Operational Excellence

Operational Excellence by Walter McIntyre

Trying to define operational excellence (OE) in a way that fits every organization is difficult.  It is also area of business strategy which is sometimes viewed myopically.  Myopically, in this case is an unbalanced approach to everything in the article below.  Remember , no customers equals no profit.

I prefer to break OE down into areas focused on customers, sustainability, innovation, performance, leadership and people. To be effective OE has to be relevant to all aspects of business operation. Therefore, OE may have a hierarchy of definitions as it is propagated throughout a business.  The core values are the same, but there will be differing levels of granularity, all focused on the core business objectives.  For example, an operator working on a turret has the same high level goal as someone from HR, but different granular objectives specific to their tasks.

I intend to keep this article fairly high level.  Future articles will drill down further. For now we can define the focus areas.  Bear in mind that these areas overlap substantially. It is not my intent to silo these focus areas.

Customers

Who are they, what are their needs, what do they want (this can be very different from needs),  how do they feel about your product or service, how do they feel about your competitors products and services (both direct and indirect competitors), and what do they want from your business?  This can be called the voice of the customer.  It is important to remember that selling is not about telling.  It is about listening.

Sustainability

Sustainability includes resource utilization, power and water consumption, waste production and  recycling, etc.  Some of these items are about controlling cost, while others are about being a positive member of the business’s community.

Innovation

Innovation includes advancing the business’s core and peripheral technologies, providing better products and services (customer’s perspective), and modernization of equipment and facilities.  A business must be aware of its customer’s needs and opinions, its competitor’s products and performance, and any gap in these areas.  If you are not innovating, you are probably moving toward business death.

Performance

Performance includes bottom line business metrics and all functions that drive them.  Some common metrics are safety, quality, delivery, and cost. Products and services delivered in specification, on time, at or under budget, and without safety incidents. This is the area where we are most used to seeing pull and flow, yield, visual management, value stream mapping, and continuous improvement initiatives like Lean and Six Sigma.  The picture below is a Gemba Board that is used to recognize a value stream’s performance.  It is one of many tools that tie performance to employee engagement.

Gemba Board Example of Operational Excellence Tool

Gemba Board Example of Operational Excellence Tool

Leadership

This is aligned with the supervision verses leadership dilema. Leaders are almost always more effective than supervisors.  In a leadership based environment, natural leadership bubbles to the surface to become upwardly mobile in an organization.  It is incumbent upon a business’s leadership to make sure everyone keeps the “main thing” the “main thing”.

People

Here we are focused on engagement, alignment, safety, and quality of life at work.  A safe work environment involves more than eliminating work related accidents.  It also includes an engaged environment where it is safe to share ideas and disagree as adults.  I would guess that most employees would rather work in an environment where everyone has each other’s back, instead of an environment where you are afraid to turn you back on anyone.

Dispersed Alignment

Parallel Alignment

A last comment for this article.  Communication is the lubrication that make OE possible.  Folks must know the business’s goals (including division, department and value stream goals), the goals and expectations they are being held accountable for, how they are doing against those expectations, and why all the above is important.