Look in The Mirror Corporate America. Do You Really Know How to Operate?

It is now Day 8 of the aftermath of Hurricane Beryl and, as of 8:00am, over 200,000 customers (bill-paying households and businesses – encompassing many more people) are still without electricity in the Centerpoint service area. Citizens, politicians, and businesses are still wondering what happened. In the meantime, Centerpoint responds with press releases and inaccurate updates to an outage map that is less informative than Whataburger’s map of open and closed restaurants. I know this firsthand because, although my power was restored within 24 hours, the outage tracker inaccurately showed us without power for multiple days. Initially, it stated we would regain power by July 17, and as of this morning, it claims we are now energized.

What Happened?

Leadership neglected to focus on operations.

Operations are the core of any company. It is what delivers goods and services to customers. It is what supplies the raw materials, pays the bills, and keeps the lights on (pun intended). It is the most important element of any organization: not finance, not human resources, not sales. Operations get things done and when management – executives and board members – recognize this point, the better off the company, customers, and shareholders.

In the case of Centerpoint, operations have two sides. First is the day-to-day operations when the weather cooperates, the sun is shining, and their power suppliers are generating adequate power. The second side happens when things don’t cooperate, like Hurricane Beryl, the 2024 derecho, or the 2021 Valentine’s Day freeze. No matter the situation, operational execution is key and organizations have to plan, train, and operate effectively in both situations. A key point is knowing there are multiple types of operations. Management has an obligation to dig deep and ensure they understand the full scope of their operations – in good times and bad.

Is Centerpoint an isolated example? No! Look no further than Boeing and the issues at that company. Again, senior leadership and the board of directors lost sight of operations. The details are different; Boeing is a manufacturing company and Centerpoint is an electric utility, but Boeing failed in both the execution of day-to-day operations and also operations in a crisis. The overarching fact in both Centerpoint and Boeing was a lack of focus on operational execution and no recognition or effort to fix things when issues arose.

Consider Three Companies That Have Developed a Reputation for Operational Excellence

When Tim Cook took the helm of Apple, there were concerns that he was “just” an operations person and not a visionary like Steve Jobs. Fair enough, but the results speak for themselves. Supply chain management, fulfillment, customer support, and a seamless and secure operations infrastructure that encases Apple products and services have generated immense shareholder value. Apple and Tim Cook recognized that their operational basis was built on the foundation of an integrated and secure platform, and they continued to enhance the platform over time.

Then there is the case of Amazon. From the beginning, Jeff Bezos focused on operations, and the company has been cited many times for the willingness and ability of its managers to “dive deep.” That is one of the leadership principles of the company. However, what is most interesting is how Andy Jassy, the current CEO, focused on operations coming out of the boom-bust cycle of COVID-19. They were suffering through the consequences of the post-Covid bust but recognized the challenge and redesigned operations for the post-Covid world. Again, like in the case of Tim Cook, many people questioned whether Mr. Jassy was up to the task, but his determination and focus on operational excellence rewarded investors.

Finally, look at GE. It is a case study of how leadership with an operational focus dug the company out of a very deep hole. The 2008 financial crisis nearly destroyed the company, and it suffered through a decade of leadership that didn’t work to fix the company's fundamental operational issues. Rather, they tried to financially engineer themselves out of the very deep hole. It didn’t work. Since 2018, when Larry Culp, Jr. took over, operations have been the focus of the organization. Importantly, operations encompass not only the numbers but the willingness of managers to learn and identify issues by "walking the factory floor", listening to workers, and building and executing action plans. GE is another case study of how digging deep and "walking a factory floor" are vital to effective operations.

From My Experience on Smarter Supply Chains LinkedIn Live

Recently, I had the opportunity to discuss these themes on the Smarter Supply Chains LinkedIn Live hosted by Priya Kumar, CEO, Sustainable Inc. with my co-founder Stacie Valentien. We delved into how foundational a lean tech stack is for any operation. The key takeaway was the importance of choosing a baseline tech stack—be it Microsoft 365, Google Workspace, or Salesforce—and sticking with it. Avoiding the trap of mixing and matching technologies is crucial as it can lead to inefficiencies and higher costs. This integration ensures a seamless experience for both the company and its customers, aligning all systems to support our primary goal: putting customers at the center.

Efficiency is key for companies. For us, that efficiency comes from using integrated technology. As Stacie pointed out during the podcast, our organized, robust foundation might have seemed excessive at first, but it has proven to be scalable and solid, ensuring we can support our customers effectively.

Leadership Must Never Lose Sight of How Their Company Operates

Managers at all levels need to get on the ground, dig deep, and focus on operational performance. Board members need to be challenging leadership about operations because if they aren’t, then the company and its stockholders are at risk.