Download Culture of operational excellence

Adapted from “The Operational
Excellence Manifesto” by
Joseph F Paris Jr, XONITEK Group
An organization can choose three value propositions to compete in market or industry:
•
Operational Excellence
•
Product Leadership
•
Customer Intimacy
Market leaders generally choose to excel in delivering one of these three while
maintaining competitive standards in other two
*
“The Discipline of Market Leaders – Choose your customers, Narrow your focus, Dominate
your Market” by Michael Treacy & Fred Wiersema
“Operational Excellence is achieved when all efforts throughout the organization are in
a state of alignment for achieving its goals and where the corporate culture is
committed to continuous and deliberate improvement of company performance and the
circumstances of those who work there – to pursue operational excellence by design
and not by coincidence”
Joseph F Paris Jr; Chairman, XONITEK Group of Companies
Culture of Excellence:
•
is a long journey with many steps starting with few success stories and gradually
gripping the whole organization. A momentum is created where nothing but the best
satisfies employees who start taking pride in being the best in business
•
produces a learning environment where people continuously develop skills keeping up
with latest trends in industry. Challenging status quo and constant search for
improvement are pursued & valued
•
is a flexible environment where each employee is willing to change as needed. The
culture is stable in vision, mission and values but elastic in structure and operations.
Focused on external adaptation and internal operation, satisfying customers and
employees simultaneously
•
shows as high self-confidence in employees who seem willing to take up seemingly
impossible tasks for execution without hesitation
•
Is characterised by “success” becoming a habit
Successful implementation of a “Business Execution System” integrates four building
blocks:
• Strategy Deployment
– Alignment, linking objectives/initiative/execution
through mapping & planning
• Performance Management
– KPI & cross functional alignment
• Process Excellence
– Being process centered, efficient & effective
management, value chain & support processes
• High Performance Work Team –
Values, right attitude & mindset, employee
engagement/empowerment, coaching
leadership development
•
Strategic Clarity : business model, SWOT analysis
•
Culture of operational excellence : continuous improvement, benchmarking,
outward looking, unending passion, energy
•
Advantaged architecture & processes : effective organizational structure,
processes, systems, competitiveness, reward/recognition
•
Well orchestrated journey : vision, mission, goals, leadership, road map, incremental
improvements, change
•
Superior alignment and execution : strategic alignment, superior execution,
training
 strangely the ‘DuPont’ operational excellence model does not show the customer in its
excellence model !!
Customer
s
 Customer
satisfaction
 Branding
 Distribution
strategy &
segmenting
 Cross-sales
Processes
Capital
People
 Lean project
 Capital efficiency
 Increased quality
and speed
 Economic capital
and product
strategy
 Management and
employee training
 Release resources
to handle growth
 Management and
cultural change
 Basel II2 and
Solvency II3
 Tracking employee
satisfaction and
effect of measures
 Worksite sales
 Moving into new
markets
1
2
3
: A Norwegian finance and insurance company
: Recommendation on banking laws & regulation issued by Basel committee on banking supervision
: an EU directive that codifies and harmonizes the EU insurance regulation
•
Customers: Customer satisfaction, branding, growth
•
Processes : Lean project, quality, speed, management and cultural change
•
Capital
: Efficiency, product strategy, financial ethics
•
People
: Management training, employee satisfaction
•
Company: What is the best type and structure for the company? Where is the best
place for the company to be formed?
•
Professional Services: who will be the best service providers for the company and
their respective expertise? Is their expertise in alignment with the requirements of
the company?
•
Finance: What is the best capital finance structure for the organization? How much
equity versus debt? What is the collateralization of the debt and what are the
conditions associated with the loans?
•
Development (Design Engineering): Who is the principal designer of the service
or product offer? What should be produced and then perpetuated in value?
•
Facilities and Production Assets: Where are the production facilities to be
located and what characteristics are required for the facility site? What is needed to
produce the product or service?
•
People Resources: What talent is required to produce, deliver and service the
offerings? How do you find and effectively hire it?
•
Marketing: Who are the customers, how to reach them and what’s the message?
Is that the message customers want to hear?
•
Sales: How to get best value for the product offered?
•
Front-Office Operations: How to make sure the business entity is running
smoothly and that the transactions are moving through the company rapidly with
accuracy & minimum resistance.
• Supply Chain: Do the suppliers know what is needed, to what specifications/
quantities and when?
• Production (product or service): How to generate the product or services in the
most efficient and effective manner?
• Logistics & Delivery: How to efficiently and effectively convey the ownership of
your product or services to the customer?
• Post-Sale Service: Once product or service is introduced in market, how to keep
customers happy with their having placed their trust in you?
Operational excellence is achieved:
• “… when all efforts throughout an organization…” – all interactions, actions and
initiatives in any form, energy or cash, used in all parts of the organization and its
value-chain.
• “… are in a state of alignment…” – there exists communication and transparency
within and across functions such that unity of purpose and existence are realized.
• “… for achieving its goals…” – the goals of the organization have been effectively
conveyed and are constantly on radar screen for focus.
• “… and where the corporate culture is committed to…” there exists a
commitment throughout the organization that it is devoted to this cause without
reservation. This comes from leadership, stewardship, mentorship and engagement, all
existing simultaneously.
• “… the continuous and deliberate…” not just always moving forward, but moving
forward in an intentional and calculated manner with a sense of purpose.
• “… improvement of company performance…” – to improve efficiency, revenue,
profit, community service, “shareholder-value”, and whatever other performance goals
are set up.
“… and the circumstances of those who work there…” – in addition to
improvements in company performance, improvements in the circumstances of those who
make the company successful are equally considered. Employees are given a sense of pride
and ownership.
• “…to pursue…” – this is a never-ending quest and efforts continue for ever !!!
• “… Operational Excellence by design…” – the quest is conducted with a sense of
purpose and in an engineered fashion with clearly defined goals, clear and concise plans
communicated effectively and transparently, proper commitment, support and
alignment throughout the organization and strong leadership during execution.
• “… and not by coincidence…” – Operational Excellence cannot be achieved by an
accident.
“Operational Excellence” is a result that comes when everybody in a company is
contributing over and above what is generally expected of him on a day to day basis. The
efforts to improve company performance ensure the company is always innovative and
competitively positioned in its value-proposition to its present and future customers and
to drive both short-term and long-term value. This will generally manifest itself as:
• High degree of employee initiative & ownership
• Employees working relentlessly towards self development & learning
• Rapid conflict resolution
• No blame culture
• Future focus
• Benchmarking