What are your goals for the year ahead? Whether it’s customer experience, time to market or cost reduction, you’ll need to consider changing the way you operate. You might pursue operational excellence as a strategy. But what exactly is operational excellence and how do you go about achieving operational excellence?
If achieving operational excellence is your plan, you will first need to define it.
What is operational excellence? At its core, it’s a way of operating where every individual is contributing value to the customer. Operational excellence depends on scalable, repeatable processes. It’s about delivering consistently in order to delight customers, accelerate growth, become more efficient and adapt to the changing demands of the market.
Now, it’s traditional to follow a definition with an example. And there’s one example that stands head and shoulders above the rest.
For a lesson in operational excellence, we must turn our attention to a leader who ticks every box. He is the embodiment of operational excellence.
His name, of course, is Santa Claus. He’s the figurehead of a vast, multi-faceted operation that never misses a beat. He’s built his brand on delivering excellence consistently across multiple geographies within tight timescales. Nobody else comes close. You only need to see the customer reviews.
For most of us mere mortals, operational excellence is a collective effort that spans a surprising range of job roles. Operational excellence in a hotel group, for example, encompasses housekeeping managers, porters, kitchen staff … the list goes on. In a hospital, operational excellence involves nurses, pharmacists, cleaners, catering managers, admissions and laboratory teams. Every one of these has an influence on the ultimate objectives of the organisation, from safety to profitability.
What is operational excellence?
The best definition for operational excellence comes, naturally, from the Institute for Operational Excellence. The Institute describes operational excellence not as the pursuit of continuous improvement but the outcome of continuous improvement.
Operational excellence is “the point at which each and every employee can see the flow of value to the customer and is able to fix that flow before it breaks down”.
The benefit of this definition is that it applies operational excellence to every level and every person in the organisation. It conveys operational excellence not as a top-down principle but a responsibility shared by everyone, empowering people to ensure the flow of value in their role and directly address anything that’s getting in the way of that flow, without necessarily needing assistance from management.
It's a definition that is shared by Hannah Barnes, VP of operational excellence for bp in Europe and Southern Africa, who sees customer value as the ultimate benefit of achieving operational excellence.
In our recent webinar on retail trends, she told attendees: “You can't go far wrong in operational excellence if you start from the customer and work backwards. So that's kind of my mantra and how I work. Everything that I design, that I work on, that I talk about needs to have real fundamental value at the end of the chain, and often some of that will be quite far up the chain, but ultimately it needs to have an impact at the end.”
In December 2020, consulting firm Verdantix published the results of a survey into operational excellence programmes. The firm questioned 259 managers from 22 countries in 14 different industries. Out of all the respondents, 93% represented firms with revenues greater than $1 billion. In total, 92% of respondents said they were planning to increase spending on operational excellence in 2021. Technology innovation was cited as a focus for investment, with mobile apps and connected worker solutions seen as crucial to remote operations.
How to achieve operational excellence
The next question is, how do we achieve operational excellence? It sounds simple in theory but requires close alignment for large and highly distributed organisations operating in fast-moving markets.
There are numerous challenges standing in the way of achieving operational excellence – geographic and departmental silos, lack of visibility, cultural differences, poor communication channels and high levels of staff turnover.
But by addressing these, organisations can make progress. There are several components to consider. Here are some of the most important.
Culture is crucial to achieving operational excellence
A hallmark of organisations that have embraced operational excellence is that everyone gets it. Employees understand their role in the value chain and share the commitment to delivering. It’s therefore vital for leaders to be clear on the overall objectives and how individuals can contribute to it. Achieving operational excellence is not a quick journey so culture needs to be continually reinforced.
Improve visibility to achieve operational excellence
The alignment that’s necessary to achieving operational excellence depends on visibility at all levels. Employees need clarity on their tasks and guidance on best practice, while managers need visibility over the detail of what’s happening on a daily basis. Intelligent operations platforms are making this possible by deploying digital assistants to guide workers and feeding real-time data back to business intelligence dashboards, regardless of the time zone and location.
Measure and improve with reliable metrics
Setting benchmarks and key performance indicators enables the accountability that is crucial to achieving operational excellence. For example, if an operations leader defines a cleaning or stock checking process that needs to happen six times a day, they need to know whether that was completed by the right person at the right time. Dashboard analytics show missed or late activity, enabling leaders to target additional training or resources where they are needed most.
Empower employees to achieve operational excellence
The employees at the core of operational excellence – store assistants, technicians, maintenance engineers, nurses, cleaners, laboratory assistants – don’t usually work at a desk. They can be collectively defined as deskless workers. They have historically received only a small proportion of the technology spend directed towards their desk-based colleagues. But that is beginning to change: as leaders recognise the influence of deskless workers on operational health, they empower their deskless colleagues accordingly with digital tools that automate mundane tasks, digitise reporting and foster collaboration.