The 5 Hallmarks of Operational Excellence

Mid 2009 ,as we started to see the glimmers of the  economic recovery Accenture consulting published a paper about their research on past economic downturns and  found that high-performing businesses put a premium on operational excellence and pulled ahead of their competition at the end of an economic recession. They found that 5 factors influence the creation of positive,long-term impacts in both good times and bad.

In fact Accenture's research finds that high performance is the result of actions taken across the business cycle: when companies are operationally disciplined in the good times and when they press this advantage as the cycles turn downward.

Accenture observed that the companies that come out ahead share 5 essential characteristics regardless of their market positioning :

1. They can identify their competitive essence, which is the one area or process in which they perform better than anyone else in their industry in order to deliver something distinctive to their customers.

2.They know what structural changes they must make to beat their competition.

3.They know what it take to out-execute their rivals.

4.They continuously find the right balance between "out-structuring" and "out-executing" their competitors.

5.They choose the right "change journey" to keep them headed toward operational excellence.

We will get more in details for those 5 characteristics in  following posts, but it is important first to define what is meant by "Operational Excellence"

Operational Excellence is not simply doing the same thing better.While it does include the disciplines of simplification and standardization as well as the elimination of waste, waiting time and rework, it is important to note that operational excellence also addresses the way  the business is set up and how the work is executed  on a day-to-day basis.In addition,technology is a key change factor driving the need for operational excellence.The rapid rise of e-commerce channels  is just one small tell-tale of why businesses must build new operating models at the same time that they improve or replace the old ones.

The question is : Do I have the right operating model to compete and win in a dramatically changing multi-polar world ?

The Discipline of Market Leaders

In 1997 Michael Treacy and Fred Wiersema wrote a book where they classify  market leaders company based on 3 fundamental Strategies and the Organization they should adapt to their strategy in order to be successful

A. OPERATIONAL EXCELLENCE (to deliver quality, price and ease of purchase and use)

Processes for end-to-end product supply and basic service that are optimized and streamlined to minimize cost and provide hassle-free service

• Operations that are standardized, simplified, tightly controlled and centrally planned, leaving few decisions to rank-and-file employees
• Management systems that focus on integrated, reliable, high-speed transactions and compliance to norms
• A culture that abhors waste and rewards efficiency

Exemple of companies: Amazon. Costco, UPS

B. PRODUCT LEADERSHIP (creating the best products or services)

A focus on the core processes of invention, product development, and market exploitation

• A business structure that is ad hoc, and ever-changing to adjust to entrepreneurial initiatives and re-directions that characterize working in unexplored territory
• Management systems that are results-driven, that measure and reward new product success, and that don't punish the experimentation needed to get there-work on fast paced Project mode
• A culture that encourages individual imagination, accomplishment, out-of-the- box thinking, and a mind-set driven by the desire to create the future

Exemple of companies:Apple,Intel, BMW

C. CUSTOMER INTIMACY (delivering what specific customers want)

An obsession with the core processes of solution development (helping the customer understand exactly what is needed), results management (ensuring the solution gets implemented properly), and relationship management

• A business structure that delegates decision-making to employees who are close to the customer
• Management systems that are geared towards creating results for carefully selected and nurtured clients
• A culture that embraces specific rather than general solutions and thrives on deep and lasting client relationships

Exemple of companies: Nordstrom, Kraft, Disney

It is important to notice that those 3 Strategies are not exclusive, a minimum level is needed to compete on the marketplace, however  the Leaders must decide one within which to excel 

The six type of people that every successful start-up  needs to hire 

Don't forget the industry veteran !!

Virgin Entrepreneur

The Equation for Change

Itis well known that if you do the same thing again and again and expect different results ...you will be disappointed
Change Management is the cornerstone of success for  companies competing in  a permanent changing  environment
The role of a Leader is to Envision the Goal and then Enable and Execute the Change Management in order to get there.

However 5 "stars" should be aligned to deliver a successful Change. This is the equation for Change

ADHERENCE at a Glance

           To summarize                    

           FOCUS x COMPETENCE x PASSION = ADHERENCE

         " If you want to be successful , put your effort into controlling the sail, not the wind "

The Art of ADHERENCE: PASSION

The most common characteristic of high-achieving leaders is a deep sense of Passion for their One Thing.
Although FOCUS and COMPETENCE are critical to Adherence, PASSION is the glue that helps Teams stick to their plans over the long haul

To improve your Team's Adherence, develop the 3 success factors for building Passion:

                         1. Paint the picture
                         2. Give what you want
                         3. Value your values

The ART of ADHERENCE : COMPETENCE

Competence is the bedrock  of Adherence. It is the component that drives sustained execution of your strategy.
As a leader, you hold the key to many critical processes and systems that will enable your team to  consistently perform- goal setting,measurement, feedback, recognition, training and communication

High achieving leaders know that developing competence is  CRITICAL.
They employ 3 success factors:

1. Elevate the average
2. Get systematic
3. Balance your view