John Kenney, CPRC, CEO, Cotney Consulting
As the summer of 2024 is getting into full swing, it brings an excellent opportunity to assess your business and look to the future. Does it take a chaotic event for you to realize it is time to make significant changes, to put a set of principles in place to get organized, reduce your risk and improve your cross-functional management? Or do you take stock and realize now is the time to take a proactive approach?
Consider the operational excellence philosophy, which embraces problem-solving and leadership to achieve continuous improvement. This philosophy is not a set of activities to perform. It is a mindset that should be present within you and your employees.
Use key concepts of operational excellence to give your company a substantial competitive advantage. It can start with minor process improvements that can have an enormous impact. The Harvard Business Review notes that companies with peak operational excellence typically have 25 percent higher growth and 75 percent higher productivity than those that do not follow the philosophy.
The secret to operational excellence is that you succeed by impacting key organizational behavior characteristics.
Workforce: You create a robust organizational culture by empowering your employees to solve problems. This helps you hire and maintain a staff who are more willing to consider new ideas and feel comfortable bringing new ideas to management.
Strategic: With operational excellence, management does not need to get involved in solving low-level problems or micro-managing daily operations. Instead, leaders can focus on the big picture – growing the business and mitigating threats. When empowered, the rest of the team can handle low-level problems and manage daily operations.
Agile: Operational excellence is flexible and dynamic. As markets or customer tastes change, you will have a self-correcting mechanism to meet customer needs and continue growing your business.
Growth: Use standardized processes and continually improve them. Optimize every aspect of your operation and implement best practices. With that accomplished, training new staff is straightforward.
Efficient: Achieve efficient operations using value streams that cut waste. Deliver value to your customers at the best price and quality. This leads to greater profitability.
There are three principal methodologies businesses tend to use to achieve operational excellence. Training is available for all three.
Six Sigma uses tools and techniques to improve your business processes to achieve better products or services. The goal is to improve the customer experience by identifying and eliminating variations. More than 50 percent of Fortune 500 companies use Six Sigma, helping them save more than $427 billion over the past 20 years. A defect is anything that fails to meet customer expectations and with Six Sigma, no more than 3.4 defects are found for every million opportunities.
Six Sigma has five steps: define, measure, analyze, improve and control. Define a problem so you can fix it. Once you determine the problem, create a plan and evaluate your available resources. Measure your available data and assess your current process. Analyze your measured data to get to the root of the problem. Then, look for possible improvements or solutions. Implement the solutions on a small scale to ensure the process remains effective.
In Japanese, kaizen means “continuous improvement.” Businesses use it to implement ongoing, positive changes. Its guiding principles are that a good process leads to positive results, teamwork is essential for success and you can improve any process.
Implement Kaizen to help create a culture of continuous improvement. This leads to employees working together to achieve workplace improvements. When applied consistently, small changes compound and produce significant results. Kaizen encourages not just small change but significant change through the participation of all employees.
This methodology stresses that it is not enough to make a change once and hope it works. It is about continuous improvement. Kaizen can help improve employee productivity, improve customer experience and cut costs.
This methodology focuses on eliminating waste in a production system. The philosophy is that businesses should focus only on that which adds value. Every process has a bottleneck; concentrating on that bottleneck is the fastest route to success.
Lean manufacturing focuses on improving the quality of products or services and eliminating anything that does not add value. It identifies seven areas of waste called the “seven deadly wastes.” They include overproduction, waiting, transport, motion, over-
processing, inventory and defects.
Use one of these methodologies to focus on growth and execute the strategies better than your competitors. Ensure employees that all systems run smoothly and allow team members to adjust for improvement when necessary.
Executional excellence or the drive to keep improving to have the capacity to pursue innovation and growth, has two primary pillars:
Businesses practicing operational and execution excellence must see the concepts as a culture that inspires everything they do. Lead your company to deliver your products and services when your customers desire them, with the least amount of effort and at a price the customer wants to pay.
In conclusion, operational excellence is not merely a set of practices but a deeply ingrained mindset that can transform your business. As the summer of 2024 unfolds, seize this opportunity to reflect on your current processes and embrace a culture of continuous improvement. By empowering your workforce, focusing on strategic growth, maintaining agility and optimizing efficiency, you can position your business to thrive in an ever-changing market.
Remember, adopting suitable methodologies can provide the structured approach needed to eliminate waste, improve quality and foster innovation. Ultimately, the pursuit of operational excellence will enhance productivity and profitability and ensure that your company remains competitive and resilient in the face of future challenges.
For further information on this or another subject, you can contact John at jkenney@cotneyconsulting.com.
Previous Article