3 crucial components that drive operational excellence

The modern marketplace is unpredictable; changing consumer demands and unexpected events such as the COVID-19 pandemic have put global supply chains under enormous pressure. Organizations aiming for long-term sustainability need to strive for and achieve operational excellence. This blog looks at the key components of an integrative approach to achieving operational excellence.

Operational excellence can be summed up as an embedded, company-wide ability to adapt to change with agility. An organization that achieves operational excellence is essentially executing its business strategy with greater success than its competitors. Such an organization is typically described as consistently robust, resilient and relevant – undeterred by challenges like new competition or digital transformation.

The principles of operational excellence prepare digitally transformed companies for abnormal flows and disruptions in the global economy, and can identify opportunities faster than the competition – even in times of crisis. Ultimately, operationally excellent organizations benefit from increased end-to-end value chain efficiency which maximizes customer value, leading to greater profitability and sustainable business growth.

However, the key to achieving operational excellence is not what most business leaders think. The traditional response to navigating uncertainty is to cut costs – often quite drastically. While closing down a factory or canceling a product line will increase revenue in the short-term, such measures do not sustain a business far into the future.

 

How to achieve operational excellence through continuous improvement

Continuous improvement (CI) processes are driven by methodologies such as lean Six Sigma, Toyota Production System (TPS) and Kaizen. While very effective at helping organizations achieve a best practice foundation for operational excellence, these function-focused methodologies need to be adapted for the digital workplace.

Today, an operational excellence program relies on a commitment to integrative, continuous improvement. This advanced business system enables companies to migrate from a functional improvement management system to a process-based, customer-focused management system. Essentially, an integrated approach to CI breaks down an organization’s functional silos and unites all its people, processes and practices across the value chain to deliver a consistently superior service.

Download The definitive guide to integrative improvement to find out more about this holistic approach to continuous improvement.

DOWNLOAD GUIDE

 

Achieving sustainable operational excellence

To deliver a sustainable operational excellence strategy, an organization needs a robust and integrative approach to improvement. The goal is to develop a united organization that treats improvement initiatives as connected projects rather than disparate events.

A culture of continuous improvement is driven by an organization’s leaders and employees. Its focus is to meet – if not exceed – customers’ expectations by adhering to a strategy made up of three key components.

 

  1. Creating a holistic environment

A well-orchestrated, integrative approach to CI redesigns an organization to focus on its processes, products and customers – not its functions. In fact, it dismantles functional silos to create a holistic environment in which departments share their knowledge and expertise to deliver sustainable improvements.

Whichever CI methodologies an organization favors, they need to be applied simultaneously across the company to ensure a seamless and inclusive impact. What is more, to gain their support for an integrative CI redesign, all stakeholders need to understand how the company’s processes interrelate and why this is crucial for achieving operational excellence.

 

  1. A collaborative workforce

All employees need to be involved in improving processes and systems across the company. Integrative improvement can only achieve operational excellence if it is fully supported and driven by a collaborative workforce of skilled, curious and capable people. To ensure employee buy-in, the improvement program needs to be clearly communicated from the get-go.

The program plan must outline the steps involved in the integration of day-to-day processes, people (as opposed to functions) and their performance. When employees work together toward a shared goal, namely, to maximize value to the customer, that is aligned to specific and realistic deliverables, the quality and consistency of their output improves.

 

To involve all employees in pursuit of operational excellence, organizations need to:

Clearly and regularly communicate the integrative CI vision Making the integrative continuous improvement program a standing item of discussion on the meeting agenda is a good way to reinforce the plan. It should also be included in the daily management system so that it stays on the leadership radar.
Reassure employees It is important that people feel confident about their role in achieving operational excellence and how it pertains to the bigger picture. To that end, organizations must share progress updates with all employees and ensure that the leadership team is equipped to answer any questions.
Provide training sessions An integrative CI program needs skilled people who are empowered to innovate and make positive changes. It is crucial that employees understand that change is part of the organization’s recipe for achieving operational excellence. Thus, coaching and training sessions that build people’s confidence and capabilities as well as encourage new behaviors are an integral part of the process.
Give people ownership By encouraging vital interdepartmental and cross-functional participation and collaboration, people feel included in the process. More than that, they see how their actions and behaviors contribute to the solution which gives them a sense of control and satisfaction.
Motivate and reward positive change To keep momentum going, organizations need to keep their employees motivated and focused on the goal. The best way to do this is by recognizing and rewarding achievements, thus encouraging others to innovate and achieve too.
Actively support the CI culture An integrative improvement program will only work if it is actively embraced and supported by all levels of the organization. What is more, improvement initiatives will only be sustainable if they are applied at the management principle level, functional systems level and on the frontline simultaneously. When it comes to achieving operational excellence, a company needs all hands on deck at all times.

 

  1. Committed leadership

A committed, collaborative and fully on-board leadership is a critical component of integrative improvement deployment. Given that change can be difficult for people to accept and that employee disengagement puts the program at risk, an organization’s leadership cohort needs to drive the strategy from the top and keep their teams focused, upskilled, motivated and encouraged.

By demonstrating the necessary mindset in their daily actions and behaviors, leaders drive the organization’s integrative CI program. Here are four guiding principles to help leaders work towards and achieve operational excellence.

Here are four guiding principles to help leaders work toward and achieve operational excellence:

Dismantle silos Leaders from different business functions must develop the integrative CI program together and deploy the strategy as a unified team.
Build holistic, end-to-end, maturity-based processes Organizations with demand-driven value networks (DDVN) are operationally excellent as they focus the entire business on the customer. The leadership strategy needs to move the business through the stages of maturity to ensure successful digital and supply chain transformations that support holism.
Sequence work A maturity-based approach to operational excellence helps guide integrative CI with steady surety. It calls for work sequencing which essentially encourages leaders to sensibly stagger team developments and deliverables. This is done in alignment with the necessary investments in training and technologies to ensure that implementation takes place at the right time with the right support.
Invest in the right digital tools and technologies New technologies such as machine learning and automation can free employees from tedious, time-consuming and repetitive tasks. Added to which, tools like leader standard work (LSW) help focus leaders on the most value-adding activities. By investing in such tools and technologies, leaders ensure that they and their teams are able to prioritize work that delivers real results as well as create room for innovation and improvement.

 

Achieving operational excellence for world-class success

When improvements are integrated and continuous, when they are owned and driven by all employees, then change becomes a familiar and positive constant. Integrative improvement is how organizations become world class. It provides a rock-solid foundation to support flexible and proactive engagement with all stakeholders. It is a cultural transformation that informs the organization as a whole and embeds operational excellence into its core.

Operational excellence needs more than the application of integrative, CI initiatives. It requires a wholesale cultural transformation that determines leaders and empowers employees. Together, through knowledge-sharing, synchronicity and innovation, an organization’s multiple levels of people can execute positive and sustainable change.

Companies that create cultures of consistent improvement through talent development and technology investments deliver superior value to their customers. Operational excellence is an organization’s reward for instilling and driving a progressive organizational design that is digitally-enabled, maturity-based and future-fit.

Download the how-to guide Managing change across the organization for more on leading the change and engaging stakeholders at all levels in the organization.

DOWNLOAD THE GUIDE

How-to guide: Managing change across the organisation