A primer on changing perceptions regarding operational excellence

Roger Price
Posted: 06/14/2017

In my view, one of the most powerful resources that PEX publishes is their periodic “State of the Industry” reports. These reports provide significant insight into the current perception of the role that Operational Excellence (OpEx) functions and teams should play in the organization and the value they’re expected to provide. These reports also surface clear opportunities for Operational Excellence Leaders and Practitioners to improve the manner in which they support the goals and objectives of the organizations they serve.

To me, one of the key questions asked in the PEX survey is “How Would You Describe the Current Perception of Process/Operational Improvement in Your Organization?” because the responses indicate how Operational Excellence Leaders and Practitioners feel about their place in the organization. If respondents believe that process improvement is likely to expand, then one can reasonably presume that they feel the work done to date warrants additional investment. If, on the other hand, they believe that the organization plans to moderate its investment in process improvement, or disinvest entirely, then it stands to reason that organizational confidence in the value delivered to date and/or the potential to deliver future value is not ideal.

Unfortunately, too many in the OpEx community find themselves in the unenviable position of having to make do with limited resources and/or constantly defend their role in the business. If you’ve found yourself in such a situation, you know that it hamstrings your ability to make meaningful change. To paraphrase an old adage often used in both sales and politics…if you’re defending, you’re losing.

So how do we go on offense when it comes to the role of Operational Excellence in the organization?  Put another way, how do we foster the belief that a dedicated and sustained investment in Operational Excellence is the right answer for the business?  The answer, in short, is to get much more rigorous, disciplined, and savvy in how we in the Operational Excellence community go about our jobs.  Specifically, we need to (a) manage strategically, (b) execute flawlessly, and (c) engage systematically:

Manage Strategically

The figure below highlights 4 elements that are absolutely critical for Operational Excellence Leaders and Practitioners to manage strategically:


First, the OpEx vision…it exists as a statement of intent for the role that OpEx should play and the impact is should have on the enterprise.  It should align closely with the organization’s vision, and all decisions about how to operate and grow the OpEx function should be informed by the vision.  An OpEx vision is critical for a couple of reasons:

  1. The process for establishing the vision will help to surface any misalignment that may exist within the business about OpEx’s role in the organization
  2. The vision informs many other key aspects of a well-managed OpEx function, including, but not limited to, strategy, performance metrics, enterprise scope, and resourcing

After the vision, comes the OpEx strategy. Simply put, in order for the OpEx function be of most value to the business, it needs to know the answer to one fundamental question; what does the business require of my function in order for it to achieve its primary objectives? A well-designed OpEx strategy will answer that question. Beyond that, having strategic objectives that are aligned to the requirements of the business is crucial to securing support from key stakeholders.  Without it, OpEx runs the risk that stakeholders will view their work as “nice to have” or, worse yet, will see it as a distraction to the business.

Third, it’s critical to establish a set of OpEx metrics.  Specifically, there need to be a set of KPIs that connect directly to the work of the OpEx function both to hold the OpEx team accountable and provide a compelling business case for the function’s existence.  Well-defined metrics are critical because poor executive buy-in is often a result of the reality that the work being done by OpEx resides in a “black box.”  Selecting an aligned set of KPIs to measure the activity and effectiveness of the function is one tactic to overcoming the reluctance on the part of some business and operations leaders to fully embrace OpEx.

Finally we get to budgeting…of course, every enterprise function should set a budget so that there is a clear picture of how many dollars have been allocated and how those dollars are to be spent. In the case of OpEx, the budgeting process is crucial for another reason; namely it helps to surface inconsistencies between the OpEx strategy and the level of investment provided to execute that strategy.  It’s important to consider a variety of expense categories when budgeting, including:

  • Salaries for staff
  • Travel & related expenses
  • Training for staff
  • Subscription fees – training/instructional content
  • Software license fees
  • Consulting/Professional Services

Execute Flawlessly

The figure below illustrates 4 elements that require flawless execution:


It’s perhaps not too surprising that method selection (e.g., Lean, Six Sigma, TPM, TQM, BPR, etc.) is key to executing an OpEx implementation.  However, picking the right method or combination of methods should not be based solely on someone’s personal preference.  Instead, the methods should be based on an analysis of the needs and characteristics of the business.  For example, a chemical producer will almost certainly need to implement a world class maintenance & reliability program in their manufacturing sites because equipment reliability is often the most important factor in determining production volume and delivery to schedule.  On the other hand, a healthcare operation will likely focus very heavily on Lean because the concepts and tools are highly applicable to both clinical and non-clinical business processes.

The scope of the OpEx implementation, both initially and across time, is often not properly considered, resulting in misaligned expectations and poor internal communication.  Scope should be considered from at least two perspectives:

  1. Enterprise Scope – questions to be answered include:
  • Is the focus only in operations or is supply chain included?
  • If supply chain is within scope, does that include upstream functions such as supply & demand planning and procurement, downstream functions such as warehoursing and transportation, or the end-to-end supply chain?
  • Is OpEx expected to work with corporate functions, such as HR, IT, legal, etc.?

      2. Maturity Scope – questions to be answered include:

  • Is the organization committing to a long-term (7-10 years) journey to world class performance?
  • Is it committing to a medium-term (3-5 year) journey to differentiated performance?
  • Is it committing to a short-term (1-3 year) journey to predictable, competitive performance?

Moving on to resourcing, getting the resource model right is fundamental to the success of OpEx within the organization.  The Experts and Practitioners who are teaching and applying the methods and engaging with the workforce must have clearly defined roles and be fully capable to perform in those roles or they will lose credibility.  Simply put, the resource model is where “the rubber hits the road” so to speak.

Finally, when it comes to governance, we’re referring to the rituals, routines, and activities that are necessary to keep business leadership engaged in, and the workforce accountable for, driving operational improvement.  The OpEx governance model defines the frequency at which the implementation of OpEx, and the associated business impact, is reviewed at different levels of the organization.  Because businesses tend to be overcome by the “tyranny of the now” when left to their own devices, a robust governance model is essential to the long-term success of OpEx within the broader organization.

Engage Systematically

When it comes to engagement, there are at least four constituencies to consider as shown in the figure below:


Within the OpEx team, it’s important to consider Practitioner capability from at least two perspectives:

  1. Technical capability – refers to their knowledge, skills, and experience in applying the appropriate OpEx methods and tools as well as their project management skills.  The good news is that there are now many avenues to pursue in developing a practitioner’s technical capability in any of the established OpEx methods, including classroom-based training, online learning, and experiential skill-building programs.
  2. Facilitative capability – refers to their ability to engage the workforce at all levels to actively participate in, and ultimately own, the OpEx journey.  Typical competencies that may need to be developed include:
  • Presentation skills (in order to facilitate workshops and deliver training effectively)
  • Change management
  • Coaching
  • Interpersonal skills (e..g., listening, emotional intelligence, giving and receiving feedback, etc.)
  • Having difficult conversations

As it relates to Leadership (e.g., business leaders, operations and functional leaders, union leaders, etc.), step 1 is to get everybody to “sign off” on the OpEx vision and strategy.  However, true alignment requires leaders to buy-in through active participation in driving OpEx in the organization and by avoiding certain behaviors that undermine its effectiveness, such as:

  • Demonstrating a highly reactive management style, which leads to the prioritization of “urgent” work over “important” work
  • Prioritizing, through budget dollars or direct management practices, other work at the expense of OpEx
  • Questioning the value of OpEx to the broader workforce

Moving forward with an implementation before true leadership alignment has been achieved is a recipe for failure.

The effort to educate the workforce on OpEx is both significant and perpetual, but it can be understood and addressed from at least two perspectives.  First, employees must understand the vision and strategy for OpEx such that they can answer basic questions, such as:

  • What is OpEx?
  • Who works in OpEx?
  • How will I interact with the OpEx function?
  • What training will I receive?
  • What is expected of me?

Then, as the formal approach is introduced and implemented, there needs to be a plan to educate and reinforce the appropriate methods and tools until they are learned and applied properly and consistently.  This education and coaching process needs to be sequenced into the implementation model such that the right employees are getting the right training at the right time.  This is just one reason why it’s important to understand issues of scope, resourcing, and budgeting.

Finally, an often overlooked constituency are the Partners to the effort, both internal (e.g., HR, IT, etc.) and external (e.g., consultants, software & content providers, etc.).  If Partner relationships are poorly managed, the perception will develop within the workforce that OpEx doesn’t have its act together, which creates a huge credibility problem.  A lack of coordination with internal and external Partners can also be a huge cost driver.  For example, if the OpEx function does not coordinate with HR prior to seeking training solutions, it’s possible that the function will end up paying for services that either could have been provided by in-house HR resources or could have been provided at a lower cost through Partner relationships that HR maintains.

A second example…consider a business that has hired a Consulting/Journey Partner to help drive the application of OpEx.  If that relationship is not well-managed, the business will most likely either end up paying for services that it doesn’t need or will not get the full value from the services provided.

Long story made short, Operational Excellence functions and teams that take a disciplined and rigorous approach to how the manage, execute, and engage are significantly more likely to generate sustainable results and enjoy the support of the rest of the organization.

Take part in the 2017 State of the Industry Process Excellence Survey today!


Roger Price
Posted: 06/14/2017


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