We’re big believers in the idea of continuous improvement.
When it comes to reaching operational excellence, it all hinges on one thing. It's this idea that we can continue to better ourselves and our organizations.
Any sort of betterment requires change. After all, it’s about identifying business processes, problems, and efficiencies that can be improved. At face value, operational excellence can seem tactical. For example, you might think of how to streamline workflows, break down silos, or integrate automation. Or you might think of how to achieve process improvements to reach better decisions.
But when we strip back the tactics of it, operational excellence is grounded in this idea of developing teams. After all, the core principles of operational excellence rely on the people driving them. And building a healthy organization is required to achieve operational excellence.
Let’s talk about how to achieve operational excellence in your organization. We’ll also discuss why operational excellence is important — and outline six steps on how to improve it.
What is meant by operational excellence?
If you think of the glossary of corporate jargon, operational excellence can feel like just another buzzword.
In order to truly understand what it means, let’s break down the definition of operational excellence. Every company runs its business in certain ways. There are plenty of factors that go into how a business is run. There are a few factors that come to mind: business strategy, operating models, talent and performance management, and customer experience—just to name a few.
If we think about those factors as the foundation, the operations are how the foundation turns to execution. In simpler terms, those factors all hinge on its operations. For example, your talent management strategy could be to hire top talent from diverse candidate sourcing pools. The operations behind that strategy hinge on your talent acquisition processes, the candidate experience, and even the onboarding process.
What is operational excellence?
Operational excellence is what organizations achieve when they’ve mastered the operation of a strategy. It’s the most seamless, efficient, and productive way to reach optimal performance.
And while it might sound easy, it’s much harder than it seems. But before reaching optimal performance, it means there’s been a journey to get there.
Are operational excellence and continuous improvement the same?
In short, no. But operational excellence and continuous improvement have a symbiotic relationship. Why? To reach operational excellence, the organization needs to adopt continuous improvement.
Continuous improvement is a key component to reaching operational excellence. At BetterUp, we believe in the idea that we can always improve ourselves and our businesses. After all, in order to reach our full potential, we need to commit to the idea that we can improve. In some ways, we can think of operational excellence as the self-actualization stage of the business world.
Why is operational excellence important?
Let’s talk about the importance of operational excellence — and why it matters to your business.
Operational excellence unlocks organizational performance, increases customer satisfaction, and drives employee engagement. It also helps attract and retain top talent and creates a positive employer brand.
By striving for operational excellence, here are some ways in which it could benefit your business:
- Better decision-making. Implementing an operational excellence program can help improve how your organization makes decisions. To streamline workflows and eliminate inefficiencies, operational excellence requires good decision-making skills.
- Being better equipped to meet customers’ needs. Every business has a customer. And oftentimes, meeting customer needs can be a challenge. But implementing incremental improvements to satisfy customers means your workforce is better equipped to meet their needs. After all, fulfilling customer expectations is what will drive revenue and growth.
- Increased resilience and ability to adapt to change. Operational excellence is about finding what isn’t working well and making the changes needed. It requires a keen growth mindset and a sense of agility to be able to stay resilient. In a time when things are changing fast, striving for operational excellence can help build resiliency.
- A thriving company culture. We’ve all worked with broken processes or failed decision-making frameworks. It’s frustrating and can cause stress and even burnout for employees.
But when organizations strive for high-quality performance, it also strives to eliminate the pain points that employees feel in their day to day. At the end of the day, it leads to increased employee engagement, collaboration, and a thriving company culture.
The 5 pillars of operational excellence
Let’s break down the methodology behind operational excellence. Here are five of the key guiding principles of operational excellence.
1. Vision
The vision is about the mission, purpose, and the “why” behind the organization. It’s the world-class, big-picture thinking that brings the vision to life. To establish the vision, an organization’s leaders should think about:
Without a vision or a purpose, organizations aren’t setting themselves up for success.
2. Structure
Now, this starts to get a little more tactical. Businesses are complex, with teams spanning across the organization. Each team has its respective leader and goals to meet.
Yet we also know that priorities shift and change. Goals change, initiatives change, and so do the problems that the organization faces.
To enable teamwork and better problem-solving, it boils down to organizational structure. In many ways, this is how you’re best organizing your teams to optimize results.
3. People
There’s one undeniable fact about organizations: they’re made up of people.
Organizations rely on people to bring processes, workstreams, and projects to life. Yet without proper leadership and employee development, your organization might not be setting itself up for success.
At BetterUp, we believe that human transformation is achieved through investing in people. It’s an intentional effort needed to develop and coach your teams to success.
4. Principles
Achieving sustainable improvement means that your principles need to help you reach your key performance indicators (KPIs).
That means your business operations need to map to key principles to help keep your continuous improvement on track. For any organization, here are some things to think about:
- How does your business strategy map to your key objectives?
- How are you measuring success? What key metrics are you measuring?
- What processes or project management tools are you using?
- How are you measuring your flow of value?
- What does your value stream look like?
5. Tools
Last but not least, you need the right technology to improve your organization. Your digital transformation strategy should help enable your success.
This pillar is important to examine as it could help lead to eliminating inefficiencies. But better yet, you might find holes or gaps in your current technology. You might find that you could use additional tools or support systems, like coaching, to help enable success.
Some organizations also use The Shingo Model to help guide how they’re building operational excellence pillars. It all depends on what sort of framework works best for your business. Make sure you’re doing your research and vetting all viable options before putting your action plan into execution.
6 steps to improve your operational excellence
If you’re looking to improve your operational excellence, follow these six steps.
1. Adopt a growth mindset
First things first, shake off any cognitive biases and old, toxic habits. It’s time to re-examine your processes with a fresh and honest lens.
I’ve worked in organizations that have said, “Well, that’s the way we do things.” In order to achieve operational excellence, this mindset needs to shift.
Adopt a growth mindset with the goal of making improvements. Examine your processes and identify areas that are broken. Make sure you’re looking at the root cause of what’s causing roadblocks, pain points, or challenges.
2. Gather feedback
While it’s important to do some scientific thinking about what you can improve, it’s equally important to gather feedback.
Say, for example, your organization is running lean. You don’t have the time or resources to risk the overproduction of products. You need your business to improve its lead times and get better at lean manufacturing.
Are you talking to your front-line employees about their observations and feedback? Is the feedback mechanism broken in your management system? As a leader, how are you using feedback to your advantage to improve what you might not even see?
3. Make strategic decisions and set goals
By now, hopefully, you’ve figured out what changes will have maximum impact. Now, it’s time to do some strategic planning and decision-making.
This will look different for every organization. For example, a healthcare company might identify that its customer support systems need attention. They discover that the tools don’t help to enable optimal customer satisfaction. This requires an overhaul of the chat functionality in the system’s software as well as training and development for the staff.
Or you might identify redundancies in some of your marketing efforts. Two separate teams ladder up to different leaders. But both teams are working toward similar goals, yet you have a gap in staffing to meet a separate goal. You might need to invest in reskilling or upskilling your people to make sure they can switch gears on their areas of focus.
Whatever the case may be, your decisions should help push your organization in a better direction. Lean on your coach to help guide how you’re making decisions to enable optimal performance. Make sure you’re setting SMART goals to help set up your workforce for success.
4. Invest in developing your people
Stripping back the core capabilities to reach operational performance, it all comes down to how you’re developing your people.
Your workforce needs to be agile, adaptable, and resilient. Your employees need to be able to pivot and prioritize the right tasks and strategies. But at the same time, you also need to meet your employees’ needs. You need to support their well-being, offer opportunities for growth, and allow them to develop and grow skills. Your leaders need to develop key management skills to help achieve team success.
Developing coaching skills can help. But more importantly, access to coaching can unlock better overall team performance. According to internal data, BetterUp can increase team performance by 25%. And when employees are thriving, the results speak for themselves.
BetterUp Labs found that with coaching, employees lead teams that are 31% more productive and 22% more satisfied with their jobs. Employees are also 1.2x more likely to recover from setbacks stronger and have direct reports who are 78% less likely to leave voluntarily.
5. Measure your results
Remember those goals that you’d set? Follow up and measure the results.
Once you’ve implemented the changes, keep a pulse on how those changes helped improve your business. You might find new things to improve in this process, which means continuous improvement should always be top of mind.
It also might show that you need to revisit or change your goals. Sometimes, the scope of the project or goal changes as external factors and other priorities change. Stay agile throughout this process and make sure you’re transparent with your teams, too.
6. Keep lines of communication open
Last but not least, operational excellence isn’t a one-and-done type of pursuit. Like self-actualization, it takes constant care, intention, and improvement.
Make sure you’re keeping the lines of communication open for your workforce. How are your employees continuing to voice feedback? How are you building a culture of feedback in your company? In what ways can you empower clear, transparent communication to stay ahead of problems instead of reacting to them?
Start to drive operational excellence in your organization
Operational excellence isn’t an easy journey. But it’s one that is well worth the effort, especially when you have the right support systems and tools in your corner.
Think of how BetterUp can help unlock the full potential of your workforce. With access to virtual coaching, you can help provide personalized support to your employees. BetterUp is your teammate in reaching your organizational goals. Together, we can prepare your people for whatever the future holds.
