Driving operational excellence

Operational Excellence manifests itself through integrated performance across revenue, cost, and risk. It focuses on meeting customer expectation through the continuous improvement of the operational processes and the culture of the organization. The goal is to develop one single, integrated enterprise level management system with ideal flow. The second component, a culture of Operational Discipline, is commonly described as doing the right thing, the right way, every time. This culture is built upon guiding principles of integrity, questioning attitude, always problem-solving, daily continuous improvement mind-set, level of knowledge, teamwork, and process driven.

Some of the key process methodologies used are Lean Manufacturing, Six Sigma, Kaizen, Hoshin Planning, Balanced Scorecard etc.

Shingo Model’s Ten Guiding Principles

Each year, the Shingo Institute at Utah State University offers the Shingo Prize for Operational Excellence. The award is based on the Shingo Model’s ten guiding principles.

• Respect for Every Individual – The principle of respect must be applied by and for every person in an operationally excellent organization. It applies to employees, customers, partners, suppliers, and the community. When people feel respected, they are likely to become emotionally invested in achieving the desired outcomes. Most people say that being respected is the most essential thing that they want from their job. What does respect look like? Employers demonstrate respect when they create development plans for employees that include appropriate goals, when they involve employees in continuous improvement, and when they provide consistent coaching for problem-solving.
• Lead with Humility – The first step to improvement is the admission that improvement is possible and necessary. This requires a sense of humility. Leaders must be willing to seek input, listen, and learn. This attitude empowers employees to contribute their best feedback and ideas. Leading with humility involves letting go of the past and preconceived notions of the “right” way. When an organization is led with humility, there is consistent, foreseeable engagement where the work happens. Employees know that they can point out opportunities for improvement and expect gratitude, rather than repercussions.
• Seek Perfection – While perfection is an unattainable goal, pursuing it creates the environment for a culture of operational excellence. Our notions of what is possible can be changed with altered points of view, meaning that the opportunity to improve is unlimited.
• Those seeking perfection look for long-term solutions rather than temporary Band-aids. They recognize that simplicity is the key to processes that trend toward the ideal.
• Embrace Scientific Thinking – Scientist insists that ideas are tested rigorously with experimentation, observation, and analysis. Applying this thinking in business helps teams understand new concepts, learn from failure, and adjust paradigms. Operationally excellent organizations follow a structure for solving problems and allow for ideas to be tested without the fear of failure.
• Focus on Process – Even the smartest and most engaged employees cannot consistently produce high-quality results with poor processes. While it is common to blame people when something goes awry, most of the time the problem is related to a failed operation, not the person doing the work. When leaders focus on the process, they get to the root cause of what created the error and improve it. They also make sure that all resources including information, materials, parts, and equipment meet the standards before they are used in a process.
• Assure Quality at the Source – Excellence can only be attained when every element of work is performed correctly the first time. If there is a problem, it must be uncovered and fixed where and when it was created. Quality can be assured only when the work environment is organized so that potential problems become visible immediately. When something does go wrong, the process must be stopped and corrected before the error moves further down the pipeline.
• Flow & Pull Value – Maximizing value for customers means creating it in response to demand and maintaining an uninterrupted flow. When the flow is disrupted or when excess inventory occurs, waste is produced. Backlogs in work-in-progress create opportunities for error. Therefore, it is necessary to avoid creating or storing more product or services than are immediately required based on customer demand. It is also essential to make sure that the resources needed to create value are available when needed.
• Think Systemically – Operationally excellent organizations understand that processes are intertwined and that the most significant problems often occur when work is moved from one process or team to another. Therefore, they recognize that it is essential to understand these relationships within the system to implement positive change. The object is to remove any barriers that prevent ideas, information, materials, or ideas from flowing throughout the organization.
• Create Consistency of Purpose – Strategic alignment is required for operational excellence. There must be certainty about why the organization exists, where it is headed, and how it will get there. The strategy must be deployed to the extent that individuals can align their actions, decisions, and innovations with the overall objectives of the organization. This allows for greater confidence and better decision making across the board. Organizations with a consistency of purpose clearly communicate the mission and direction with everyone. They set individual and team goals that are well aligned with the overall strategy and goals.
• Create Value for the Customer – The bottom line is that only the customer gets to define value by conveying what they want and for what they are willing to pay. Long-term success is only achieved by organizations that deliver customer value effectively and efficiently consistently. Creating value for the customer is a simple idea, but it is not easy. Excellent organizations continuously work to gain a deeper understanding of their customers’ needs and expectations.

Operational Excellence in HR

The first step in creating Operational Excellence in HR is to create a process family matrix, in which we identify all the different activities for which HR is responsible for completing and attempt to leverage similarities among them to create flow. We typically aim for an 80 percent similarity in process content to form what’s known as a process family, and we create one flow in the office per process family.

Suppose that after examining all the activities in HR, we determine that we can create a process family for hiring new employees that consists of the following activities (while there are many more activities involved in hiring a new employee than just the ones listed here, all of these steps must be completed along the way as new talent is sought):

• Request for new hire.
• HR review.
• Place advertisement.
• Seek out internal company resources for compensation review.
• Receive and filter résumés.
• Contact interested candidates.
• Schedule interviews.
• Conduct interviews.
• Schedule and conduct additional rounds of interviews as need.
• Offer a candidate a position.

Once we have identified all the activities that must be completed to hire a new employee, the typical continuous improvement inclination at this point would be to identify the biggest problem we face, brainstorm ways to fix it, implement a decision, and then measure and monitor the results. When something else goes wrong or needs improvement, we repeat this process again, eliminating the biggest source of pain to our business at the moment. However, this approach only leads to the optimization of certain areas of the flow at the expense of the flow overall, virtually guaranteeing that the customer (who, in this case, is the job candidate) does not experience any benefit.

However, Operational Excellence is not achieved through brainstorming. It is achieved by applying a specific set of guidelines geared toward designing flow in the office:

• Takt or takt capability
• Continuous flow
• First In, First Out (FIFO)
• Workflow cycles
• Integration events
• Standard work
• Single-point sequence initialization
• Pitch
• Changes in demand

We need to apply these design guidelines to our flow in the order seen above. For example, we would determine the takt or takt capability of the flow first, then see where we can do continuous flow (or more likely part-time continuous flow, since office employees are shared resources), then see where we can implement FIFO lanes and create workflow cycles, and so on.

The successful application of these guidelines ends up creating a robust guaranteed turnaround time for each process in the flow and even the entirety of the flow. That enables us to tell job candidates, with certainty, that we will contact them within a certain number of days, ensuring timely responses to them. Not only does the guaranteed turnaround time give us a greater chance of recruiting top talent, it eliminates the need to only go through the hiring process more than once to find someone qualified for the job.

To have operational excellence in future-looking, high-impact HR organizations, requires us to:

• Focus on business – having business acumen necessary to understand and internalize what’s ahead; having technical knowledge to build a realistic support plan,
• Be nimble – having simple, stable people processes; having flexibility, adaptability and agility to respond to unforeseen dynamics,
• Leverage data and technology – having capability to access and monitor data; increasing self-reliance through the use of technology,
• Think beyond the immediate organization – having understanding of networks outside the immediate organization (i.e. social media channels) to help build organizational brand.