Redefining Operational Excellence

Get ready, because here comes a provocative idea. Everything anyone has ever said about operational excellence is wrong. Until now.

Operational excellence is about driving innovation and managing talent and enhacing customer engagement and ensure strategy aligns with tactics and determining optimal enterprise velocity. But it is not about lean and six sigma and any other methodology that people want to discuss. Operational excellence is a mindset, not a tool. It helps increase profitability, productivity, retention, engagement, empowerment, innovation, and many other things.

Most of the people who write and talk about operational excellence discuss it in the context of manufacturing. Operational excellence becomes synonomous with the Toyota Production System and other systems and methodologies. This view is wrong. It is too narrow, too limiting and not comprehensive enough. It’s easy to say operational excellence is only for manufacturing organizations.

I help clients pursue operational excellence and make tremendous improvements, yet very few of my clients are manufacturers. We need to get away from this narrow view.

I was recently reading Kevin J. Duggan’s book Design for Operational Excellence. In the book, Duggan talks about flow of value to the customer and the processes that the organization follows. He also talks about Lean and Six Sigma, but there was nothing about people and very little about culture. When culture was mentioned, it was only considered after an organization reduces operating costs. What kind of culture would an organization have if their focus was cost-cutting? Not one that many people want to work for.

Operational excellence is not just about developing a better process or eliminating waste or increasing standardization. That only works in very specific environments and for repetitive tasks. Operational excellence is about creating a different culture. A culture focused on adding value and making improvements and optimizing speed. That culture needs to come first, not as an afterthought.

Operational excellence is also about collaboration and partnerships and has to take into account external partners and organizations.

Too many people talk about operational excellence and only focus on what happens inside an organization with it’s flow and it’s processes. The real definition of operational excellence must have an internal and external focus. On employees, on customers, on suppliers and on other business partners. Only then can a company say they have achieved excellence.

Duggan’s book has some good ideas, but a more comprehensive view of operational excellence needs to be taken in order to truly generate breakthrough results for an organization. You can only achieve so much when you focus on standardization and eliminating waste. No company ever cut their way to growth (maybe to survival, but not sustained growth). We need to take the blinders off and broaden our view of operational excellence so organizations can achieve even greater heights.


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