Understanding Operational Excellence
If there is one buzzword in business language today which is most guilty of confusing workers with its obfuscating fog of convoluted terminology, it would have to be Operational Excellence. The whirlwind of discussion surrounding this subject includes terms such as Performance Excellence, Business Process Management, Process Improvement, Economic Efficiency, and Incremental Innovation just to name a few… For many non-specialists it’s becoming increasingly hard to understand where one concept begins and another ends.
Put simply, Operational Excellence can be defined as a management principle which encourages the discovery and implementation of incremental changes, with the objective of optimizing processes to achieve a competitive advantage. However business jargon like this can sometimes do more to obscure meaning than reveal it, so it could be useful to look at an example of the concept in action.
Schneider National, a transportation and logistics firm based in Green Bay, Wisconsin was losing deals due to a lengthy response time to customer requests for proposals (RFPs). Employing Operational Excellence techniques the company slashed its response interval, resulting in a 70% in the number of bids that Schneider won, translating into a sales increase of hundreds of millions of dollars annually.
While the above example shows how this concept can be hugely beneficial to some organizations, the majority of companies are making one crucial mistake which is inhibiting their success…
The Dark Ages of Scientific Excellence
The origins of Operational Excellence can be traced back to the concept of Scientific Management, or “Taylorism” which was developed by Frederick Winslow Taylor 130 years ago within the manufacturing industry. While this concept hit a peak in the 1920s and 30s, many of the themes it popularized have persevered into 21st century management.
While Scientific Management represented a significant development in management theory, it also had a bad side. The theory encouraged managers to look at processes mathematically, which resulted in employees being pushed to the limit of their productivity level. This inadvertently exasperated existing issues between blue collar and white collar workers, which in turn strengthened labor unions. Although many companies benefited hugely from Scientific Management, as time went on it became obvious that it was necessary to at least try and fit the emotions of workers into the equation.
Right Idea, Wrong Approach
In contemporary operations management, the thoughts and feelings of employees are given relatively much more consideration. In his 2011 book, Design for Operational Excellence, Kevin J. Duggan outlines a much more modern approach:
- Design lean value streams from the time the order is received until delivery to the customer.
- Make lean value streams flow from one process to the other.
- Make flow visual so each employee can easily see how all the processes function.
- Create standard work for flow between processes to secure complete end-to-end flow.
- Make abnormal flow visual so every employee can easily tell when flow has been disrupted.
- Create standard work for abnormal flow in order to quickly fix problems.
- Have employees improve the flow as they are the most knowledgeable about the process.
In this paradigm of Operational Excellence, the employees are involved with almost every stage of the process. However, while many organizations are now aware of the benefits to this approach, few make a structured and concerted effort to actually engage their employees and involve them with the initiative from end-to-end.
Ignoring Your Most Precious Resource
An Economist Magazine Intelligence Unit Report entitled Strategy Execution: Achieving Operational Excellence, surveyed 276 senior executives in the U.S.A. and Canada regarding Operational Excellence. Not surprisingly the report found that growth was intimately tied to efficiency, however it also found that shockingly, just 38% of senior executives feel that their company effectively captures and implements employee recommendations for performance improvement.
So, while the majority of organizations understand the importance of involving employees with their operational excellence initiatives, many leaders feel that this audience is not being effectively harnessed. What if organizations could crowdsource the collective intelligence of their employees in order to reach a truly innovative performance and process improvement culture which delivers sustainable results?
Leveraging Your Collective Intelligence
Qmarkets’ award winning idea and innovation management software helps leading companies across the globe to tackle a wide variety of business challenges, the most common of which is operational excellence. Configured to fit the branding, processes, and culture of each client, these collaborative platforms allow organizations to leverage their entire workforce against any strategic principle or objective. Both the potential use cases and benefits they afford are abundant:
- Tap into the collective knowledge of your employees to optimize your continuous improvement processes
- Employ digital Kaizen to identify & share best practices across different business units and geographies
- Drive lean & agile processes through digital transformation
- Preserve your organizational BPM insights in one central knowledge base
- Become a customer-centric organization by utilizing external crowdsourcing
Giving stakeholders the opportunity to contribute and collaborate on ideas, not only results in brilliant suggestions for operational excellence, but also measured increases in customer satisfaction, employee engagement, and productivity. So, whichever term you choose to use to describe your quest for excellence, Qmarkets can help you transform your ideas into results.