Operational Excellence: The Great Unlock
“Now what?”
That’s the question every leader is asking as 2020 draws to a close. Whether your business has pulled through successfully or is still trying to find its path, “now what?” represents an opportunity. The way to seize it is through operational excellence.
Operational excellence is the maintenance of a sustainable competitive advantage through operations management. That’s a rather dry way of describing that wonderful feeling when the gears mesh and the organization moves in the direction you intended. There is nothing more thrilling than to see smart work produce great results. It’s why we all love the business we have chosen—to accomplish things that at times feel heroic and have a positive impact on our teams and the world.
For me, operational excellence means creating process that facilitates your team’s best work while making sure the right work gets done. It means having clear metrics to measure what matters, systems that enable and data that you trust. It means that the right talent is in the right roles, and you have all the capabilities you need to deliver your best product. Operational excellence brings joy to the workplace by nourishing the soul of the company: its culture.
Just a few benefits that operational excellence provides you and your organization:
It gives you the muscle to transition and transform, especially in times of crisis.
It insures that day-to-day operations do not consume 100% of your resources.
It reduces friction and improves communication across the enterprise.
It gives people a common goal and helps them understand their contribution.
It gives your talent a sense of accomplishment, which drives them to do their best work.
It lowers costs and reveals opportunity so you can grow profitably.
It opens bandwidth for innovation.
It is the first step to agility.
How to achieve operational excellence
The key to achieving operational excellence is defining exactly what it means for your organization, and that requires answering many questions: What is our purpose? What are our goals? What capabilities do we need to get there? Where should we focus our resources and energies? Nobody – even the most brilliant CEO – can answer these questions alone. I love the expression, “the race is won in the pit.” To me, that means that the knowledge, wisdom and expertise is embedded in the organization’s operations and can be easily revealed.
In my previous post I mentioned a McKinsey study that showed how companies with a long-term approach outperform their peers. A more recent report highlights the behaviors that support a long-term orientation, and while it doesn’t cite “operational excellence” specifically, many of the behaviors they list – insuring that strategic initiatives are properly staffed and funded, evaluating leadership on the quality and execution of strategy, adapting management systems to encourage innovative thinking – all point to the importance of operational excellence. Here’s my take on those crucial behaviors:
Lead from the heart. Leading from the heart means embracing everyone’s humanity, including your own. We’re all on a journey together. We may stumble along the way, but we’ll learn from our mistakes. It means being vulnerable and asking more questions than delivering answers.
Be clear in your vision. The leader’s purpose and vision of success is your company’s North Star. It keeps people aligned, engaged and hopeful even in the midst of a crisis.
Listen without judgement. This serves so many purposes! At the heart of operational excellence is listening to every member of your team. It makes people feel relevant and heard. It helps you understand why someone may be going astray. Most importantly, it opens you to discovering new talent and ideas from the people “in the pit,” who know how the engine works and how to make it as fast as it can be.
Be a coach. Leaders are coaches. They’re not on the field, and they can’t see every little detail of every play. Their role is to remove as many barriers as possible for their talent and bring out its best. They rally the team when the chips are down and cheer them on when they do well.
Have structured casual conversations. One thing we all miss in the age of Zoom are those casual interactions that often lead to insight and innovation. An open-door policy lets people feel comfortable dropping by with a question or an idea. Still, you can’t rely on luck to open up two-way conversations with your team. You have to set time and space aside to insure that they take place (especially for remote workers), and you need to ask the right questions.
Create a multiyear operating plan. You didn’t really think I’d go without mentioning my favorite subject, did you? I’ve written previously about the incredible value of multiyear operating plans. The process of developing a plan, and the departmental plans that support it, is a holistic approach that ties together your goals for the brand (including purpose and positioning), financial performance/expectations and products. Both the plan itself and the process of developing it align the entire team in a productive, motivating and actionable way.
Seize the day!
Achim Berg, global leader of the apparel, fashion and luxury group at McKinsey recently wrote in the Business of Fashion, "Now is the time for executives to make bold decisions to get through these stormy seas, whether they are about channel strategy, geographic focus, assortment planning or securing supply chains." I couldn’t agree more. These are scary times, but they offer an opportunity to really lead by unleashing your talent, driving operational excellence and make the competition irrelevant. What could be more fun?
Read Part Two: The NEXT Approach