As a member of the University of Minnesota faculty or staff, you’ve probably heard the term “operational excellence” used more than once by now. If not, you’re most likely familiar with the ideas behind the term. Take the following excerpt from President Eric Kaler’s inauguration speech, for example.
“This institution needs to have an administrative backbone that is effective in supporting teaching, research and public engagement. Today, I am committing to you that, while I’m president, we will reduce administrative costs every single year.“
Operational excellence is a long-term commitment to working smarter, reducing costs, enhancing services, and increasing revenues throughout the university. It includes a variety of integrated activities with these goals in mind:
- Mitigating the impact of state budget reductions and keeping tuition increases low by reducing operational costs
- Improving operations and processes, resulting in a more efficient, less redundant organization
- Promoting entrepreneurship, intelligent risk-taking, cooperation and engagement on campus and in the community
- Freeing up dollars to be reinvested in the core academic enterprise
Challenges and opportunities
In a series of five listening sessions, the following themes were identified as essential to achieving operational excellence at the U of M:
The university is too risk averse and regulatory, more mired in saying “no” than in finding ways to say “yes.”
The university can do more to unleash entrepreneurialism, by identifying best practices for achieving efficiencies and scaling them up where appropriate.
The university needs to improve its change management and problem-solving skills, so it is able to alter course and direction when needed.
Consultation is important, but there are pitfalls to overconsulting, especially as it affects speed of innovation.
Achieving operational excellence means addressing all of the above. While solving specific problems is important in the short term, advancing the institution’s overall problem-solving skills is essential in moving forward.
Making progress
President Kaler has already announced the following actions as part of operational excellence efforts:
Senior leaders have been charged with implementing risk recalibration initiatives in their respective areas. This work is aimed at addressing the university’s risk-averse culture by eliminating or rethinking unnecessary or redundant policies and procedures.
The equipment capitalization threshold will be increased from $2,500 to $5,000, thereby reducing the volume of items we “count” by more than 30 percent. This will occur the next time we negotiate our facilities and administrative (indirect cost) rate for sponsored agreements.
External sales agreements are being simplified from eight pages down to one.
The university is centralizing more accounts receivable activity, reducing the burden on local units and utilizing central capacity more effectively.
A tool to allow units to pay vendors electronically rather than via a processed paper check is being developed.
The University launched Minnesota Innovation Partnerships (MN-IP) to eliminate protracted negotiations over rights to intellectual property resulting from industry-funded research.
Deans have been charged to look at and examine the mission centrality, value and scope of all institutes and centers. Administrative service centers will also be examined based upon similar criteria.
Long-term vision
Of course, this is all part of a commitment that won’t happen overnight. Because much has already been done to improve operations, future advancements will be more complicated. Achieving operational excellence will require the university to discontinue some activities while making strategic investments in others.
A work group has been charged with identifying how faculty and staff can collaborate more effectively to achieve operational excellence. Ideas and solutions will be communicated broadly and built into ongoing activities.
Ultimately, change is needed throughout the university, and making these decisions cannot simply occur at the highest levels of the organization. All faculty and staff have an important role to play.
Post by Matthew Sumera, associate director of strategic initiatives for University Relations
March 20, 2012 at 3:45 pm
The abbreviated external sales agreement is a positive step in the right direction and will help us more easily engage with external organizations. Thank you!