Operational Excellence and Its Connection to Organizational Values, Strategy, Vision and Mission

Operational Excellence Series is an informative set of documents prepared by Simple and Pragmatic Consultancy

Simple and PragmaticConsultancy

What is this document about?Competition in business-life is obviously increasing.

A simple research shows that, most of the top-100 companies in the world 60 years ago are not in the list anymore.

Speed of change is increasing globally and companies need to adapt better than ever. Actually, adapting only helps survival.

Companies need to lead change in today’s world.

Regarding the above, two questions should be considered:

• How can change and improvement be led?

• What should be the roadmap for sustaining competitive advantage for companies?

Operational excellence -OpEx- is considered as one of the tools for increasing competitive advantage for more than 50 years.

But what is OpEx and how can we simply start using the tools offered by OpEx for our company? How can we make sure that employees in our organisation understand the simple pillars of OpEx and they start applying the principles?

In this special series about operational excellence, we are seeking simple and pragmatic answers to above and more questions for those who are new to this literature and also for those who are experts in the field and are willing to have a fast refreshment about their knowledge.

We have done our best to design the slides in this presentation as simple as possible for appealing to everyone interested in this topic.

“Fortune 500 firms in 1955 vs. 2014; 88% are gone”

Why do we (our company) simply exist?

And what do we want to do with our company?

Before starting any effort for improving our organisation, some very basic questions need to be addressed.

The reason of existence of our company together with its identity should be defined (or re-defined) in order to align all work and improvement efforts accordingly.

This very first presentation hence aims to link the concepts such as company values, mission, vision, strategy, jobs to be done to the concept of operational excellence.

By the way; why does your company exist?

Finding the reason of existence..

…the first step towards

improvement…

Who are we?The previous question was a little hard to answer. If you have a clear answer to that, you may simply go on and ask the next question: W h o a r e w e a s a n organisation?

If the reason of existence of your company is still unclear, you may still proceed with the following questions to gather some inspiration to answer the first one.

Consider all these questions as sources for inspiration or as sparks for triggering a “question-producing” process for collecting ideas and/or for reviewing your company’s current and future reason of existence .

Next slide introduces some concepts to you. We ask you to think on these concepts for your organisation for a while and elaborate on them as much as possible.

The more you know about about your company, a fitter and better improvement plan you can tailor accordingly.

That is, you can align your e f f o r t s i n imp rovemen t accord ing to who your company really is.

This would be much more efficient and effective for getting sound results from your efforts.

how can we identify our company?

some tools to use are on the next

page

Who are we? - basic concepts

Values What does your company (its executives and employees) give importance to? Can you list these in a list and prioritise them?

Mission What is the role of your company in the World? Can you write a simple sentence about what your company is accomplishing? Try to write a sentence as simple as possible.

Vision What kind of a future can you dream about your company? When you dream 5 or 10 or 20 or even 50 years from now on, what do you see? Or what do you want to see?

Jobs to be done What does your company really produce or serve? We mean, what is the solution your company is producing? In other words, what is the need or problem of the customer your c o m p a n y ’s e x i s t e n c e i s satisfying? Again be as simple as possible.

Strategy In what way are you planning to accomplish your goals? What are minor and major steps? Which sources are you going to focus on? Which segment group are you going to serve? What are other parameters that are going to influence your strategy?

Finding the reason of

existence..

…the first step to improvement…

Who are we? - basic concepts (continued)

SWOT Analysis SWOT is a simple technique for t a k i n g t h e p i c t u re o f y o u r organisation. Each letter in the word SWOT is an initial of a word shown below:

S : Strengths What are your company’s internal strong points? Which of your c o m p a n y ’s a t t r i b u t e s g i v e s advantage? Think of everything that you should sustain and make use of as an advantage.

W : Weaknesses What can you count as internal points to be improved for your company? What is refraining your company from success?

Think of items that advantages from your competitors point of view. Consider only internal aspects.

O : Opportunities Thinking about external factors; what kind of positive factors might a s s i s t y o u r c o m p a n y f o r improvement and success? Think o f e c o n o m i c , p o l i t i c a l a n d technological situations or trends to find possible opportunities for your company.

T : Threats What are external factors that may be obstacles in your way? Again you may think economic, political and technological trends that may pose difficulties for your company.

…SWOT analysis

might help you to get the

picture quickly…

Where are we?

Having worked on the “who” version of the same question, next we need to find out where we are.

L ink ing our company to a mountaineer metaphor ical ly, having identified ourselves at the most basic level, where are we on the map currently?

Some details might include the geography, altitude, coordinates, details about environment such as plants and animals living in the re g i o n , e x p e c t e d w e a t h e r conditions as well as durations of days and nights.

In business terms we need to answer questions like; • What are our current market

shares and sales figures?

• What is the level of customer satisfaction?

• How have we positioned our services or products?

• What i s the qua l i fica t ion motivation and loyalty level of our employees?

• How efficient and effective are our processes?

• How effective and efficient is our company in financial terms?

The important thing in finding where we are is that, we need to run a comprehensive analysis of the company and answer lots of questions like above. Next, we need to identify decide which ones are more critical for success.

…find out critical factors leading to your vision, then

measure the levels of these

factors to determine what

should be improved…

Where do we want to go/be?

Remember the analysis we have done in the last part, the most important factors affecting our company’s success.

Comparing what is achieved with our vision, it is now time to think the future levels of the same (or addit ional) measures of our company.

If -for example- having happy and loyal employees who are sensitive to customer satisfaction and are also sensitive to environment is a part of your company’s vision (and if these are problematic in the current state); you need to consider focusing on your HR metrics as one of your critical areas of improvement.

So in simple terms, we have figured out the point A as the current location in the previous section. Now it is time to describe point B as detailed as possible. The more details we gather here, the better the design of our improvement pathway will be.

To get inspired, you may use the questions we have asked in the last section.

Also consider downloading our “CEO’s pre- improvement preliminary check-list” from S l i d e s h a r e f o r f u r t h e r inspiration. It will be available soon.

…defining the journey from point

A to B…

..and deciding

what is needed to be done..

Two ways to improve

There are two basic ways to improve a company:

• Improving what it is already doing • Doing something different than

competitors or changing the way the company is doing things

Merging these two approaches is also an option. The former is known as operational excellence. The latter is called innovation.

Innovation is not a major part of our op ex series but a summary module i s inc luded in the upcoming presentations.

To sum up of what we have done until now;

• We have worked on the reason of existence of our company and tried to clarify it

• We have identified critical aspects of our company starting with the values

• We have pictured where we are and where we want to be

And what is next?

Next we need to find out “how” we are going to go where we want to be - the B point.

In general these are achieved by opex and innovation programmes in the company.

Let us summarise what they are in the following slides…

… innovation vs.

operational excellence…

Operational Excellence

In simple terms, OpEx aims to define and improve so called “performance metrics” by using specific management principles and tools for a sustainable success for the company.

OpEx has been widely influenced by some of the improvement methodologies such as six sigma and lean management. One of the most important aspects of OpEx is that , i t emphas ises the i m p o r t a n c e o f c h a n g e management for a long-term improvement. Hence, OpEx approach not only includes technical improvement but also focuses on improvement of h u m a n re s o u rc e s ; t h a t i s e m p l o y e e s , t e a m s a n d organisational culture.

OpEx is widely remembered with 10 key principles also known as Shingo Principles*: 1. Respect every individual 2. Lead with humility 3. Seek perfection 4. Assure quality at the source 5. Flow and pull value 6. Embrace scientific thinking 7. Focus on process 8. Think systemically 9. Create constancy of purpose 10.Create value for the customer

In upcoming presentations, we will be giving much more details about OpEx and how to apply it in your company.

OpEx - Shingo Principles

Making sure that

improvement is on its way

*http://www.shingoprize.org/model

Innovation and creative thinking

Being one of the most important concepts for sustainability today, i n n o v a t i o n i s u s u a l l y m i s u n d e r s t o o d b y m a n y organisations. It’s aim is simple: finding something new either a product or service or a way of d e l i v e r i n g a s e r v i c e o r manufacturing a product. (Of course, the service or product needs to have a commercial value for being sold in the market.)

Although many agree with the ultimate objective, there is a confusion in “how” to achieve innovative thought.

One misconception is that, people th ink innovat ive th inking is somewhat inspirational. That is one needs to get inspired to

c re a t e a g e n u i n e i d e a o r something new. Inspiration is a part of creative thinking. But what is meant here is something coming to mind not by chance but through systematic working and thinking. In other words creative thinking is a proactive process which requires planned and systematic efforts to find new ideas rather than waiting passively for new ideas to come.

Other misconcept ion about innovation is, companies expect big and revolutionary ideas from innovat ive thinking. On the contrary, what makes difference is s m a l l e r b u t c o n t i n u o u s improvements in processes, services or products.

Through planned and systematic

work and techniques;

genuine and new ideas can be

found..

ç

Innovation and creative thinking (Continued…)

Therefore, by following simple and clearly defined steps, everyone can find genuine and new ideas. The crit ical points here for executives are; • T h e e f f o r t s s h o u l d b e

systematic and continuous, • There should be a climate in the

company where everyone’s opinions are welcomed and respected. Furthermore, new opinions should be encouraged,

• Regular workshops or meetings should be planned to make creative and innovative thinking a part of company culture.

We are going to explain some techniques about “innovation and creative thinking” in the innovation module of OpEx series soon.

Summary and next programmeWe made a brief introduction to operational excellence and explained how it is related to company values, mission, vision and strategy.

Without working on the DNA of the company and on what the company wants in the future, it makes no (or little) sense to start operational excellence efforts.

Therefore, before OpEx implementation, it is better to understand who the company is, where it is currently and where it wants to be in the future.

Our OpEx series will continue with presentations on corporate culture, lean management, six sigma, change management, and practical innovation topics.

H o p e t o m e e t i n t h e n e x t presentation…

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Thank you for your interest

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