At EON, we’re privileged to work with OpEx Leaders and teams at a wide variety of organizations, which gives us broad exposure to the latest trends and most pressing challenges that our clients face. Some of our clients are new to formal OpEx and are just getting their “sea legs” so to speak. Others have been at it for some time and are trying to take their efforts to the next level. The third category of client is one that has been on the journey for some time and has been able to implement a structured approach to OpEx within most or all of the organization.
As we reflect on our work with clients across the OpEx maturity spectrum, we’ve identified 3 key challenges that every OpEx Leader will eventually need to address at some point in order to drive an approach to operational excellence that stands above the rest. We sometimes refer to these as the 3S’s on the OpEx journey.
Challenge 3: How to Make OpEx Sustainable?
This is the question that makes many OpEx Leaders and Practitioners break out in a cold sweat because OpEx has a well-chronicled sustainability problem. According to a 2017 study by the PEX Network, more than one-half (58% to be exact) of respondents reported that their operational excellence programs have existed for less than 5 years or don’t exist at all. It certainly should be expected that some percentage of respondents would be new to OpEx, particularly those who work at companies that have only recently reached a scale point to justify investing in a formal program, but it’s still astounding to me that so few firms have a program with an established, long-term track record. Whether due to a significant change in leadership, reprioritization in the business, or just general change fatigue, there can be substantial “head winds” to the sustainable implementation of OpEx.
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So what can be done to reduce the risk of regression and increase the likelihood of OpEx sustainability? This is a topic about which we’ve written extensively, so in the suggestions provided below we’ve linked to relevant content where appropriate.
- Be more intentional and aggressive in tracking and reporting the return on investment from OpEx-related work that’s been done in the business
- Make the OpEx function “need to have” by taking ownership for the implementation of one or more business-critical workflows in the organization, such as strategy deployment, KPI and target selection, or compliance
- Put a set of management rituals and routines in place that force the organization to think and act in terms of continuous improvement
- Stop positioning OpEx to the rest of the organization as a program
With regards to the last point, if OpEx is discussed within the organization as a program, then the assumption is that, like all programs, it has a defined end date, which is exactly the mentality to be avoided if sustainability is the goal. A little while back I wrote an article for Industry Week titled, “Operational Excellence: Business Function or Core Capability?” The premise of the article can be summed up as follows; “…for virtually all large organizations whether we like it or not OpEx is both a business function that needs to be strategically managed and a core capability that needs to be developed.”
A simple analogy to illustrate this point. All organizations recognize the importance of effective talent management as a core capability that needs to be constantly evaluated and improved upon. There is virtually no scenario where a business leader would announce, “we don’t care about how we manage our talent in the organization so we’re not going to do it anymore” because, as long as the organization requires people to function, it’s incumbent on the business to hire the best people it can, give them the skills to be successful, and offer them a compelling employment value proposition. The business also needs to know who its high performers and high potentials are so that it can retain them, keep them engaged, and progress them through a meaningful career path. For these reasons, effective talent management is perceived as a core capability, and there is a designated (and permanent) function that is responsible for working with the business to build this capability…human resources.
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Similarly, OpEx Leaders need to push the business to think about operational excellence as a core capability that will always need to exist in order for the business to be competitive and the OpEx function as the permanent facilitator of this capability. There should be no “end date” when it comes to the pursuit of excellence, which is a point that needs to be made repeatedly until everyone in the organization understands and agrees.
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