How to Apply Operational Excellence to Your Business Model
James Aherne of Renault-Nissan Consulting discusses applying operational excellence best practices to business models
For many, the concept of operational excellence can seem a bit confusing. It is indeed a broad topic and applying operational excellence to a business model will mean different things to different companies, leaving some to conclude that any attempt to define the term only leads to ambiguity.
This needn’t be the case, for operational excellence can be described as a business philosophy that embraces ongoing problem-solving and strong leadership as the keys to achieving continuous improvement.
It’s safe to say that all businesses could identify at least one area of operation that could be improved – and, if truth be told, there is always room for improvement, even in the most high-functioning areas of a business’ processes. Applying operational excellence to a business model means committing to making improvements at all levels, over time.
However, in order to strive for such company-wide improvement, meaningful change must take place across the whole organisation. Sometimes this change will happen as a sudden, major upheaval within the business. This can be effective, though of course carries much risk – particularly in large companies with many thousands of employees who are suddenly required to reinvent themselves, how they work, and even what they produce.
A far better approach to successful change management is to plan for it, strategise, and allow it to happen gradually over time. Building an operational excellence business model will start you on a journey towards this kind of lasting, meaningful, controlled and successful change – and is applicable to organisations of all sizes.
What is Operational Excellence Really
It can be simple to fall into the trap of thinking that operational excellence is just about reducing costs and/or increasing productivity. Although an operational excellence business model will certainly enable you to achieve these things, the philosophy in fact encompasses much more besides.
Striving for operational excellence means focusing on the continuous improvement of all ongoing business processes, while simultaneously providing additional value and greater experiences for the customer. A continuous improvement process can happen all at once, known as breakthrough improvement. Or, it can take place in parts over time – known as incremental improvement. Either way, building a culture of continuous improvement is a big part of what an operational excellence business model pursues, and has the explicit aim of continuously maintaining and building upon all improvements that are made over the long-term.
However, as important as it is, even continuous improvement isn’t enough on its own. As your organisation continues to refine its processes, products and services, it’s important that it is still able to grow. operational excellence is achieved when a sustainable culture of improvement is realised in the minds of all members of the organisation. When every employee can see the flow of value to the end customer – and is empowered, motivated and skilled to fix that flow before it breaks down – your organisation will be producing increasingly valuable products, solutions and services for your customers and achieving long-term, sustainable growth. In short, you will be on your journey towards operational excellence.
How to Apply Operational Excellence to Your Business Model
Let’s consider how a business can start to create a culture of continuous improvement that will lead to operational excellence.
1. Start at the top – Engage leaders
Realising any lasting change in company culture will be nigh-on impossible without the buy-in from the leaders. Your leaders will be crucial when it comes to motivating employees and communicating vital information and objectives on your path to operational excellence. They will also be responsible for keeping process improvement initiatives on-track and indeed, reinforcing the principles of continuous improvement at every turn.
To do this, they will need to lead by example, and be able to exercise humility. This means that your leaders will empower employees under their management by actively seeking their input, listening to them, and acknowledging their own shortcomings as the whole team constantly seeks better solutions.
This humility will help to create an environment where employees feel more respected, empowered, and that their input is valued. As a result, they will be motivated to perform better, leading to an improved company culture where everybody is involved in resolving problems as they arise.
2. Educate employees and respect every individual
Following on from the first point, an operational excellence business model recognises that because everyone has worth and potential, everyone deserves respect – and this respect must be demonstrated at all times.
One of the best ways to demonstrate your respect for your employees is to involve them in any improvements that you make. Ask them, “How can we improve as an organisation?” Assign leaders or task managers to gather their feedback, and act upon it.
Empowering employees to take decisions that will improve their own role or their department will also improve company culture and enhance morale and motivation, for it will show them that their input – beyond the minimum of what is expected of them – is highly valued. Importantly, it should also be celebrated when an employee achieves good results from improving an area of the organisation. As such, you should create a system for identifying and acknowledging success stories.
3. Embrace scientific thinking
As your company begins to field ideas from all corners, taking a systematic approach to experimentation and learning will enable you to foster innovation and continuous improvement, setting you on a path towards operational excellence.
And it must be remembered that it’s just as beneficial to understand what doesn’t work (and why) as it is to know what does. As such, don’t just focus on the ideas that generate good results, for continuous improvement means also focusing on failures in order that you may correct them.
Management should systematically explore all new ideas, encourage all members of the organisation to put forward their thoughts and opinions without fear of failure, and take a structured approach to solving problems.
4. Focus on processes and seek perfection
It may well be argued that ‘perfection isn’t possible’ – nonetheless, you should set the bar as high as you can, and strive for it anyway.
This will create a different mindset within your organisation – one that strives for optimal operational efficiency at every turn. For every problem that’s encountered, instead of looking for temporary measures to patch over the inefficiency, instead seek out a long-term solution that could perhaps also simplify the task without compromising on the quality of the outcome.
When focusing on problems, it’s also important not to point fingers towards individuals but rather to acknowledge that problems are often rooted in processes, not individual people. Indeed, even great employees can’t consistently produce outstanding results when working with an imperfect process – which is precisely why you should strive for perfection, no matter how unattainable it might seem.
When a mishap occurs, look first at the process in which it happened, and analyse what went wrong. From here, you can make the necessary adjustments, rearranging the steps in the process, to try and achieve more favourable results going forward.
5. Create value for the customer
No matter what changes you make to improve company culture, motivate and empower employees, and improve internal processes, all will be in vain unless you continue to create value for the customer.
To do so, you must understand what the customer wants and needs, because value is simply measured by what the customer is willing to pay for.
An operational excellence business model will ensure growth sustainability by staying in touch with the market, and actively working to understand the expectations of the organisation’s customers. At the end of the day, an organisation that stops delivering value to its customers is not sustainable in the long-term, and so it must know exactly what customer needs and demands it is trying to meet in order to achieve operational excellence.
Achieve Operational Excellence with Renault-Nissan Consulting
Through applying operational excellence to your business model, you will improve company culture and performance across all levels, which in turn will lead to long-term, sustainable growth.
This means that businesses should look beyond traditional, one-time improvement models, and embrace continuous improvement principles that move toward a long-term system for change.
At Renault-Nissan Consulting, we are certified in and provide training for numerous methodologies – including Lean and Six Sigma – that will enable your organisation to achieve operational excellence. We identify the changes required in your organisation to ensure that it works more efficiently and effectively from top to bottom, and implement the right tools and methods for ongoing operational excellence success.
With 28 years’ experience and 300 consultants working in a range of sectors, become more successful and more profitable with Renault-Nissan Consulting, and reap the benefits of world-class operational excellence. Get in touch today to find out more about our Operational Excellence Consulting Services.