Forward-thinking business leaders increasingly view operational excellence as a critical driver of competitive advantage. But for many organizations, implementing excellence remains an elusive objective. In this blog, we outline seven principles of a successful operational excellence implementation strategy.
[joli-toc]Organizations have been adjusting to numerous changes since the start of the COVID-19 pandemic: hybrid working, fluctuating profit margins, disrupted supply chains, changing customer needs, and more. After two years of turmoil, the need to achieve operational excellence (OpEx) is greater than ever to restore growth and profitability.
The secret to a successful operational excellence implementation strategy
The successful implementation of operational excellence lies in the initial stages of execution, when great concepts are turned into tangible actions. Applied correctly, the following seven guiding principles should result in the sustainable improvement of key performance metrics. These principles can be applied to both manufacturing and supply chain operational environments.
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Communicate and always ask questions
Gemba walks are an essential part of the lean management philosophy. Performed virtually or in-person, it lets leaders observe processes ‘‘where the work is done’’ and engage with employees by asking guiding and probing questions. In manufacturing, for example, it allows you to walk around and observe actual processes on the shop floor, engage with frontline workers and explore opportunities for improvement based on their insights and expertise. Although the practice of gemba walks derives from a manufacturing strategy context, it has been applied to process improvement in many industries – from customer service centers to software engineering.
The efforts to drive operational excellence require buy-in from everyone. Establish this by talking about the benefits and importance of continuous improvement (CI) with everybody and at every opportunity. Regular, consistent communication serves to build confidence in and inspire a culture of sustainable continuous improvement.
Excellence in one area isn’t enough for overall operational excellence – everything needs to be linked together. That means getting senior leaders aligned around business goals, and making it easy for everyone to participate and contribute toward these goals. Effective communication, visibility and transparency are therefore critical. So, keep communicating with work teams and provide a single source of accessible information. Setting up an operational excellence group or ‘‘task force’’ to drive business improvement projects can bring about significant benefits.
Download the How-to guide: Gemba walks for executive leadership for more on this valuable opportunity to communicate directly with your employees.
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Prepare a plan of action
Many business strategies for implementing change begin and end in the planning stage. It’s therefore critical to identify the problem, determine what needs to change, and how to make the change a success. Research and compare continuous process improvement tools and methodologies, and consider the resources required. Most of these tools and techniques have been designed over many years to assist organizations in their search for operational excellence by identifying inefficiencies in their processes and finding ways to improve them. Craft a clear statement that defines what you want to achieve and how you will achieve it, including the sequence and timing of actions.
A well-designed CI plan has helped many organizations achieve success in the face of market uncertainty, changing consumer demands, increased competition, and unprecedented global events such as the COVID-19 pandemic. Generally, such a plan is founded on an organization’s baseline capabilities. First, it identifies organizational strengths and weaknesses, then it designs an appropriate business strategy to guide implementation and, finally, it executes the relevant improvement initiatives in a logical sequence.
The most successful examples of continuous improvement plans comprise five common elements:
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One organization, two structures
To learn, adapt and remain competitive, organizations of the future must create a dual capability by integrating two parallel operational structures in their organizational architecture. The first one manages day-to-day operations; the second looks after the improvement projects and new opportunities. Organizational duality provides a promising new approach to continuous innovation within the same organization. And innovative thinking is the key to an implementation strategy framework for operational excellence in the digital age.
That’s why the concept of working on the business and not just in it is fast gaining ground among the world’s top executives. It works like this: As operations continue to apply digital technologies, working in the business will become more automated through simplification and stabilization. Automating mundane, noncore tasks will save considerable time for both employees and employers.
Results from the WorkMarket’s 2020 In(Sight) Report revealed that more than half (54%) of employees surveyed believe they could save 240 hours annually through automation. This is where the concept of working on the business and not just in it comes into play. The time saved by both employees and leaders would enable them to spend more time on innovation and continuous improvement. This represents the working on the business component and makes up the second operational structure. It is where true operational excellence is built, which forward-thinking business leaders increasingly view as a critical driver of competitive advantage.
However, working in the business remains a necessity, as it’s where the day-to-day activities of running the business occur. The key is to find a balance, of which freeing up time is a great enabler.
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Lead with both purpose and compassion
Engaged leadership is a key determinant of success in strategy implementation. An effective design for operational excellence requires leaders who invest in employee engagement and enabling technology. To inspire an organizational culture of excellence, leaders must consistently implement a well-ordered improvement methodology. This they achieve by embracing lean management systems and best practice principles openly and with gusto.
Empower employees to make continuous improvement a part of their daily work. Encourage them, give them the tools, training and time required to probe their existing processes so that they continuously identify opportunities for improvement. Encourage small, incremental improvements in all functions and at all levels of the organization. These improvements, known as kaizen – a Japanese term that can be defined as ‘‘change for the better’’ – form the basis for a sustainable improvement culture. All employees become actively engaged in the improvement process.
Culture remains the only sustainable source of competitive advantage as it can’t be copied. Since you can buy AI and automation, they aren’t a long-term source of competitive advantage. The people who do the work are in the best place to improve the work, but they need to see a committed and compassionate leader before being expected to embrace such a culture themselves.
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Clarify the what, why and how
Most organizations understand that they operate in a digital age that requires them to transform their traditional production systems into modern production systems. However, like continuous improvement, digital transformation requires a notable shift in organizational mindset and culture to achieve operational excellence. Therefore, be clear about your new outcome, how you will achieve it and why it’s necessary to achieve it – these considerations are the building blocks of sustainable business transformation.
Traditional production systems improve each function of a company instead of the organization as a whole. To optimize the continuous improvement process, leaders need to dismantle departmental silos so that functions can share knowledge and skills. People, business processes, systems and practices are united across the business’ entire value chain. This integrative continuous improvement approach simultaneously combines and integrates multiple CI methodologies that deliver sustainable results through people-driven best practices and work process improvements. Essentially, the process empowers a digitally transforming or transformed business with the resilience to withstand crises and capitalize on opportunities.
To activate integrative CI, organizations must follow a six-step approach that is actioned in a continuous cycle:
- Assess all areas and opportunities for improvement
- Plan workflows to meet improvement targets and timelines
- Train leadership and expand CI capabilities
- Implement integrated best practices company-wide
- Manage progress globally
- Share improvement practices and standards through digitally enabled and accessible platforms
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Small steps to big change
Achieving the first, even small, targets have enormous psychological value, bolstering personal and collective optimism as the implementation progresses. A CI-driven leader can encourage and identify the small, incremental improvement ideas that will consistently evolve the work standard.
The 5S lean principles is a methodology that puts into practice the lean philosophy of continuous improvement through consistent reduction and elimination of waste. The 5S system aims to establish the principles of discipline, orderliness and cleanliness in the workplace, all fundamental to world-class competitiveness. It’s also about maximizing efficiency and profit.
Often touted as the cornerstone of a continuous improvement action plan, organizations worldwide use 5S to start their journey of continuous improvement. This is one of the most effective ways to gain support and realize small, incremental wins. To build on the benefits, consider implementing the 5S methodology in a pilot area with other foundational best practices such as teamwork, focused improvement and visual management.
Executed in cohesion, 5S builds confidence in teams through the following:
- It convinces the sceptics and achieves employee buy-in
- It provides quick results to sustain the momentum
With its focus on waste elimination, 5S is also well-suited to be part of a rapid deployment strategy – a focused, time-bound response to key areas of losses, wastes and overproduction within a business. The emphasis is on speed – using up-to-date information and relevant tools to identify and resolve excessive loss and waste issues. As with 5S, a rapid deployment strategy shows some quick wins that motivate employees to continue with improvements.
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Create a fault-tolerant environment
Along with a coaching culture, instill a learning culture of continuous improvement that tolerates mistakes and supports collaborative problem-solving. Make people feel like they are part of the solution – reward progress and recognize achievements through formal or informal acknowledgement. Employees must feel supported, and, in turn, they will be more supportive of the organizational changes.
Operational excellence isn’t simply about applying lean and continuous improvement principles – it’s a holistic culture change where all employees are empowered and driven to execute the organizational strategy in the most efficient, cost-effective way. The basic tenet of kaizen is that improvement is a gradual and methodical process that’s only sustainable if built into an organization’s culture. It does this through inclusion and collaboration, encouraging all employees to participate in improvement and work together in their – and their company’s – best interests.
As demonstrated by some of the world’s most successful corporations, across a diverse range of industries from manufacturing to healthcare to airlines, operational excellence is both achievable and sustainable. It must just be tackled in the right way. Incorporating these eight principles within your operational excellence implementation strategy and planning will give you the edge over competitors and achieve greater business growth, even in times of economic uncertainty.
Download the How-to guide: Driving employee engagement on the CI journey to find out more about building a CI culture that keeps your people committed to your improvement strategy.
