Operational Excellence continues to gain popularity. A recent worldwide survey by the Business Transformation & Operational Excellence World Summit found that over half of respondents believe OE is on the rise, and nearly half have an Enterprise-wide Operational Excellence (OE) program in place. Yet, despite the popularity, several studies have found that between 50% and 70% of “OE Programs” fail to deliver their expected results.
Why most Operational Excellence efforts fail
Perhaps this is a classic case of “over selling and under delivering” where expectations were set too high. Surely one way to improve that metric would be to lower the bar. However, we believe that the reason many OE programs fail is because they do not set expectations high enough. Unfortunately, Operational Excellence is often associated with efforts to create continuous yet marginal improvements by chiseling fat and waste away little by little. These methods have their place, but they alone will not deliver OE. We believe Operational Excellence is much more than a set of tools, methodologies or software to marginally improve performance. OE is an end goal where your company is performing at its absolute best to execute its strategy.
For most organizations, achieving Operational Excellence will require transformational rather than discreet changes. It may require transforming the way we think about Operational Excellence, transforming what we work on to achieve it, and transforming the environment to make those efforts successful.
OE is more important today than ever before
One of the greatest opportunities for outstanding performance is through Operational Excellence. As competition intensifies across all industries, competitive advantages from strategic differentiation are harder to find and much harder to sustain. Companies that can effectively and consistently execute their strategy while quickly adapting to strategic shifts will stand out among their competitors. Just look around any typical company. There is rarely any shortage of good ideas. The limitation is usually on the ability to put those ideas into motion.
Operational Excellence is delivering leading performance across all measures of value by consistently executing the strategy. Consistent execution requires two components working together: the systems in place to manage the work to be done to execute the strategy, and the culture that drives how well and consistently the work is done.
The 10 Fundamentals of Operational Excellence
The following series of articles is a compilation of what we believe to be the 10 most fundamental things to get right to allow for Operational Excellence. Before diving in, a word of warning. This is not a comprehensive checklist of everything you will need to do to achieve Operational Excellence, but rather a list the things most often forgotten or ignored. This is also not a list of the trendiest buzzwords that will excite the imagination. These are the fundamentals of Operational Excellence, the necessary foundations that allow other, more exciting things to flourish.
In a way, these represent a new approach to Operational Excellence. In another way, they represent a return to an old approach, a return to the things we’ve lost through growth and complexity, and a refocus on the basics that make a company great.