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Recent data reveals 33% of executives are prioritising cost reductions and 67% plan to reinvest those savings into growth, making operational efficiency a strategic necessity.
But what does being more efficient look like in the current business world? And how does it serve as the key to unlocking growth?
This guide will walk you through how to achieve growth operational excellence through understanding efficiency and how to improve it within your organisation.
Operational efficiency is a process that measures performance and optimises the use of resources to achieve business goals. The aim is to minimise input, such as costs and time spent, while maximising output, like customer acquisition or revenue.
The operational efficiency ratio measures how much input goes into your daily work compared to the output produced. Leaders within your company will regularly check the resulting numbers and take action on factors that impede output.
Operational efficiency is a primary metric that drives continuous improvement. The results allow the organisation to reduce waste, facilitate cost savings and improve the quality of its products and services.
Pushing business efficiency within an organisation can have a significant impact on success.
The process enables leaders to make informed decisions based on the numbers that impact growth, driving changes that promote operational excellence.
Here's how operational efficiency contributes to business success:
Business leaders have access to all kinds of data analytics platforms that offer insight into commercial performance. But when it comes to operational efficiency, there are really two key performance indicators to note, a formula and a ratio, both of which we’ll explain below.
The operational formula is a simple equation that checks total operating expenses against company revenue. Dividing the two will show you how efficient your business really is.
It’s like seeing how much water you need to help your plants grow and bear the most fruit.
The sum is calculated by dividing operating expenses by total revenue. The lower the resulting number, the more efficient the business.
Operating expenses / total revenue = operational efficiency
For example, a company that had operation expenses of £1 million but generated £10 million in revenue, the equation would be:
£1,000,000 / £10,000,000 = 0.1
The company's operational efficiency would be 0.1 based on the formula.
The ratio is almost the same as the formula, but with the operational efficiency result as a percentage rather than a decimal. To achieve the number, you only need to multiply the sum by 100.
Operating expenses / total revenue * 100 = operational efficiency
Again, the lower the ratio, the better the company's performance. We can use the same example to demonstrate the result.
£1,000,000 / £10,000,000 * 100 = 10
The organisation's efficiency ratio would be 10%. If that number drops in the future, you’ll know you’ve made efficiency improvements.
The primary goals of improving a business's efficiency are to streamline operations, achieve significant cost savings, optimise business processes and gain a competitive edge.
Focusing on improving these pillars can help in driving operational excellence and growth.
To achieve these goals requires buy-in across your entire organisation, but not everyone will be as invested in these targets as you. So, it can help to explain benefits in real-world terms.
"Waste" is a term used to describe the time spent by employees on non-productive work.
As a leader, you’ll want to minimise waste as much as possible, but to do so you’ll need to get employees on board. Your people likely want to reduce waste too - but for them, the benefit is facilitating a smoother and more fulfilling workday.
Idea management platforms like Sideways 6 help to capture frontline insights that make these transformations possible, putting leaders in the perfect position to take action.
Cost savings are a primary focus for business leaders, as they have a significant impact on performance metrics. Management and decision-makers will continuously review where they can reduce labour, resource and operational costs.
Leaders continue to reduce operational inefficiencies by adopting new technology to drive improvements. The more you automate repetitive tasks and supply chains via technologies like artificial intelligence, the more freedom employees will have to focus on productive work.
Enhancing operational efficiency can also give an organisation a competitive edge in its market. If you can produce more goods at a higher quality than your competitors, you’ll offer a better service to your customers.
Leading companies will adopt continuous improvement strategies to achieve sustainable growth. The push towards unlocking business efficiency delivers higher value to shareholders and enhances customer satisfaction.
The difference between high and low productivity in US companies alone will sit at around $50 trillion by 2030, so it’s clear why leaders look to push business efficiency to drive growth.
However, driving operational excellence for growth isn’t easy, with obstacles spanning from supply chain to executive decision-making. That said, there are practical ways to streamline operations and foster continuous improvement, you just need to speak to employees’ needs.
Understanding your organisation's goals and targets is the first step to forming an operational strategy. You'll need to consider the challenges your company currently faces and how you can align them with the overall goals.
When considering your goals, ask yourself these questions:
Use these questions to define the problem and outline the necessary actions. Clearly communicate the goals to all employees to ensure they understand what they're working towards, and work their ideas into your plans to help them feel engaged in transformations.
Sustainable operations stem from achievable goals. Employees are more motivated to work towards sustainable business growth when their short-term achievements are consistently celebrated within the organisation.
Using a tool like Sideways 6, you can give employees the freedom to share their ideas on improvements inside platforms like Microsoft Teams that they’re already familiar with. The more you involve your people in change, the more motivated they’ll be to help you grow.
Strategic planning sets realistic targets that can be achieved with the resources currently available. Reviewing your company's performance history on specific tasks can help gauge a strategy that includes achievable goals.
Your strategic plan should also outline how to foster effective communication and collaboration among employees. Their ideas and feedback can be critical in improving business processes.
Raw data is the lifeblood that outlines business performance. It's essential to unlocking business efficiency, where almost every organisation will have software solutions to measure key performance indicators (KPIs).
Data analytics platforms are crucial for monitoring, processing and analysing performance. However, where an organisation has complex processes, it's essential to prioritise project management metrics to help boost efficiency.
Inefficient processes cost businesses between 20%-30% of their revenue per year, so it pays to foster a culture of continuous improvement in your organisation to maintain agility.
Metrics to focus in on include:
Utilising these KPIs can provide actionable insights to streamline processes and drive growth.
Automation through software solutions and leveraging AI helps make significant improvements to streamline operations and enhance workflows. Technology can be key to reducing the time spent on repetitive tasks and assigning employees work that generates more output.
Many platforms can also expand beyond operational processes. They can automate customer interactions, streamline supply chains, monitor performance and generate predictive analytics to help remain competitive.
Software solutions that have integration capabilities with your organisation's existing applications can be the most beneficial. Business users can quickly improve efficiency and productivity without having to spend time learning new technologies.
Take Sideways 6, for example. It integrates directly with Microsoft Teams and Interact to help you gather frontline ideas in an instant and accelerate adoption - without adding extra admin.
While human oversight is still necessary with automation, the time and cost reductions can benefit the growth potential.
Optimising resource allocation against constant market changes can be challenging. However, it plays a critical role in minimising input and maximising output.
Leaders can use company performance data to understand better where to allocate resources, such as labour and budget. Areas that aren't producing to meet the business's growth targets should be reviewed.
Reducing bottlenecks, such as outdated machinery, should also be part of a strategic resource plan, as they can impede a company's ability to scale with market changes. The inability to meet resource optimisation requirements can impact both product or service delivery and the overall supply chain.
Providing employees with an ideal working environment and enhancing the customer experience can have a profoundly positive impact on efficiency. Satisfied employees tend to be more productive, while increasing customer satisfaction can attract new clients.
Focusing on both can improve output in terms of productivity and generating revenue. Here are some ideas on how you can increase satisfaction for employees and meet customer expectations:
Business operations can significantly benefit from scalable software solutions. They can help business users achieve operational excellence through their capabilities, including automation, real-time reporting, collaboration and resource optimisation.
Software that offers seamless integration with existing company applications can be the most efficient, reducing training times and costs while increasing productivity. Teams can leverage cross-platform solutions to communicate, analyse and complete tasks more efficiently across various devices (i.e., laptops, mobile devices and tablets).
Finally, encouraging ideas and collaboration within the organisation can facilitate continuous improvement. There are numerous success stories of unlocked organisational growth by leaders providing platforms for employees to share ideas and feedback on how to address pain points within the company.
Through Sideways 6-powered idea management initiatives alone:
Many of these ideas have led to improved efficiency and streamlined processes, helping organisations exceed their growth targets. Encouraging ideas and collaboration at all levels of the company can also foster a valued company culture, motivating employees to be more productive and responsive to leadership.
The above tips provide an overview of how to improve business efficiency. Here are some real-world examples of how organisations have unlocked growth through action.
As discussed on our blog recently, software and transformations are shaping the future of retail, with self-scan checkouts offering a prime example of improved operational efficiency.
Businesses have leveraged technology and optimised resources by adding machines where customers can pay for goods themselves, speeding up payment times and automating repetitive tasks.
The checkout machines enable managers to allocate staff to focus on customer satisfaction, thereby enhancing the overall experience of visiting the retail establishment. Floor employees can also use the extra time to assist with supply chain tasks such as unloading and stocking deliveries.
An example of growth from improved efficiency in the built environment is the "My Contribution" platform developed by Balfour Beatty using Sideways 6. Leaders provided employees at all levels with a collaboration tool, inviting them to share ideas about improving workflows and operations.
In 2024, over 271 employee ideas resulted in £3.2 million in cost savings and 53,000 hours of working time. The collaboration tool continues to help the company drive more efficiency and unlock further growth.
Predictive maintenance systems are examples of efficiency in the utilities sector. The technology continuously monitors machinery, such as water pumps, notifying supervisors when components are nearing the end of their lifespan or are at risk of damage.
The technology prevents costly machine failures, therefore reducing expenditures and allowing managers to implement maintenance and supply chain plans systematically. For example, a UK-based utility firm invested in a hydraulic network risk tool that predicts and prevents major outages, saving the company £7 million.
In 2025, British Airways launched Original Thinkers, a company-wide employee ideas programme intended to help colleagues drive efficiency-boosting change. Leaders are using the Sideways 6-powered platform to spark thought-provoking discussions about day-to-day operations, giving the people who keep the business running the power to shape its future.
Travel agencies offer another idea on how they can improve their efficiency to compete in more challenging market conditions. Leaders have leveraged technology like customer relationship management (CRM) systems and automation to enhance the appeal of using online agencies to book holidays, offering a customer-centric and high-quality experience.
Organisations will always face roadblocks and obstacles when striving for operational excellence. Some vary by industry, while others can be recognised as standard efficiency roadblocks.
Here are some of the primary challenges businesses encounter in enhancing operational efficiency.
One of the most common challenges to improving business processes is communication. Many organisations will be hard siloed, meaning that departments can be isolated from each other, making necessary collaboration difficult.
Open and effective communication is crucial for streamlining operations and enhancing business functions. Companies may struggle to achieve operational excellence without clear lines of communication and collaboration and accessible ways for employees to share ideas.
Business intelligence is an integral part of a company's performance measurement methods. Using legacy off-the-shelf solutions may not provide the operational data that today's businesses require to foster continuous improvement.
The time and cost of implementing newer software solutions can also be a challenge for organisations. Current cash flow means that upgrading technology may not be practical towards unlocking business efficiency.
High employee turnover negatively impacts efficiency due to the increased time and costs associated with training new staff. It could also signify issues with the company culture if employees regularly leave the business.
Low employee engagement can affect efficiency as productivity can wane. Often, a lack of communication, poor leadership and a challenging working environment lead to lower-than-desired levels of output.
Often, supply chain issues are out of an organisation's control, which can be challenging when attempting to streamline processes. However, other supply chain events can also affect efficiency.
Failure to optimise inventory can lead to vulnerability to supply chain disruptions. The results mean that excess stock or unmet customer demand can impact revenue.
Achieving operational excellence to unlock organisational growth can be a challenging task. However, with the right tools, leaders can achieve their business targets and exceed them.
Sideways 6 is an idea management platform that unlocks growth potential from all levels of your company. It integrates with your existing platforms to encourage collaboration, streamline processes and find actionable solutions to pain points that hinder efficiency.
Learn how Sideways 6 can be the key to your business’ success and try our product with a free demo today.
