Operational excellence

From Wikipedia, the free encyclopedia

Operational excellence of an organization is the execution of its operations in an excellent way. Given two commercial companies with the same strategy, the operationally more excellent company will in general have better operational results, creating value for customers and shareholders.[citation needed] The term can be explained and applied in many ways, and is popular with management.[citation needed]

Some approaches to the concept build on earlier continuous improvement methodologies, such as Lean Thinking, Six Sigma, OKAPI and Scientific Management.[citation needed]

Key components[]

There are two components fundamental to operational excellence: an integrated management system (IMS) and a culture of operational discipline.[citation needed]

The first component, an IMS, consists of a framework of processes and standards that define where the organization is going, identify the risks to getting there, mitigate them, manage change, and continuously improve. Having one single, integrated management system reduces overlap, redundancy, and conflict. Early adopters of this practice have been companies such as Exxon and Chevron utilizing Operations Integrity Management System (OIMS)[1] and Operations Excellence Management Systems (OEMS),[2] respectively.

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 five guiding principles developed from the United States Nuclear Navy, a high reliability organization. Those principles are integrity, questioning attitude, level of knowledge, watch team backup, and formality. These values are used to identify the behaviors expected of each and every employee and how they support the organization's mission and outcomes.

Shingo Prize[]

The Shingo Institute, an organization that awards the Shingo Prize, has identified ten "Guiding Principles in the Shingo Model" as forming the basis for building a sustainable culture of organizational excellence:[3]

  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

OKAPI method[]

The OKAPI method was created by organizational-intelligence experts Iris Tsidon [4] and Maya Gal.[5] Their system incorporates the use of a methodology of SMART KPIs (key performance indicators).

  • S – Specific: the more precise the KPI, the greater its value, and the more correct the focus it provides us. It is important that the KPI direct us towards what we want to achieve.
  • M – Measurable: a KPI is supposed to measure actions, not behavior.
  • A – Achievable: challenging but attainable
  • R – Relevant: KPIs need to be relevant to the objective we want to achieve, and contribute in a significant way to the organization's success.
  • T– Timely: Every assignment must be scheduled with a defined time table for completion

The OKAPI method identifies the main challenges facing companies striving for operational excellence:

Disconnect
People are not connected enough to the larger business needs; rather, they are motivated by professional considerations, without seeing the prices we pay in the commercial aspects.
Lack of progress
The tasks truly important for the growth of the business are not progressing. People here work very hard and are very devoted to their work, however, the assignments we need to perform in order to grow the business are not given priority
Unable to change to stay competitive
In a competitive market, you need the ability to adapt your management infrastructure to change. However, this process has to happen quickly and efficiently. Many organizations do not succeed in changing courses in time to keep up with their competition.
Data is too complicated to understand easily
To receive a picture of the state of the company, you should not need to dig through intricate Excel reports. Complicated reports and their preparation consume much valuable time. Creating a system to enable the receipt of a timely, readily available picture on a current basis will add a great deal of value.
No coherent management plan
There are many people who think that systematic management is not important, or they do not use one because setting it up and following a plan is not one of their strong points and they pay too heavy a price for it. They get too involved in facilitating transactions, leading business development, and creating solutions to immediate problems in the company. Managers need to learn how to delegate responsibility for their own current management, so that others can work towards the shared objectives we have defined.

Flawless execution (FLEX) methodology[]

Also known as PBED (Plan-Brief-Execute-Debrief) the FLEX methodology is an iterative IMS designed by fighter pilots to achieve operational excellence in combat, the methodology was adapted to a business practice in 1998. Elements of the methodology are utilised in the agile manifesto commonly used by software developers. As an iterative process it values adaptation of strategy to real world influences through the practice of debriefing. Debriefing is a tool utilised by organisations to drive cultural change, specifically "Nameless and Rankless" where who are and what your position is in an organisation is irrelevant when assessing results and developing solutions:

  • Plan - Establish a long term strategy focused on a common purpose. A High Definition Destination (HDD) then follow the six steps:

1. Set a clear, measurable and achievable team objective aligned to your HDD (alignment of the organisation) 2. Identify the threats and risks to achieving the objective (define to problem) 3. Identify the resources required to mitigate the threats (define the cost) 4. Apply lessons learned (*this is the key step for this method, taking a lesson from a debrief and applying it to the plan) 5. Develop individual objectives and tasks that align to the team objective (accountability) 6. Contingency plan. (three simple steps to recover from a major disruption)

  • Brief - Communicate the plan to the execution team
  • Execute - Execute the plan and focus on objectives (cultural change)
  • Debrief - Measure the result of daily execution vs the plan, conduct a root cause analysis and adapt the objectives (Step 4 of the six step planning process)

Philosophically, individuals practising operational excellence within an organisation should champion simplicity over complexity. In practice this should see the self-awareness exhibited around errors and mistakes in decision making be rewarded, on the basis the lesson is learned and applied, leading to continuous improvement of day-to-day practice and end result.[original research?]

See also[]

References[]

  1. ^ "Learn about the Operations integrity Management System at ExxonMobil". ExxonMobil. Retrieved 2017-12-07.
  2. ^ Affairs, Chevron Policy, Government and Public. "OEMS". chevron.com. Retrieved 2017-12-07.
  3. ^ "The Shingo Model". The Shingo Institute.
  4. ^ "Israeli female entrepreneurs visit Silicon Valley". Globes. 22 December 2016.
  5. ^ "Meet the Female CTO and CEO Who are Shaking up the Corporate World with Their Crowdsourcing Startup". 7 April 2014.

[1] [2]

  1. ^ "Israeli female entrepreneurs visit Silicon Valley". Globes. 22 December 2016.
  2. ^ "Meet the Female CTO and CEO Who are Shaking up the Corporate World with Their Crowdsourcing Startup". 7 April 2014.
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