Operational excellence

Operational excellence, defined

There are two views of operational excellence:
The methods view
This view (mainly used by methods experts) defines operational excellence by the methods used - like TQM, six sigma, lean, TOC, …
The top manager's view
For a business leader operational excellence is the state, in which the business achieves it operational goals in each and every goal period. (For the top leader the HOW - or which methods are being used to achieve that goal -is of secondary importance)

Operational excellence defined

The right things

Peter Drucker has been quoted for having said: "It is far more important to do the right things than to do things right":

The right things are the vital few actions foreseen in the operational plan. Not everything that can be done, but the smallest number of actions with the highest effect on reaching the operational goal. Any other action but the “vital few” are a waste of company energy - by not leading the company to the operational goal.

The right things - done right

Building the right operational plan is the fundamental basis for operational excellence. However: we have seen many grand strategies fail in execution – so we would like to extend the statement:

Operational excellence 02

Operational excellence: The 5R principle

But what are the vital few? How to define what is important to do and what is not? How to make sure they are done right? How to ensure that if things change we redefine what is right?

Operational excellence 5R principle

It is top management responsibility to lead by the "5R Principle" (the operationalized version  of the Shewart cycle):

  1. Right Goal: Setting the right operational goal(s)
  2. Right Plan: Defining the right operational plans
  3. Right Lead: Leading to ensure that operational plans are perfectly executed
  4. Right Check: Checking operational plans regularly to adjust them to the ever changing business situation ("agile business management")
  5. Right Leadership: Leading the elements of the Plan-Lead-Check cycle
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