Tuesday, September 15, 2009

"Operations Excellence"

Nice buzz word, that! Never fails to capture the interest of the CEO! Every one seeks Ops Excellence. However, most managers have no clue on how to achieve it. The real reason is, they haven't really explored its meaning in detail. A quick search for the definition of the term on Google reveals thousands of pages and as many approaches! One model I liked took the Malcolm Baldrige National Quality Award as a reference point. That is definitely a good place to start. However, the award considers over a thousand points - way too much for the business we meet with every day. (I have not yet begun consulting with the CEOs of the Fortune-100). To me Ops Excellence has two elements:

  • Satisfactorily meeting the requirements of ALL stake holders
  • Continuous improvement.
That's it!

So, who are our stake holders?

I think of four:

  1. Share Holder
  2. Customer
  3. Employee
  4. Community
Not necessarily in that order. The priority depends on where you are messing up!
I would recommend most businesses should start with this simple model and move forward.

The next question is: "what does each of these stake holders want?"

Often, they know what they want. Sometimes we have to tell them. Let’s start with areas where the stake holder knows what s/he wants. We then check the data to see if we are able to give them what they want. If yes, we go beyond toward 'delighting' them. If not, we identify the gaps and plug away.

Looks simple enough, but this is where the gap between knowledge and execution widens. Up to this point, most business leaders have no difficulty. In fact they know the gaps intuitively. The challenge lies in the next steps.

Most CEOs have not listed out the gaps explicitly. Those who have done that, lack the ability to strategically prioritize them. And finally, even assuming they (or a consultant) did manage to prioritize well; few know how to pursue the chosen priorities simultaneously.

At this point, managers need several skill sets / tools:

  1. Ability to identify, measure and set KPIs for each area that stake holders are interested in
  2. A performance management process that tracks and measures all round performance
  3. A methodology for initiating and establishing a continuous improvement culture, and
  4. A determined and consistent management focus on monitoring the process… call this execution.
Items 1 to 3 can be bought. Item 4 cannot be bought and cannot be delegated. It is THE JOB of leadership. This is also the most common point of failure.
The surprising thing about execution is that it is very, very simple. Any one can do it.
And that is the problem! It is very, very boring. It does not challenge your intelligence. It does not get you in to the front pages.
No wonder most leaders hate to do this. They either delegate this or else do it in an inconsistent manner. No wonder Ops Excellence fails.
In upcoming posts, we will look at how some great companies manage to do this…. And how smaller businesses can aspire to learn and practice this.