A 5-step action plan to transform your operational excellence ecosystem
Forward-thinking executives around the world are increasingly viewing operational excellence (OpEx) as a key driver of top-line growth, and no longer as just a tool for incremental process improvements at an operational level. They understand that OpEx project teams and processes are best placed to create disciplined frameworks to gain competitive advantage. As a result, they’re starting to align operational excellence teams at the strategy, value creation and customer experience levels to enable end-to-end business transformation.
The constant pressure from new competition is a major incentive for many organizations to refine or invest in their operational excellence methodologies. There is now a real need to instill a culture of continuous improvement in order to stay competitive in a very competitive global market. This is clearly reflected in a recent report released by Proqis, The Global State of Operational Excellence: Critical Challenges & Future Trends. In it, nearly 30% of survey respondents cited the threat of new competition as a key driver of operational change.
The report identified four other top drivers pushing change in the operational excellence ecosystem. These include:
- Needs of the customer — the ability to connect with customers, both internally and externally, is now almost ubiquitous; it’s easy to learn, seamless and intuitive
- Need to reduce cost — organisations are facing corporate-driven targets in cost and working capital reduction in an attempt to offset declining revenue
- New technologies — companies are scrambling to keep up with the latest technology, but these solutions are worthless without the right organizational culture to make the most of them
- Cross-industry disruption — start-ups and technological innovation are making the market more competitive every day, across all industries
Commencing the OpEx journey
The journey towards achieving operational excellence typically begins with an initial step change improvement, followed by continuous incremental advances. The implementation journey itself runs through a change management process which consists of the following five steps:
1. Build the business case for operational excellence
To ensure the building of sustainable advantage across your end-to-end value chain, you’ll have to seriously consider developing an integrative improvement capability. The upshot of an integrative approach is an organization that is primarily designed around customers and products, not functions. This ensures that both functional improvement requirements and the improvement methodology used are on a common platform, and executed in concert with one another.
2. Understand the impact of the key drivers
In order to fuse your business vision and transformational strategy with the methodologies, tools and techniques of operational excellence, you need to have a strong awareness of the drivers mentioned above.
3. Integrate sustainability into the vision, strategy and objectives
Sustainable implementation requires that continuous improvement tools integrate into an operating system and are bound by clear management principles within a complete framework.
4. Manage risks, reduce cost and build stakeholder value
Value generation and the reduction of operational risk are closely related to the culture on the production floor. Organizations that succeed in creating a proactive risk culture can use its strength to focus on value generation through an operational excellence culture.
5. Develop competencies and support cultural change
Integrate skills development and improve the way work is performed throughout your organization by building the required skills at leadership, operational and production floor level. Develop a learning and development strategy to ensure your workforce has the competencies required to deliver on the business imperatives.
Once you’ve defined the reasons for cultural change, convey them to the workforce. An organization-wide sense of urgency is necessary to compel the organization to transform. This is often referred to as being the ‘burning platform for change’.
DOWNLOAD How To Guide: Managing Change across the Organization to find out how to successfully lead and manage your change efforts.
Competitive advantage today and in the future will come only by transforming your business from end to end, function by function and process by process. Following an integrated, cohesive approach to value generation will give you the edge on your competitors, even through times of economic uncertainty. As demonstrated by some of the world’s most successful corporations, operational excellence is both achievable and sustainable — it just has to be tackled the right way.