Yogi Berra once made the insightful comment: “If you don’t know where you’re going, you might end up someplace else.” Not surprisingly, this is a good description of a problem you might see when you don’t have an operational excellence (OpEx) strategy: you don’t know where you’ll end up.
Operational excellence is a good thing—and having an OpEx strategy is essential to achieving it. Let’s look at a few things organizations have learned from not having an OpEx strategy.
Without a Strategy, Leaders Don’t Provide a Clear Direction
Your OpEx strategy sets a direction, helping the overall organization plan for the integration of improvement efforts into key customer, operational, financial, and employee performance areas. This provides guidance not only for the direct reports in the OpEx community, but also for the cross-functional team members who are (or should be) engaged in improvement efforts.
In building the OpEx strategy, leaders need to make choices to select the best path forward for desired results. Without this direction, people don’t have a clear grasp of how improvement efforts can be used to help the organization. Individual functional leaders may have ideas and trigger actions, but the resulting directions can be going all over the place.
As Michael Porter says about setting strategy, “You can’t be all things to all people.” Use your OpEx strategy to integrate the organization’s highest vision and strategic needs to provide the overarching direction for the full organization.
Without a Strategy, You May Have Lots of Effort But Little Alignment
In any organization, most people are enthusiastic about making improvements or at least willing to go along with team efforts. The problem is that without a strategy, these improvement efforts are disjointed. Teams may be doing lots of work and making progress because their efforts may be in areas that are inconsequential for the overall organization.
Even worse, teams may create their own plans for optimization and achieve the desired results within that defined part of the operations. This silo optimization may actually be dysfunctional for the overall organization. For example, a manufacturing process team may implement large batch size to increase equipment utilization and reduce costs. Downstream processes then have to deal with issues related to large chunks of inventory and, possibly, increasing costs.
Without the strategy, day-to-day efforts may deliver progress… but, again, it may be in the wrong direction.
It’s Hard to Rally Resources Without a Strategy
The OpEx strategy is both the guide for future plans and the vehicle for communicating those plans. If the strategy isn’t articulated, how can it be shared with people to inspire their engagement?
Imagine convening your organizational teams and saying, “Let’s do OpEx!” Any enthusiasm generated will immediately be followed by confusion: “Okay. What do we do?” Without communicating the overall strategy and helping employees see how their work ties into the organization’s goals and plans, people just don’t have the wherewithal to know what to do and the motivation to make a wholehearted effort.
Long-Term Needs May Not Get Appropriate Focus Without a Strategy
Using Japanese quality circles and applying basic lean tools are generally likely to deliver improvements. In fact, many operations can see improvements when attention is focused on them simply from the Hawthorne effect. However, unless these short-term gains can be sustained, as in the fifth S of 5S, they’re not valuable to the organization in the long term.
The OpEx strategy will include a continuous improvement (CI) model such as PDCA that ensures actions are taken to make any improvements sustainable. Without this, changes for the better often revert back to past practice. Motivated employees tend to lose their motivation.
Goals and Results May be Fuzzy Without a Strategy
In talking about improvement, some might say, “I’ll know it when I see it.” But that just doesn’t work. Without an OpEx strategy, you may not have observable, measurable goals and results. That means the organization doesn’t have a sharp focus on what is needed for success and a working understanding of the gap between current performance and future needs.
Setting goals using a systematic process for defining strategy, such as Hoshin Kanri, and monitoring performance against those observable goals is key to measuring performance. Measuring performance against the strategy assures the team:
- Is on the right long-term path,
- Recognizes the need to take appropriate corrective steps if not on the strategic path, and
- Knows when to celebrate success.
Clearly, a strategy for operational excellence is essential. Fortunately, developing an OpEx strategy is also quite doable. Get in touch with EON to get started.