Without leadership, the quest for Operational Excellence (OE) is likely to underachieve or fail. The most powerful elements in the creation of an OE philosophy and culture are the focus and determination of a leadership team to execute the right things effectively by engaging the employees and creating a “High Performance Culture”. This culture is one where employees know what they are doing, why they are doing it, and are supported by goals and measures that drive improvement. Leaders must consistently reinforce the goals of an OE program with employees. It is important to remember that employees with more than fifteen years of service have most likely been through at least three different improvement initiatives that have since been abandoned by the organization. It may take more than one day to gain their acceptance and commitment to an OE initiative by the current leadership team.
To be successful and create a sustainable culture, leadership must select a tight focus area for OE activities. The majority of organizations today undertake an excessive number of initiatives and programs, rendering them incapable of executing all of them well. It is a practical impossibility for the leadership of an organization to provide adequate resources, emphasis and time to undertake any more than a few critical activities and successfully run the business as well.
In organizations that run an excessive portfolio of OE initiatives, leaders are often found to have only a superficial knowledge of the programs that are being implemented in their businesses. The ability of the leadership team in envisioning, communicating, role-modeling and inspiring the pursuit of balanced and realistic goals cannot be understated and must be set in the context in which OE will be applied to create an operational advantage for the organization.
It is an unrealistic expectation for a leadership team to demonstrate these important behaviors if their exposure to the subject matter is through a number of crammed, hour-long executive overviews which, in the absence of deep prior understanding are little more than an acronym and jargon management program.
Leaders must also direct the OE activities and actively guide implementation. The improved area of emphasis must first create a stronger competitive position in the market in which it competes. All too often programs and activities are focused primarily on internal cost management activities, which while necessary, are not usually a source of competitive advantage. Why is this the case? Operational Excellence focused on cost-cutting is typically either a corrective action to bring organizational cost structure in line with the levels of its competition, or a continuous improvement tool to achieve year-on-year cost reduction in order to keep up with inflation and stay in the game.
The most powerful and sustainable OE cultures exist in organizations that align Operational Excellence programs and activities with the strategic goals of the company and thereby improve its competitive position, thus ensuring the support of the Board of Directors and shareholder groups.
A trend that we have observed in the current economic climate is an increasing number of organizations eliminating OE programs, Six Sigma functions and Lean teams in cost management initiatives. This may be something of a paradox indicative of the lack of alignment between corporate aims and strategic goals.
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