Aleman & Associates, number 441 on the Hispanic Business 500®. “Companies with great strategic planning, and that excel in communicating and marketing, could crumble financially over inefficiency.”

To remain competitive and profitable, a company must constantly strive to improve the productivity of its operations, or risk falling to smarter, more efficient competitors. Improvement in operational efficiency requires monitoring of the daily workflow as well as investments to enhance it.

“The CEO can never be satisfied and must always press his people to improve,” says J. Ricky Arriola, CEO of Inktel Direct, a Miami-based direct marketing firm, which ranks number 179 on the Hispanic Business 500. “The CEO is very influential in setting culture, and if the CEO is always pressing to get better results … then that will become the DNA of the company and its employees.”

Mr. Aleman warns against equating computerization with efficiency. “Technology only aggravates the problem,” he laments. “But [operations] can be improved with a human resource department that listens to the needs of supervisors.”

Mr. Arriola agrees that people remain the key to improving the workflow. To achieve operational efficiency, a CEO should be analytical, curious, open to taking risks, and willing to invest in training and technology, he says. And even if a company has achieved operational efficiency, he adds, it won’t remain in that position unless it has a corporate culture that breeds continuous improvement and believes in quality and productivity gains.

“Because of entropy, all systems fall apart over time,” states Ichak Adizes
in his book Managing Corporate Lifecycles (Prentice Hall, $26). “The integrating role [of management] develops a culture of interdependency. … That internal sense of belonging, or interdependence, I call integration, and it is integration that makes an organization efficient.”

While most efficiency experts, including Mr. Adizes, come from the manufacturing sector and focus on incremental gains in output, service-sector companies take a different approach. Rafael Mendoza, CEO at Crown Medical of Miami, maintains that efficiency became the prime factor that allowed his company to expand into new markets. “I think that was the basis for us to make the jump and become national in scope,” Mr. Mendoza says, “because we were able to have everything down pat. Once we got [the process] in place – and it took years – it was very easy to implement this highly efficient system in other places.”

The company provides only one service, the treatment of varicose veins. Mr. Mendoza, an economist with experience in system analysis, designed the single focus so his company could hone its skill set, limit risk, and grow in its niche market.
Crown Medical, number 294 on this year’s Hispanic Business 500, has increased its revenues 52.9 percent in the last two years. It now operates nine clinics in Florida, Illinois, Texas, and Puerto Rico.

“Operational efficiency becomes the common denominator that will make you cost efficient and aggressive and permits you to avoid mistakes down the line,” Mr. Mendoza says. “That is translated into profit.”

Source: HISPANIC BUSINESS magazine

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