Operational Excellence and the Basics

In this day and age, there isn’t time to sit and watch what happens in your market. If you want to succeed, you need to take control of your own destiny.  Most CEOs realize this, they often scramble for ideas on how to improve their operations and, too often, jump on the bandwagon of the latest fad with the hope that it will solve their problems or give them an edge over their competitors. They have heard the stories from their peers on the golf course or the tennis club. They have read the articles in magazines, they may even have spoken to a smooth talking consultant; all singing the praises of the latest “revolution” in productivity and lower cost. The more they think about it the better it sounds.

One classic example goes back to the late ‘90s, when the 6 Sigma methodology became widely seen as the Holy Grail of business improvement.  Many people thought: “If companies like GE can be successful with 6 Sigma than why shouldn’t we?”  What a lot of people learned, though, is that there is no point in learning 6 Sigma if you don’t have any data to process. And, of course, that success isn’t measured in the number of, say, trained Black Belts. Success appears as an increase in bottom-line results.

So before you sign up your organisation to the next revolution you need to ensure the right conditions are in place, that the grounds have been plowed and fertile so the seeds you will plant through the new approach and methodology will have the best chance to grow.

The biggest killer of such initiatives is the lack of time. If your organisation operates in fire fighting mode your people are busy running from one emergency to the next. It is very difficult for them to find the time to sit down and analyse a problem to identify it’s root causes. It’s like the story of the lumberjack who was so busy cutting down trees that he didn’t have time to sharpen his saw.

Besides, the reactive nature of the organisational dynamics make it difficult for people to accept the proactive approach of the new methodologies; it goes against the organisational culture of rewarding people who solve problems when they happen rather than rewarding people who anticipate and take actions to avoid problems altogether.

This is why your journey to Operational Excellence needs to start with the basics: Planning, Execution and Follow-Up. By forcing people to think about the future you automatically change the organisational dynamics away from fire fighting to proactive actions.

This may seem obvious, but you’d be amazed to find how many companies operate without one or two of the three.

Execution is a given—without execution, there is no revenue. And every company engages in some degree of Planning, whether it’s in budgeting, sales or logistics. How ‘granular’ that planning is, and/or how much room for improvement is built into that process, are two different questions.

It is in Follow-Up that most organizations stumble. There often just seems not to be enough time to do a proper review of the Planning and Execution, let alone perform root causes analyses on the deviation between what you planned to make and what you really made. People forget that deviations are golden opportunities to learn, improve and save time. But I guess this is also nothing new, most managers will regularly look at deviations to understand performance. There is even a name for this: Management by Exceptions.

Note that it is one thing for managers to practice Management by Exceptions; it is another when operators do it. In my experience, to achieve the next level of organizational maturity, one needs to look at plan deviation, from management to the operators. If you can get your shop floor operators to apply the same techniques, then you will have made a huge jump in organizational maturity. Empowering employees to analyze deviations and make decisions without consulting their superiors (within their freedom box) not only gives employees more job satisfaction, it tightens the control of your operation and produces better results.

Zabok, 12th May 2013

3 thoughts on “Operational Excellence and the Basics

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