New Report Reveals Four-Part System to Achieve Operations Excellence in Middle Market Companies

October 1, 2014

Research shows how mid-sized firms perform better than their larger peers 

Columbus, OH – More than two-thirds (68 percent) of C-Suite executives in the nation’s nearly 200,000 mid-sized firms say it is highly or somewhat challenging to maintain improvements from operational methods such as Six Sigma, Lean or Total Quality Management. When mid-market leaders manage their operations as a four-part system – focusing on problem-solving, daily management, strategic alignment, and people development – they can sustain and achieve higher levels of effectiveness, according to a new report today by the National Center for the Middle Market (NCMM).

The U.S. middle market, made up of companies with revenue between $10 million and $1 billion, represents only three percent of American businesses yet contributes one-third of private U.S. gross domestic product (GDP) and jobs. This vital sector is projected to create 59 percent of all new jobs in 2014.

The report, titled “The Operations Playbook: A Systematic Approach for Achieving and Maintaining Operations Excellence,” helps mid-sized firms focus on the most important areas of operations. In addition, the findings show business leaders how each of the four parts work together to sustain progress in the whole system.

Dr. Peter T. Ward, Director for the Center for Operational Excellence at The Ohio State University Fisher College of Business, said, “When it comes to operations, middle market companies are the perfect size because they are large enough to institute formal processes but small enough that their leadership is still closely involved in the day-to-day functions. Leaders can be closer to the work of the business, which helps them to communicate strategic goals, be more involved in developing the skills of employees, and recognize and solve problems as they arise.”

Key highlights include:

  • Mid-sized firms are more likely than their larger counterparts to report or discuss problems rather than covering them up (70 percent vs. 60 percent). Moreover, mid-market companies focus on finding the root cause instead of implementing quick fixes (66 percent vs. 55 percent).
  • Middle market companies were more likely to rate customer satisfaction as their top metric to judge operational effectiveness (47 percent vs. 37 percent), while large firms tended to focus on profit margin changes and productivity changes.
  • Large firms, on the other hand, are significantly more likely than their middle market counterparts to implement a formal continuous improvement method (73 percent vs. 41 percent).

Describing the report, Executive Director of NCMM Thomas A. Stewart said, “This new research will help mid-market companies achieve even higher levels of effectiveness in operations. This is the fastest-growing sector of the economy because executives focus on customer satisfaction, are committed to solving problems, and connect closely with employees. We believe these findings define the path by which they can sustain the gains and drive future growth in their businesses.”

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About the National Center for the Middle Market

The National Center for the Middle Market (NCMM) was founded in 2011 in partnership with GE Capital and is located at The Ohio State University Fisher College of Business. The Center is the nation’s leading research institution dedicated to helping middle market companies be more competitive through impactful research, thoughtful advocacy, and educational programs. To learn more about the Center or the MMI, visit www.middlemarketcenter.org.

Contact

Jared Favole
Hamilton Place Strategies for the National Center for the Middle Market
jfavole@hamiltonps.com
(202) 822-1205

Jeff Caywood
GE Capital
jeff.caywood@ge.com
(513) 530-7028

Ann Hamilton
The Ohio State University Fisher College of Business
hamilton.847@osu.edu
(614) 292-8150

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