Operational Excellence – The Main Principles to Continuously Improve

In every business, there are key areas that need improvement. However, it can be challenging to identify those specific areas and to come up with the right plan for the desired outcome.

Businesses try a variety of techniques to pivot and make changes. These include hiring new managers or employees, seeking the help of third-party audit firms, and even going through a total upheaval.

However, in most cases, changes happen gradually and often in a natural way. Operational excellence is a perfect example of such a change.

We’ll talk about the importance of operational excellence in this article and also highlight some of its core principles.

Let’s get started:

What Is Operational Excellence?

Business Dictionary defines operational excellence as,

“A philosophy of the workplace where problem-solving, teamwork, and leadership results in the ongoing improvement in an organization. The process involves focusing on the customers’ needs, keeping the employees positive and empowered, and continually improving the current activities in the workplace.”

The concept of operational excellence can leave people confused as its approach is not always clear. The term can be difficult to define, hence it often remains ambiguous.  Moreover, the definition of operational excellence can often end up being too broad to understand.

We must make it clear that operational excellence doesn’t only refer to a set of functions or activities. It’s a mindset that needs to be present within an organization and its employees.

The difficult part is translating this ‘theory’ into workable steps. Worry not, we’ve got you covered. But, before that let’s talk about how operational excellence links to continuous improvement.

Operational Excellence and Continuous Improvement

Continuous improvement refers to the on-going efforts to bring an improvement to an organization’s products, services, or processes. It helps businesses improve over time by maintaining and building on improvements.

However, continuous improvement alone can never be enough on its own. Merely improving does not help a business grow. This is when operational excellence comes into play. It makes sure every employee can clearly see the flow of value to the end consumer.

Employees must take steps to improve both the delivery and value to ensure customers are fully satisfied. While operational excellence helps reduce costs and increase productivity, that’s not its only benefit.

It aims to create a culture that promotes improvement and sustainable long-term growth. This is achieved by making sure every process is completed in the best possible manner. Once this begins to happen, everything starts to fall in its place and operational excellence is achieved.

10 Core Principles of Operational Excellence

Now that you already know the definition of operational excellence, it is time to talk about our top 10 core principles:

#1 Create Value for the End Consumer

The first step to creating value for the end consumer is to know what he or she truly wants or needs.

Then management can use a variety of techniques to understand a consumer. This remains important because consumer demands are consistently changing.  

You will not be able to drive continued success if you do not evolve over time. This is important for all kinds of businesses. You need to keep an eye on consumers and your competitors to be clear about what they require and what you can do to meet their expectations.

An organization needs to be consistent in maintaining the flow of value to ensure sustainable growth.

#2 Work on Creating Constancy of Purpose

All the employees from top-level management to low-level staff members must be on the same page. They must know the definition of operational excellence and their specific role in the chain.

It can be difficult for an organization to achieve or maintain operational excellence unless every employee has a clear agenda.

Thus, you must take steps to educate employees about their role in the business and how important they are.

#3 Don’t Forget Humility

Never forget the importance of employees. You alone can never lead an organization to success. You will need the support and aid of your employees, hence make sure to be humble.

Pay attention to others and be open to the idea of self-improvement. You do not have to do what others say, but do not reject their ideas without even listening to ’em. They might be able to come up with something unique and helpful.

#4 Respect Everyone

Remember that everyone has potential, worth, and a sense of being. The Shingo Model suggests treating everyone with respect.

The best way to show respect to employees is to appreciate their skills and job and to get them involved in higher-level business decisions. This can be done by seeking employee feedback and rewarding them for their hard work.

This will motivate them to put their best foot forward and work harder.

#5 Think Systematically

An organization consists of several departments that must all work together to achieve excellence. The management must understand the connection between each department and ensure that every department does its job in the best possible manner.

No organization can achieve operational excellence until all departments work together. If you concentrate on a single department, you will only end up improving one part of the process but will never be able to have a great end product.

#6 Take Steps to Maintain Quality

Improvement is a continuous process. The management team should keep a strict eye on all processes and ensure that each process or step adds value to the product or service.

Moreover, businesses should focus more on ‘creating’ what consumers demand. They should not try to create demand, instead, they should work on fulfilling it.

Also, remember that just because something works today does not mean it will work tomorrow as well. The management team may have to consider changing certain processes to improve results as better techniques, employees, or tools become available.

#7 Maintain the Flow of Value

The main goal of every business should be to offer maximum value to its consumers. Management must take steps to ensure there are no interruptions and processes are completed in a neat manner. This is very important because interruptions can result in inefficiencies and waste.

You must account for even the smallest of losses. Remember that an organization cannot attain continuous improvement if there is a disruption in workflow.

#8 Do Not Blame

Accidents are inevitable, no matter how careful you are. When things go wrong, you must look at the process and make sure everything is in place instead of looking for someone to blame.

The first step should always be to perform an audit. The management must concentrate on the ‘process’ and not the person ‘performing’ it to identify what went wrong. This is because no matter how good your employees are, they will not be able to create something good if the process is flawed.

However, in some cases employees might be at fault. The best way to solve this problem and to achieve operational excellence is to provide the required training to the employees so that they can play their role in achieving operational excellence and transfer value to the customer.

#9 Look for Perfection

This may sound odd because we’re taught to never run after perfection but the truth is that perfection is usually attainable in the world of business. No organization can achieve perfection unless it aims to achieve it.

While perfection always comes at a price, you must take steps to attain it. You will never be able to improve if you do not continually improve. The key lies in aiming high and simplifying processes.

It can be hard for the management team to define operational excellence succinctly to employees and convince them to strive for perfection.

Employees may reject business ideas and stick to standard work practices and procedures that they’re more comfortable doing a certain way.

It is the duty of the business to educate employees about the importance of operational excellence and find long-term and manageable solutions to achieve better results.

#10 Make Use of Scientific Thinking

Businesses must take steps to innovate. The best way to achieve operational excellence is to seek guidance from science and turn to concepts like Kaizen or Six Sigma.

Six sigma is a data-driven methodology that helps identify and eliminate defects in any process. It can identify the abnormal flow of data and processes and suggest improvements in standard work procedures to deliver better value to the customer.

Since technology is changing at a rapid pace, it is important for businesses to keep an eye on what’s available and what isn’t. Businesses that fail to change with time find it difficult to leave a mark.

Operational Excellence Examples

You will find examples of operational excellence all around you. Look at any business process and examine it closely. Try to identify flaws and what you can do to bring attain operational excellence.

A great example of a company that achieved operational excellence is Sanofi Pasteur. It introduced a ‘Big Opportunity’ Project to improve its substandard manufacturing culture. As a result, the company saw massive improvements in quality and culture helping it transform within a short span of time.

It recorded happier employees and a less stressed work environment that pushed everyone to work better.

Philips Lighting also saw great results by using Lean Management and Six Sigma methodologies. The company achieved consistent delivery reliability and pulled lead-times from 1 percent to 42 percent by improving process and concentrating on delivering excellence.

IBM is another company that brought innovations to processes to enhance productivity and reliability. The company automated several repetitive and manual tasks to make employees more productive and increase quality and efficiency.

The company concentrated on every step of a process to achieve business excellence and saw great results by joining hands with Watson Technology.

These examples answer a very important question – what drives operational excellence. These companies improved technology, concentrated on all the processes, improved work culture, and joined hands with reliable partners to identify and improve the abnormal flow of work and achieve excellence.

What is the Role of Operational Excellence?

As explained above, operational excellence involves bringing continuing improvements to achieve a competitive advantage and dethrone competition. It can take a business months and even years to achieve excellence and reach the desired results.

The key lies in not giving up and continuing to improve. The process can be slow but it’s very rewarding as it does not only benefit the bottom line but it also helps improve the company image, goodwill, employee happiness, etc.

It aims to develop a system in which employees concentrate on fixing problems just as they arise. Its main role is to make a business self-sufficient and reduce the risk of interruptions or issues that can cause production to come to a halt.

Businesses use a variety of techniques to achieve operational excellence These include:

• Six Sigma
• Kaizen
• Lean Manufacturing

The right methodology depends on several factors including your niche, limitations, and requirements. Lean manufacturing principles, for example, are best suited for a manufacturing business. Six Sigma, on the other hand, is said to be suitable for management-related businesses or departments.

How Rever Can Help

Rever is all about sharing and reusing, doing and tracking. Operational excellence and continuous improvement become a hundred times easier with our innovative digital platform. Using Rever’s dashboard, you can monitor the performances of your teams, the summary of their impact, and easily identify the people making the biggest difference at your company.

At Rever, we believe that anybody can be a knowledge worker and thrive. What makes us human is the capacity to grow our intellect and will, and to use them for good. We observe, especially at work, that most people are asked to stop thinking and do as they are told. We want to change that. We enable people to achieve their full creative potential.

Interested in learning more? Then get a demo today with one of our friendly lean management experts.