How To Systematically Beat Competition

Operational excellence is about improving faster than competition. A lot of companies both in manufacturing and services, old and new companies are obtaining advantages over competitors thanks to applying operational excellence. From companies like Nestle to Swiss Airlines or Alibaba, operational excellence has delivered outstanding results driving those companies to the leadership of their industries.

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Operational excellence consists of a series of tools and behaviors to continuously improve the way companies work. This approach is characterized by 6 main factors:

  • Coach the workers to find the solutions.
  • Measure the current situation and the improvements.
  • Ask why five times.
  • Use the appropriate tools to help to generate ideas.
  • Disseminate the results across the company.
  • Top Management should measure the results of initiative at least 3-5 years.Operational Excellence

First, coaching the workers to find the solutions is typically one of the most challenging tasks, since workers quite often are not used to develop solutions and managers are not used to coach but rather to decide what is best. It requires almost an entire cultural change and a fundamental review of the expectations of the jobs from workers and managers.

Second, measuring the current situation and the improvements facilitates tracking and realizing how much we have improved since the application of operational excellence. It is important that the workers themselves often should do the measurement so they do not feel threatened by being measured and they experience their progress firsthand.

Third, asking why five times is an exercise that helps you open the doors to opportunities which often remain unexplored. It seems rather simple and repetitive, but the results tend to be questioning old practices that have been there because of tradition and that we forgot to question and to adapt.

Fourth, there are many tools in operational excellence. In fact, quite a few companies got confused by the range of tools available and the level of sophistication. The advice is to start by keeping it simple and using the most appropriate tools for the company. Starting by selecting 3 to 5 tools and incorporating more complex ones over the years. For example, most companies would start with tools like 5S, Value Stream Analysis and Root cause analysis. These are relatively simple tools that provide good and robust results. On the other side, sophisticated 6 sigma tools like regression analysis have had very limited use in most companies.

Fifth, it is very important to disseminate the results across the company using the workers themselves. Many companies have used videos, websites and internal journals to give the opportunity to the workers to explain to their colleagues what they have achieved and how. This way, the rate of adoption by other workers increases substantially and operational excellence becomes a companywide initiative.

Sixth, top management should understand that this is a long term strategic initiative and it would require at least 3 to 5 years support to become a standard practices in the company. It means that top management should follow it up, recognize it, provide resources to support it and demands results from it. Research has proven that around 50% of the improvements obtain in a company tend to be lost in the first year. Thus, it is fundamental that top management is making sure that the operational excellence continuous to be alive in the company and consistently delivers results.

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