"Operational excellence" has always been an elusive but worthy goal for anyone involved in business. Massive amounts of money has been poured into technology solutions to attempt to achieve it, and some organizations have shredded their hierarchies in attempt to get closer. But there always been clunkiness and resistance to such efforts.
A recent survey suggests that operational excellence is tied closely to both corporate culture and technology. "In the last five years, new technologies and AI have developed, and many respondents suggest that the entire nature of operational excellence has developed to be more inclusive, more adaptable, and more personalized to each organization," state the authors of the survey report, issued through the Business Transformation & Operational Excellence (BTOE) site.
For those new to the concept, "operational excellence" is actually a thing (affectionately called "OpEx"), with a growing following of proponents and even professionals within enterprises dedicated to researching and implementing new practices. Similarities, and perhaps overlap, is seen with quality management and lean teams.
I like the definition Wilson Perumal & Company provides to describe the purpose of operational excellence:
"Operational excellence is the execution of the business strategy more consistently and reliably than the competition. Operational excellence is evidenced by results. Given two companies with the same strategy, the operationally excellent company will have lower operational risk, lower operating costs, and increased revenues relative to its competitors, which creates value for customers and shareholders."
In the BTOE survey, close to half of respondents have a formal enterprise-wide operational excellence program (45%), while a majority, 54%, believe that wider understanding of operational excellence methodologies is on the rise.
When it come to priorities, corporate culture and technology rank among the top activities that enterprises will be emphasizing as part of their efforts to achieve operational excellence:
i.Sustaining continuous improvement culture 49%
ii.Overall business growth 44%
iii.Customer satisfaction 42%
iv.Implementation of new technologies 41%
Similarly, when asked what specific technology solutions they plan to put into place over the coming year, robotic process automation (RPA) and artificial intelligence were the technologies seen as most critical to operational excellence efforts going forward:
i.Robotic process automation and AI 19%
ii.Data analytics 11%
iii.Finance management 9%
v.Real-time analytics 6%
vi.Business process management 5%
Tellingly, executives would like to emulate the efforts of leading technology companies with operational excellence such as Amazon, Google and Microsoft. Interestingly, Toyota heads the list - the company that put lean and quality on the map (and now produces computers on wheels.)
The head of global process management for one company in the survey indicated that the emphasis going forward is on unleashing the power of data to drive operational excellence, including "real-time process performance monitoring and management; capacity management; data mining and predictive analytics." Another CEO even observed that his company is seeing such success with their operational excellence technology that they're planning to launch a new business with it. "We are using our own platform that will be completed with new collaboration features in the next six months. We are planning to create a spin-off company to create a separate business based on such platform as we invested for years on it."
Culture comes before technology, so it's critical that an organization be prepared and open to innovation before money is spent on technology solutions. Simply dropping technology on top of a dysfunctional organization won't deliver success by any measure.
Competitive disruptors are driving the movement to operational excellence, the survey also shows. As many disruptive players are employing data-driven decision making and digital approaches to take markets in new directions, existing companies need to increase their capabilities in these areas. The BTOE survey identified the following reasons to amp up their operational excellence initiatives:
i.Threat of new competition: "There is now a real need for continuous improvement, in order to stay competitive in a very competitive global market."
ii.Needs of the customer: "The ability to connect with customers, internally & externally, is now almost ubiquitous - easy to learn, seamless and intuitive."
iii.Need to reduce cost: "We are all facing corporate-driven targets in cost & working capital reduction, in attempts to off-set declining revenue."
iv.New technologies: "Companies are scrambling to keep up with the latest tech, but these solutions are worthless without the right company culture to make the most of them."
v.Cross-industry disruption: "Start-ups and tech innovation are making the market more competitive every day, across all industries. So, it is do or die."