February 26, 2020

What is Operational Excellence? Top Tips for Success

Finance Leadership
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Anyone who works in an organisation sees the importance of improvement and the value of a positive mindset. At the heart of every business are an idea and purpose. This purpose is then delivered to the customer who derives benefit from it. Overall, to make a business successful, both its people and its processes have to continue to offer said value. Through operational excellence, an organisation can support a mindset that is driven around the common goal of improvement and execution of its promised results. 

Although operational excellence may seem to be a vague idea, there are practical ways to ensure your organisation is in line to achieve this mindset. From investing in technology and automation, maximising efficiency and using analytics to measure results, there are strategies to make operational excellence happen. 

Here, we will define what operational excellence means, the principles behind the idea, and useful methodologies for implementation. 

What is Operational Excellence?

Operational excellence is a philosophy and mindset in business that positions its strategies and people around problem-solving and leadership. It helps to ensure that processes are designed to prioritise the customer’s needs, while also supporting the morale of internal stakeholders like employees. As such, employees feel motivated and inspired to deliver results to the best of their abilities. 

With operational excellence, employees also have the training, resources and most importantly, the positive mindset to act as constructive, analytical thinkers and problem-solvers. This means that if and when an issue arises, they have the confidence and knowledge to address and resolve it. Overall, having an attitude geared towards operational excellence becomes part of the company culture. This helps to serve the inner workings of business better, and ultimately, its customers. 

When operational excellence exists within a business, the business is positioned to beat out the competition because it can perform more reliably and strategically by lowering costs, lessening risk and ultimately, increasing revenue. 

So, how do you achieve operational excellence? 

There are specific methodologies, but from a top-line view, here are three critical elements:

  • Develop an integrated working environment with a seamless flow (a fundamental way to making this happen is to leverage technology and automation software to your advantage) 
  • Create a culture that prioritises Operational Discipline, or doing the right thing, every time 
  • Build a team that believes in supporting one another and delivering value to the customer 

The Difference Between Continuous Improvement and Operational Excellence 

It’s easy to confuse a topic we’ve focused on before, namely continuous improvement with operational excellence. That’s because both of them play to the general idea that business can always be better and operate more smoothly. 

However, the key differences between the two are:

  • Continuous improvement refers to modifications to business processes that take place incrementally 
  • Continuous improvements serve as a method for growth
  • Operational excellence is the overarching mindset and approach that enables an organisation and its people to sustain development over time 

Top Tips for Success with Operational Excellence 

As a business leader, it’s up to you to instil a culture of operational excellence. From a top-down approach, it means providing your team with everything they need to understand the business and feel like an integral part of its inner workings. 

As such, they will be actively involved in improving and serving the experience on behalf of your clientele. 

Here are some of the top tips to adopt and maintain operational excellence:

  • Respect All: It seems obvious, but people need to know that they are respected. Within business, this means that their opinions matter. When adapting processes or addressing problems, be sure to include your employees and make sure they know that their insight is valuable. 
  • Be Humble: Humility allows status to fall by the wayside. With humble leaders, team members are more open to approach and share information. 
  • Seek Perfection: While perfection isn’t achievable because there’s always room for improvement, there is importance in striving towards the end. When you set your goal up to be error-free, then you can at least implement the best processes and methods to try to achieve that state. While all businesses do, of course, face both controllable and uncontrollable risk, you can at least minimise such risks. For example, if you work in the financial industry and your employees have to perform a lot of manual and repetitive data entry, there’s a high risk for human error. Instead, you can leverage data automation tools to manage the data for you. In turn, employees can focus on high-level tasks and feel more valued. 
  • Think Scientifically: The scientific method is based on creating a hypothesis, devising an experiment and testing its validity. Businesses operate similarly through trial-and-error. Everything you do should be measurable, and with data and analytics, you can make it as such. Therefore, you can create a culture that embraces the idea of trying new things, failing fast, and bouncing back. 
  • Practice Quality Assurance: Quality comes from all the pieces of a process working together and delivering their intended results. By maintaining and measuring each step along the way, you can ensure a quality product or service every time. 
  • Maintain Purpose: Your business has a reason for existing. This should be shared with everyone who comes on board from the get-go. That way, employees can consistently align their work with the company goals and deliver its purpose. 
  • Create Value: Your bottom line depends on your customer. You have to consistently and reliably deliver what you promise to the end-user. From a smooth workflow and dedicated team, this is how you can achieve results. These values come together to support operational excellence. 

Main Principles to Achieve Operational Excellence

Now that you understand the philosophy let’s get practical. Here’s how you apply operational excellence in your workplace:

1. Design lean value streams: Minimises waste and unnecessary outputs allows you to deliver your product or service to your customers more quickly. Data Automation tools help make this possible by streamlining workflow and eliminating bottlenecks. 

2. Make value stream flows: Make sure you train everyone to understand the process and work together towards achieving business goals. 

3. Share visual flows: Use tools like process modelling and visualisation software to show your employees visually how the process works. That way, everyone is on board with how the starting point creates the endpoint. 

Create standard work for flow: 

1. Make abnormal discharge for visual: One way to approach problems is to make sure they are visually noticeable to team members. For example, with process automation, the software tool can alert you when something is wrong, or information is missing. That way, the responsible party can address the issue immediately and continue the process. 

2. Create standard work for abnormal flow: Document problems that arise. That way, when something comes up, you have a standardised method to address and resolve the issue. 

3. Have employees in the flow improve the flow: Leverage your team for process improvement always. Those who deal with it daily know it best and can help to make it better.  

4. Perform offence activities: When your team is equipped to manage processes, and they flow automatically, they can spend more time devising new strategies and coming up with innovative ideas. 


Methodologies

Here are some methods for helping achieve operational excellence that also support process improvement: 

  • Lean Manufacturing: This is an approach that eliminates waste from the manufacturing process without sacrificing the quality of the product. If any aspect of the business isn’t supporting adding value to the customer, then it should be considered for elimination. 
  • Six Sigma: Six Sigma focuses on improving the customer experience by implementing DMAIC - 
  • Define the problem to solve it
  • Measure available data and assess processes
  • Analyse findings
  • Improve solutions based on findings
  • Control the new method to maintain its success.  
  • Kaizen: This method relies on every employee to take part in continuous improvement within a manufacturing cycle. 

Challenges

No one purports that operational excellence is easy to achieve. However, there are some common challenges that organisations face. By understanding what they are, you can devise strategies to overcome them. Challenges include:

  • Detachment: Employees may not realise how vital their role is to the overall success of a business. This is where outlining processes and visually representing its value to the customer can come in handy. 
  • Lack of progress: Progress may feel slow. Leaders have to ensure that success is communicated internally while showcasing how small changes over time are pivotal to the business’ long-term success. Setting incremental milestones can also help with the feeling of achievement and moving forward.
  • Lack of appetite for adoption: Some companies like to do business as usual and fear change. However, adopting new ways of operating, such as using data automation technology, is one way to help ensure efficiency. 
  • Overly complex data: Data can do more harm than good if not properly managed. The good news is that automation and data tools can do the heavy lifting for you so that data is only useful and never harmful. 
  • Siloed Management: Even if swimlanes exists, business processes all work together as pieces of the whole. The use of shareable and collaborative tools can help make a business’ workflow operate smoothly. 

The Bottom Line 

Ultimately, an organisation is bound to face ups and downs. With operational excellence, everyone involved is on board to approach problems strategically. The mindset of operational excellence supports an organisation and its people to beat the competition, continuously improve, and strive towards perfection. 

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