Operational Excellence: The NEXT Approach

In my last post I walked through the definition of operational excellence, what it feels like and why it’s so important – especially in times of crisis.  One of my readers gave me great feedback and asked, “How can NEXT help clients achieve it?”

 We do it by asking, listening to and answering questions: Are you happy with your growth and profitability targets? What is your brand differentiation? What business are you in? What does the future look like? What does success look like? Once the work of operational excellence kicks in, we prioritize and pace the process with you, insuring the capabilities you most need to win receive the focus.

Three steps to operational excellence

At NEXT we tailor our approach to each client rather than try applying a one-size fits-all solution. Our organizing framework is simple and flexible, keeping in mind that process should always serve the business. The goal of the framework is to define, in practical, actionable terms, what operating excellence means to our client’s specific organization. Creating the complete framework is a three-step process: Alignment, when we set the targets; planning, when we show how the business will achieve its financial goals (We call this phase “show me the money!”), and execution, during which we continually refine the processes and systems to support your talent’s best work.

Step one: Align

To be sure you’re making the best investment of time and money, you need a multiyear operating plan (I like a horizon of three years).  That plan answers the crucial question, “What does success look like? ” More often than not, our new clients have answered that question with financial targets alone, which are only one component of a complete vision of success. When that’s the case, we start with our one-to-three day “What does success look like?” engagement to bring clarity and alignment on the organization’s goals and how to achieve them –  through product, customer experience, technology, or whatever.

At the end of the Align phase we deliver an opportunity matrix, which we prioritize through additional discussion with the team. This becomes the launchpad for operational excellence. At this stage, we’ve defined operational excellence in terms of the goals it will achieve and the broad strategies the organization must execute to achieve them. Here’s an example:

Step two: Plan

In this stage of the process, we build out the operating plan we created in the Align phase. That means sending the functional leaders back to their teams to come up with “responses” to the overall operating plan. These responses serve two purposes: First, they tell the CEO how and if each team member truly understands the vision and plan. Sometimes, as I mentioned in my earlier blog, their response will be so off base that the CEO knows right away there’s an alignment issue. Second, each response, if aligned with the overall plan, serves as a functional drill-down: how that business unit or function will deploy its resources to support the overall plan. This is where operational excellence is defined for each department and where we establish priorities and pacing.  This is also where we show you the money – that is, how each operational efficiency or new opportunity will contribute to the top and bottom lines. At the end of the planning stage, our client will have a fully elaborated three-year operating plan and a complete picture of what operational excellence can look like.

Step three: Execute

We love it when we can engage with a client as team members across an entire concept-to-market cycle. This is the third stage of the process, and one in which our clients often want our hands-on participation as successful operators. Do the processes we’ve put in place truly free up talent? Have we successfully built in the capabilities we need? Are there unanticipated “marbles in the funnel” – that is, people, processes or systems that are creating obstacles to operational excellence? During this type of engagement, we put on our coaching hats to work directly with talent across the organization to get them to share leadership’s vision. They become engaged in the process and excited about achieving the vision. We make sure the team learns from any missteps and celebrates successes large and small. At the conclusion of the execution phase, your entire organization will have a model for continuous improvement that will lead them down the path toward operational excellence, working through and around difficulty and taking on challenges with enthusiasm.

There’s actually a fourth step to our process: To insure that the changes we’ve implemented “stick,” we check in with our clients within 90 days of our last engagement to review results and help the team with any course corrections or – hopefully! – accelerations.

Operational excellence for the win

The great football coach Vince Lombardi once said: “Perfection is not attainable, but if we chase perfection, we can catch excellence.” He may never have used the term “operational excellence,” but he defined it perfectly. Chasing perfection and achieving excellence is something that great athletes – and great organizations – know all about. It’s a joyful, engaging, competitive effort to push the boundaries of the possible, and it’s what we’ve chosen to do because we know that it drives success – which reminds me of another Lombardi quote: “We run to win, not just to be in the race.”