Elements of Success with Operational Excellence Programs

3. Develop a comprehensive program that can be executed by people throughout the company — It is a well established fact that good ideas are not the sole province of a few highly trained experts. If you look at the source of many of the best ideas within your company they likely come from people whose job it is to perform very specific tasks, such as screw parts together, reconcile invoices, purchase materials or perform other singular focused activities. They are the operational experts that know what is wrong. What they often lack is the toolset to think about the problem in a structured manner, to estimate the benefits or to consider alternate best practice approaches. We found that the best Operational Excellence programs are understood and in regular daily use by people at all levels throughout the company. In fact, the very best programs are so embedded in people's daily job routine that they are executed naturally, not as an episodic improvement effort.

Table Stakes:
• The planning process includes detailed individual project planning and goal setting
• The program includes development and execution of a detailed communication plan

Differentiators:
• The program includes training for all employees in basic performance improvement concepts
• A formal and rigorously followed planning process is used for identifying and prioritizing key objectives and specific initiatives for operation improvements
• A structured process is used for reviewing, approving and closing out projects

4. Do what's right for your industry, company and unique situation — Many companies, even some great companies, become famous for their devotion to certain operational excellence approaches. Some companies have embraced Six Sigma and require their employees to achieve certain levels of expertise. Others are famous for Lean and are looked upon as experts in that approach. When examining even these apparently singularly focused companies we found that they are more diverse than they appear. We found Lean throughout many of the best Six Sigma companies and vice versa. Successful programs embrace a range of theories, methods and techniques, and the structure of the program selects the right approach for the problem at-hand and simplifies these techniques for use by people throughout the company as stated in No. 3 above.

Table Stakes:
• None of these "focus" attributes were in common between all successful and some unsuccessful companies

Differentiators:
• Both Lean Manufacturing and Six Sigma tools/approaches are used as appropriate
• Projects are typically targeted at the sub-plant/department level
• The planning process occurs at least semi-annually

Some of the detailed results provide further insight as companies work to position their Operational Excellence programs for ongoing success. For example, we found that it is critically important for a company to have a well defined and broadly understood business strategy, which allows people throughout the company to appropriately define and structure improvement efforts. It is no surprise that when the goal is clear and well understood people can line up to support it. On the other hand, when the strategy is missing, vague, not easily translated into actions and/or not disseminated throughout the organization we found that the goals of the Operational Excellence programs were scattered and that the programs themselves tended to lose focus and eventually fail.

Figure 2: Companies with a clearly defined and understood Business Strategy always outperformed those that did not or where the strategy was not well known.

Leadership was another major insight from the study. There may be a tendency to believe that programs with strong upper-level project leadership have the most likelihood of sustainable results. Our study found that top-level support was insufficient to consistently drive success. The overall goals may be set by leadership through the strategy, but it is those programs that push project ownership down into the organization that have the best chance of achieving and sustaining benefits. All of the companies that consistently sustain improvements reported that the projects were lead by either Managers or Supervisors, and none were lead by Executives. This finding accentuates the significance of the comment made by the executive earlier in this paper that the biggest problem his company had was getting middle management to know what to do in support of Operational Improvement.

The study also showed that successful companies have broad knowledge and ability to apply the right tool or approach based on the problem being solved. They combine Six Sigma, Lean, Theory of Constraints and other approaches into an overall program for improvement. And they don't employ a large staff whose sole responsibility is continuous improvement. The best companies in the study had employees throughout their organization that understood both when and how to apply different tools and approaches.