The Lean Practice Guide to Operational Excellence
Operational excellence. It’s an inspiring term, right? It evokes a particular mental image - one of machine-like efficiency, a business that produces top results.
It’s something every company should strive for. It’s a given. You want to perform at your best, you want your colleagues to work in unison to drive forward ongoing improvement.
But what does it take to achieve? Operational excellence (OpEx) is a popular term but it’s also an abstract one. It’s open to misunderstanding and poor implementation. Let’s start with the basics. Let’s define it.
OpEx Defined
It was the early 1970s: Dr. Joseph M. Juran, an engineer and management consultant, was teaching Japanese business leaders how to improve on quality. Regarded as the father of quality management, and a significant figure in the field of operational excellence, Dr. Juran taught businesses how to ensure excellence, add value to customers and to promote continuous development.
OpEx has been a part of organisations like Toyota for a long while, as far back as 1948 in fact - helping Japan reach an economic boom with highly-performing products and commodities. Operational Excellence helped companies eliminate waste, so much so that it contributed to Japan’s new standard for lowered production times and costs.
It’s a standard that exists today. The hallmark of Japanese business is efficiency. Muda, a Japanese word meaning ‘wastefulness’ is a key concept in the lean business methodology.
So what sits behind this standard? Dr. Juran defined 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.”
Honouring customer’s needs? An empowered workforce? Streamlined processes?
It goes without saying, a lean organisation is one that strives for operational excellence. The two philosophies are interlinked, if you achieve one, you’re working towards achieving the other. So let’s unpick the ways that your lean practice can practise operational excellence.
How to Achieve Operational Excellence
It makes sense to start at the top. Luckily for us, there’s a clear way to do that.
The Shingo Prize rewards the pinnacle of operational excellence. Awarded by the Shingo Institute, a programme of the Jon M. Huntsman School of Business at Utah State University, the prize measures how well businesses showcase continuous improvement. They are measured against ‘The Shingo Guiding Principles’, a set of values that are used to determine operational excellence. So let’s break them down, one by one.
1 - Respect Every Individual
The whole is greater than the sum of its parts. But if those parts aren’t retained, the whole is going to crumble.
Respect must be given to be earned. It must be felt by every person in an organization. It must be felt by your employees, customers and suppliers. Individuals are better motivated when they feel valued, and respect is often atop of the list of what people want from their employment. When people are respected, they’re less likely to perform the bare minimum of the job requirements. They are empowered to achieve, to measure up to the higher standards and expectations that they feel. If you’re failing to respect your employees or clients, you’re denying them their potential. It goes without saying that this serves as the foundation for continuous improvement.
To achieve operational excellence, create a development plan for your employees, based on realistic expectations. Value and reward their feedback - involve them in the process of reforming and improving their areas of responsibility. You should continually provide coaching and feedback, committing yourself to their growth and honouring the trust you demonstrated when initially hiring them.
2 - Be Humble
There’s no point trying to improve if you can’t be honest about the areas that require improvement. In order for OpEx to succeed, you’re going to need a healthy dose of humility. You can only achieve excellence if you are vulnerable enough to accept that you may have bad habits, bias, flaws.
Humility is necessary for growth, for learning how to be more efficient, for correcting ongoing mistakes. If you’re willing to consider input and feedback from your team, you’re narrowing the distance between leadership and staff, opting for a candour that befits company-wide development. A leader that is willing to continuously learn, is setting an example, creating an environment that puts respect into practise.
You should be creating opportunities for your employees to report issues with confidence. Make a pattern of rectifying these problems in a consistent manner. The truth is that many lean business principles are a matter of leading by example.
3 - Pursue Perfection
Perfectionism can be exhausting. In many areas of your life, perfectionist tendencies are a recipe for disappointment. Some things are simply out of your control. In some cases, it pays to be flexible, to adapt to the changing tides as they come and go. This is not true for operational excellence. When you pursue perfection, you are expanding the realm of possibility. You’re changing your mindset. Whether or not you achieve the most optimal results possible, you are creating a culture of change. You’re encouraging your company to rethink what’s possible, to shift the rubric by which they currently operate. Many of the opportunities we land are born from the desire to change things for the better. This is true for OpEx.
In practice, you should be creating-long term solutions for any company problems. You should aim to streamline and simplify work, removing unnecessary meetings, tasks and distractions. More on this later.
4 - Embrace Scientific Thinking
If there’s anywhere with a continual improvement process, it’s the lab. The scientific approach is one based on incremental improvements. It’s one centred on refining practises through repeated cycles of experimentation, through direct observation. Scientific thinking prioritizes the systematic exploration of new ideas, it sees the value in failure. It makes performance something that can be measured by empirical means. In truth, if you’re going to achieve operational excellence, you’re going to have to adopt this commitment to trial and error. You’re going to have to become comfortable with failure.
You can implement scientific thinking by taking an observation-led, structured-approach to problem solving. Think audits, performance reviews, experimental changes. You should be encouraging your employees to explore new ways of doing things without fear of failure or reprimand.
5 - Focus on Process
There’s a saying that doesn’t sit well with me. You’ve heard it before. ‘A good tradesman doesn’t blame his tools.’ The reality is that you can take an extremely talented individual, but if their resources - including the processes that are in place to support them, aren't up to scratch, they’ll fail to thrive. Process is the cornerstone of operational excellence. All outcomes are the result of your processes. Rather than blaming the individual when things go wrong, instead examine the ways in which you can optimize your company’s processes.
For example, when there’s an issue, observe the conditions that brought it about. Improve on the process that created the error, don’t chastise the individual that was behind it. Again, respect is paramount to company-wide improvement. You should be ensuring that all the information and resources in your organization are appropriate, that your staff are empowered to perform the processes in place.
6 - Assure Quality at the Source
In your pursuit of perfection, you’ll only be able to remedy any lapses of quality by fully understanding their root cause. When errors occur, apply your scientific thinking to accurately detect why they have occurred. Perfect quality can only be achieved when issues are corrected at the point of creation. This may take time, but errors are only identified during a review, then they’ve been allowed to hamper overall performance for too long. Instead, it should be paramount that your staff are empowered to take corrective action as soon as problems are identified. In the tech industry, this is often achieved by Quality Assurance testers. Even if you’re not operating in the tech industry, your organization will benefit when you train your staff to have the rigour and observational skills of a QA.
7 - Find a Flow of Value
The next OpEx principle is the most abstract and difficult to interpret. So let’s put it simply. You’re best respecting your customer when you’re mindful of their needs. This extends beyond good customer service but includes an effective response to real demand. A way to understand how your products and services relate to customer demand comes in understanding the flow of value.
Picture walking onto a production floor, and examining how many manufacturing processes each station is from the customer. If a visitor can see where a production process sits in the overall journey from business to customer, then they can understand its value stream. They understand how the flow works. Your job is to ensure the flow is visible to your employees. Your job is to create a transparent system of processes, wherein each employee understands how their work is a particular response to customer needs. Your job is to ensure your employees know what to do should that flow break down, to minimise any issues of the delivery to the customer.
To improve flow, avoid creating more products than necessary; in doing so you’re only adding to the processes in your value stream. You should also ensure that the resources that both your staff and customers require are readily available when required.
8 - Think Systemically
When adopting scientific thinking, it’s important to think systemically. This extends beyond a methodical approach to problem solving. Instead, it comes from understanding the interconnected nature of the elements within a system. In essence, your organization is a superorganism. When we understand the relationships between processes and different departments, we’re able to make better decisions that enhance your business on the whole.
You should be eliminating the roadblocks or bottlenecks that prevent the sharing of information, ideas and decisions throughout your business. You should be ensuring that there are clear goals for each employee, each department and that decisions are understood by those who are affected.
9 - Create a Constancy of Purpose
A lot of refining practice comes back down to your company’s ethos. That is to say, it’s dependent on the set of values by which you operate. If you have a clear understanding of why your organization operates in the way it does, you’re able to assess whether it's on track for operational excellence. You may need to reshape your team’s culture, aligning actions in a way that ensures that continuous improvement is a shared responsibility. This is achieved when you clearly communicate your company’s direction to every member of the workforce.
10 - Create Value for the Customer
The final Shingo principle for operational excellence is probably the most important. It describes the bread and butter of every successful business. You want to create value for the customers. Value has to be defined through the lens of what a customer wants, of what they’re willing to pay for. Organizations that fail to do so are ones that fail to achieve long-term growth. Whether it’s through questionnaires, case studies, reports, relationship-building calls or even a complaints service, it’s your duty to understand your customer's needs and expectations.
When we look at these principles, it’s clear that operational excellence is achieved when you alter your mindset. By double-downing on your company’s defining principles, by taking on a new mantra, you’re reframing how you go about business. The same is true when you adopt lean business practices. The reality is plain: mental attitude is the seed that grows into long-term development.
OpEx and Lean Practice
Achieving operational excellence is an organizational transformation process. It takes time, hard work, a team-wide commitment. We’ve spoken at length about the ways OpEx principles can help you on your way. At Lean Practice we combine the technical challenge of creating new systems and processes with the adaptive challenge of learning to think in new ways. . Our people centred approach combines the latest in human performance, psychology as well as leadership and all things “lean”.
Finding Your Flow
We’ve discussed flow in relationship to the value process. At Lean Practice, we focus on a second definition of the word: flow as the optimal work experience. It’s the Super-Saiyan state of the corporate world. Flow is when we are happiest, when we perform our best at work. What you may not know is that you can actively cultivate the conditions needed for your flow state.
Steven Kotler, the director of the Flow Research Collective, identifies the specific ‘triggers’ to help people achieve their peak state. At Lean Practice, we’ve condensed these to 17 specific rules to follow to optimize your performance.
Understanding Neurochemicals
So much of our motivation derives from the chemical messages received by our brains. Whether this is a motivation to succeed, to improve, to stick at our tasks, it’s all a result of the subtle interplay between the chemicals that define human emotion. The study into neuroscience and the chemical impact on performance is a growing field. Over the last 15 years, we’ve learned a great deal about the brain and how it functions. Lean Practice understands that when we examine our moods and behaviours, we can identify the triggers that influence our overall motivation. Here, we analyze the 4 main chemicals that dictate our emotions, so we can apply them to a personal growth plan that compliments operational excellence.
Behaviour Design
Of course, there’s no point knowing the chemical composition of moods and emotions without using that knowledge to change our behaviours. To make change a reality, you need to know how to modulate your emotions, to make your commitment to improvements last. The harsh reality is that around 70% of change efforts fail. We understand that to make a behavioural change, you need motivation, ability and a cause. Lean Practice has designed a system that uses the proven methods from the world’s key leaders on behavioural change.
Concluding Thoughts
You don’t need to be revolutionary to achieve a performance revolution. In fact, so much of long-term sustainable growth comes down to mindset.
The truth is that operational excellence represents a mentality that is deeply rooted in a company's culture, that empowers employees to continuously improve.
