Dear Campus Colleagues:
Last fall, we launched Operational Excellence, an effort to identify opportunities to improve the efficiency and effectiveness of operations at the University of California, Berkeley. As one of the world's preeminent public teaching and research universities, there can be no doubt that excellence is deeply ingrained throughout our campus. However, for some time, most of us have recognized that the systems, policies, and processes that we depend on to run our campus have substantial room for improvement. Our goals in Operational Excellence are to improve our operations and to ensure that the maximum possible resources are available for teaching and research.
I know that all of us are fully committed to ensuring that this institution continues to be a model of excellence. We have taken dramatic steps to reduce our operating expenses, especially over the past two years. Nevertheless, we cannot count on the State to cover our full operating costs in the highly competitive market for world-class faculty, staff, students, and facilities.
In addition to reducing our costs, we must create an environment in which all members of the campus community can do their best work. This will require streamlining business processes and reducing organizational complexity, automating cumbersome manual transactions, and making a commitment to greater accountability at all levels. At the same time, we must keep our focus on our primary missions of teaching, research, and public service.
RECOMMENDATIONS AND NEXT STEPS
On April 12th the Operational Excellence Steering Committee, which was composed of Berkeley faculty, staff, students and alumni, released a report that outlines the conclusions from the diagnostic phase, with recommendations regarding the most appropriate path forward. The report, prepared by a large working group of Berkeley employees and supported by the consulting firm Bain & Company, is an impressive compilation of data gathered and analyzed over the past six months regarding key operational areas of our campus. The report highlights the potential to improve materially the way we operate and to save more than $100 million from Berkeley's on-going operational costs. The Steering Committee recommended that we make a systematic effort to capture at least $75 million annually of those savings over the next three years.
Executive Vice Chancellor & Provost (EVCP) George Breslauer and I have participated in every Steering Committee meeting, separately reviewed much of the research and analysis presented to the Steering Committee, and, of course, have thoroughly reviewed the Steering Committee's final report. I am accepting the Committee's recommendation to proceed with initiatives in five areas: procurement, organizational simplification, information technology, energy, and student services. Together, these five initiatives will be designed to improve effectiveness of our operations while reducing on-going operational costs by a minimum of $75 million annually, over the next three years.
In the next few weeks we will appoint initiative teams to design specific solutions for cost savings and operational improvements in each of the five areas. Two more teams will be appointed to address broader organizational challenges: the design of a new model for managing our financial resources, particularly common goods, and a strategy to move our campus toward an operating culture with aligned, clear goals throughout our organization, consistent decision processes, effective management strategies, and clear career paths for our employees within the university.
The Steering Committee also recommended that we immediately establish a Program Office which, for the duration of Operational Excellence, will both oversee and guide our efforts as well as support a coherent, integrated, and systematic approach to the design and implementation of specific initiatives. I agree with this approach and have initiated processes to put this structure in place quickly. We will have more information to share with you in the coming weeks.
In addition, I have asked Bain & Company to continue assisting us through the end of this calendar year. We have not finalized the details of this engagement but I expect that this investment will be invaluable in helping us achieve the savings we have identified, maintain the momentum of this work, and augment and support our Berkeley leaders in emulating best practices.
WHAT WE MUST ACCOMPLISH
I strongly believe that our campus has significant opportunities to achieve the savings and operational improvements that we need. This will require a systematic and sustained effort for the next 2-3 years. It will not be easy. Each of us will have to change the way we work, and the way we work with each other, in order to streamline our operations and produce meaningful savings.
In addition, we will need to make significant investments in automation, process improvements, people, and training, many of which are long overdue. We are exploring alternatives for low-cost financing that will enable us to borrow the money needed to make these investments soon in order to produce real savings quickly.
Many of you participated in the development of the Steering Committee's recommendations through focus groups, interviews, surveys, and e-mailed suggestions. Some of you have expressed concerns about specific changes outlined in the Steering Committee's report. Others have argued strongly that we need to take swift and decisive action. I very much appreciate the feedback that you have provided, before and after the report was issued, and the extent of your commitment to making sure that we move forward in a way that preserves our excellence and honors our values.
It is imperative that we succeed with Operational Excellence. The current budget challenges are likely to persist for some time. Consequently, we need to manage the resources we have as effectively as we possibly can, while we continue to advocate for more resources from the State of California and pursue our ongoing fundraising efforts as well as other creative revenue strategies. So far, the reactions to our Operational Excellence efforts, in Sacramento and from the UC Regents, have been promising.
EVCP Breslauer, Vice Chancellor Yeary, and I are committed to the success of Operational Excellence at Berkeley. We recognize that it will not be easy; however, I am convinced that we can make the needed changes. I ask each of you to participate in making this effort a success.
Robert J. Birgeneau
Monday, May 3, 2010
Received this morning, posted unchanged except to highlight every instance of the words "excellence," "effective," and "effectiveness":