What Is Operational Excellence?

Editor's Note: Take a look at our featured best practice, Lean Daily Management System (LDMS) (157-slide PowerPoint presentation). The concepts of Lean are straightforward and can be easily understood. In comparison to technical engineering projects, implementing Lean designs is relatively simple. However, many attempts to implement Lean production end in disappointing results. Why is it so challenging to achieve successful [read more]

Also, if you are interested in becoming an expert on Process Improvement, take a look at Flevy's Process Improvement Frameworks offering here. This is a curated collection of best practice frameworks based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. By learning and applying these concepts, you can you stay ahead of the curve. Full details here.

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Perfection is not attainable, but if we chase perfection we can catch excellence. – Vince Lombardi

In “The Discipline of Market Leaders – Choose your Customers, Narrow your Focus, Dominate your Market,” Michael Treacy and Fred Wiersema describe three distinct value propositions or disciplines an organization can choose to compete in their market or industry–Operational Excellence, Product Leadership, and Customer Intimacy.

Market leaders choose to excel in delivering extraordinary levels of one of these three value propositions, while maintaining competitive standards in the other disciplines.

Based on Treacy’s and Wiersema’s findings, market leaders will not pursue a diffused business strategy across two or even all three disciplines, but will continually focus on their organizational design, processes, technology, and competencies to improve the one particular value discipline that they want to provide to their Customers better than anyone else.

Organizations pursuing an Operational Excellence differentiation strategy are able to deliver a combination of quality, price, and ease of purchase and service that no other organization in their market or industry can match.

Achieving Operational Excellence requires the successful implementation of a Business Execution System that effectively and seamlessly integrates the following four building blocks: Strategy Deployment, Performance Management, Process Excellence, and High Performance Work Teams.

First, Operational Excellence organizations follow a well defined Strategy and Operational Planning & Deployment Process that ensures collaboration and alignment among the different parts of the organization and effectively links strategic and operational objectives, initiatives and execution. Strategy Mapping and Hoshin Planning provide this systematic and collaborative planning, execution, and review process.

Second, Operational Excellence organizations are able to translate strategic or operational objectives and initiatives into measurable success indicators and ensure alignment among the different levels and parts of the organization.

The Balanced Scorecard Methodology provides a Performance Management framework to ensure alignment of an organization towards common objectives and goals.

Third, Operational Excellence organizations are process-centered organizations that have well designed, efficient, and effective management, value chain, and support processes to deliver best-in-class products and services consistently.

Process Excellence concepts, methods and tools, including Six Sigma Methodology, Lean Management Methodology, 8D Problem Solving Process, and Business Process Improvement, are core competences and utilized at all levels of the organization.

Fourth, Operational Excellence can only be achieved and sustained with the right attitude, the right mindset, and the right competencies. Operational Excellence organizations continuously strive to increase the engagement and empowerment of their employees through strong values, guiding principles, leadership development, coaching, and continuous competence development.

Want to Achieve Excellence in Process Improvement?

Gain the knowledge and develop the expertise to become an expert in Process Improvement. Our frameworks are based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. Click here for full details.

Process Improvement involves analyzing and improving existing business processes in the pursuit of optimized performance. The goals are typically to continuously reduce costs, minimize errors, eliminate waste, improve productivity, and streamline activities.

As we continue to deal with COVID-19 and its economic aftermath, most organizations will prioritize Business Process Improvement initiatives. This is true for a few reasons. First, Process Improvement is one of the most common and effective ways of reducing costs. As the global economy slows down, Cost Management will jump to the forefront of most corporate agendas.

Secondly, a downturn typically unveils ineffective and broken business processes. Organizations that once seemed agile and focused during periods of growth may become sluggish and inefficient when demand drops off.

Lastly, COVID-19 has expedited Digital Transformation for most organizations. One of the quickest and most impactful forms of Digital Transformation is Robotic Process Automation (RPA). Thus, we have included numerous RPA frameworks within this Stream.

Learn about our Process Improvement Best Practice Frameworks here.