Operational Excellence in Silicon Valley - A Glimpse of the Future
Ahead of the Business Performance Excellence USA conference taking place from September 26 -28, 2016, PEX Network columnist Ian Gotts, takes a closer look at rise of Operational Excellence in Silicon Valley and what's next for Operational Excellence 2.0.
I spent 15 years building Nimbus, a process mapping company, to a reasonable size in the UK and a very successful exit. I now live in San Francisco where I have become an avid student of “the Silicon Valley way”. And 4 years after the exit, I have got the 3 of the founders got back together and to we have launched a cloud process mapping app with a highly disruptive freemium pricing model targeting the Fortune 5Million, not just the Fortune 500.
Why? Because it is a massive market that has an unmet and growing need. We can make a big difference helping every company achieve and maintain operational excellence. And because we can.
And that last paragraph encapsulates much of what makes it so different here. Dream big. Get a product to market. Grow fast.
This attitude has spawned some amazing companies that are changing the way the world thinks, works and plays; Google, Salesforce, Slack, Box.com, Tesla, FitBit and AirBnB to name just a few. But this means that their growth often runs ahead of their operational maturity. A 3 year old company could have $100m of investment, 500 staff and be growing headcount at 50% per year. In many cases, they are still validating their business model, establishing more formalized organizational structures and hiring experienced management. They may only just be realizing that they need some operational processes in place, but to the founders that feels like it will kill the start-up vibe. To those lower down the company who are battling to get the job done – running the operation, processing sales orders, hiring and firing, running marketing campaigns - in the turmoil of “creative chaos”, they long for some formalized ways of working. It is a critical phase of growing up. But it needs to be done against the backdrop of massive change.
“Process” needs a rebrand
The biggest issue is that “process” has got a bad rap. To the founders and executives of high growth companies it is synonymous with old-school conglomerates. It stifles change, kills creativity, stops innovation. It will derail the growth rather than super-charge it. Therefore, they do not proactively launch or fund internal operational excellence initiatives which will put in place end to end processes.
Projects are only authorized to respond to a major issue – a customer problem, a product recall, a social/PR flare up. And these are tactical rather than holistic. What is ironic is that it would have been easier to get the processes documented and established when the company had only 50 staff. The business is simpler. There are fewer people to get consensus. But at that point, process mapping is the last thing on anyone’s mind. Now, don’t get me wrong. Getting this done when you are 300 staff and only in 3 countries is way better than waiting another 3 years and the company now has 1,000 staff across 10 countries.
So, we need to show that “process” or “operational excellence” is a driver of growth rather than a brake. It actually enables creativity. Done well, it empowers and inspires staff and improves productivity. Done well, it should grow and evolve with the business, not be ‘bolted on when we’re big enough’. The critical part of that sentence is “done well”. But we need examples of “Operational Excellence 2.0”. The approaches of the last 20 years, “Operational Excellence 1.0”, will not work in this new world.
Operational Excellence 1.0
The last 20 years has been characterized by lengthy business transformation projects (Quality, BPI, LEANSigma, BPM) that documented processes as flowcharts in Visio, Powerpoint or BPA tools. The flowcharts were useful to the project team who developed them. The benefits of the exercise were short lived in many cases. Then the flowcharts gathered dust on a shared drive. Over a couple of years, the organization evolved and the processes became out of date and then the exercise was repeated. Obviously there were exceptions, but not enough of them.
That approach simply will not work in high growth companies, particularly those in Silicon Valley. This is the center of innovation. So it is here you would expect to see “Operational Excellence 2.0” being invented. It is a revolution, which starts with completely different thinking. It is not an evolution. It cannot be flowcharts developed using Office365 and gathering dust in the cloud.
Operational Excellence 2.0
We need to consider the needs and expectations of fast growth companies and their millennial, connected employees. Here are some principles for “Operational Excellence 2.0”. Operational processes are the “on-line operations manual” and therefore need to:
- Describe the business at a strategic level to get executive level alignment
- Drill-down to multiple levels to diagrams where detailed activities are described
- Provide detailed guidance to end users and provide access to all the systems, workflow, documents, procedures, web pages, KPIs and media to get their job done
- Have a simple notation so they are easily understood by end users no matter what their background, discipline or seniority – with no training
- Activities are automated, wherever possible, and are seamlessly integrated and surfaced based on context – time, task or geography
- Accessed securely on any device, from anywhere – and be as intuitive and elegant as the best consumer apps
- Designed to encourage feedback and enable rapid, controlled change
- Provide security, management and version control of all content
- Scale from the smallest organization up to a major multi-national
- Be constantly changing to reflect and even drive the continuous improvement and disruption that many of the best companies are inflicting on themselves to drive towards their potential
To do this, the tools to support Operational Excellence will need to be built with new thinking, using the latest technology platforms and scalable, and freemium business model. The good news is – they are. Q9Elements and ManyWho are examples.
Comprehensive platforms like Force.com leveraging the underlying Salesforce.com customer data and a myriad of associated applications for businesses throughout their growth cycles are another. Platform independent workflow and automation vendors provide yet more alternatives and opportunities. Yet all are enabling continuously changing ways of working.
A glimpse of the future
This September we will get some insights into how “Operational Excellence 2.0” is shaping up. The Business Performance Excellence USA conference organized by PEX Network is bringing together the thought leaders from Silicon Valley to compare notes on how operational excellence plays in the digital world.
One aspect of Silicon Valley is how open executives are to share their experiences of growing a business. That means the playbooks for launching and growing a digital business are becoming better understood and consistent. But looking at speakers at the event, the job titles of those who lead transformational change as diverse as ever; Head of Process Improvement, VP Process Excellence and Innovation, SVP Business Process Management, VP Global Innovation and Cooperation.
The job title that sums up the essence of Operational Excellence in Silicon Valley for me is VP Rapid Continuous Improvement. Senior. Change. At Pace.
But the best news is the level of seniority of the speakers and delegates. Operational Excellence is being taken seriously at executive level. Certainly out here we have come a long way from process being owned by the Quality Manager, holed up in a tiny office managing a textual document.