Tim Hebert
January 04, 2018

Operational Excellence: Out of Reach or a Stone’s Throw Away?

Achieving Operational Excellence - how close are you?

How close are you to achieving Operational Excellence?

Think for a moment of the one business or departmental challenge you faced in a prior role that, despite your best intentions, you never figured out a way to prioritize and solve.

If you are a VP of Sales, for instance, you may still be lamenting the fact that after rolling out a new customer relationship management system, you never got 100 percent buy-in… let alone 50 percent! If you lead finance, it may be that one of your financial processes could be characterized as “death by spreadsheets,” despite your knowing that there was a way to automate the process.

As a business owner for more than two decades, the “issue-I-should-have-addressed” is something I think about every single day. I will use my most recent company, Atrion, as an example. As many of you know, Atrion was a Rhode Island-based IT services firm that grew from a two-man, spare-bedroom operation to a $160-million, 260-plus employee organization before I sold in October of 2016. I love the legacy we created at Atrion and the way we lived out our purpose—to have a positive impact on the lives of others. But even to this day, I can’t help but think of the five to 10 things that, had I invested in fixing back then, could have made that legacy even stronger. 

In business, we can often pinpoint the exact process and systems bottlenecks standing in the way of our desired transformation, yet we do little to tackle these challenges. Sometimes we think we have good reason:

  • Our client’s needs must come before our business’ needs
  • We have gotten by thus far; what’s another few months?
  • The timing is not right to invest in this area

But, at the end of the day, these are just excuses… excuses that stand in the way of an organization’s ability to reach operational excellence.

What is Operational Excellence?

What is Operational Excellence?

The term “Operational Excellence” has long been used to describe organizations that successfully leverage operations and proven process to achieve business growth. Organizations that subscribe to this mentality often incorporate Lean-based components into their business model, specifically focusing on how to eliminate organizational waste (e.g. defects, waiting, overproduction—more on that here). The Institute for Operational Excellence defines “operational excellence” as the point in which: “Each and every employee can see the flow of value to the customer, and fix that flow before it breaks down.”

Here at Trilix, though, we have our own definition of operational excellence that pulls from the pillars mentioned above. To us, organizations that center on operational excellence:

Uniquely understand the powerful way people, processes and technologies fuse together to move an organization toward its desired future state. It’s about approaching and making every business decision—whether strategic, philosophical, tactical, technological, etc.—against that operational excellence model.

Organizations that reach operational excellence do so because they:

  • Unwaveringly commit to continuous improvement. Every choice the organization makes must stand up against the question of: “Does it add value to the business?”
  • Healthily obsess over process. These organizations understand that one process does not sit in a silo. Rather, operational excellence is about how collectively an organization’s processes come together to move the business towards its desired end state.
  • Embrace a growth, versus, fixed mindset. These are the companies that challenge something because they recognize that everything needs to be challenged for a business to remain competitive and differentiated.
  • Hold themselves accountable. By relying on both quantitative and qualitative feedback, these companies constantly gauge how successfully they are moving the needle forward.
  • Excitedly consider what could be. Exhilarated and inspired by the thought of potential, these organizations are on a never-ending quest for utopia.

Organizations that subscribe to operational excellence subscribe to a mindset, a determination to execute their business like a fine-tooted comb and nourish their voracious appetite for change. Organizations with this disposition enjoy many gains—from reduced inefficiencies to improved employee loyalty. These are the companies that also end up building unbreakable client relationships because they are continually reinventing in their people, processes and technologies to better serve their external audience. In many ways, the term “operational excellence” is synonymous to “innovative,” “transformative,” “revolutionary” and “differentiated.”

Related Reading: Make One Change—Uncover a Masterpiece

So if operational excellence is the desired endgame, what happens if a business fails to reach it? Let’s take a look…

The Cost of Not Reaching Operational Excellence

Companies that fail to reach operational excellence encounter steep repercussions that can fall into any of the following categories:

  • Financial: When your organization becomes rife with waste, bottlenecks and redundancies, the speed at which you hemorrhage money increases exponentially. In fact, a recent study by IDC Market Researchfound that companies lose 20 to 30 percent in revenue every year due to inefficiencies. What’s more, businesses that operate in this type of an environment end up failing to maximize the full value of technology investments; wedging legacy technology into broken processes; and distracting and frustrating their top talent because of process and system stopgaps.
  • Loyalty: Market research evidences that employees are growing increasingly frustrated with their employers’ lack of focus on innovation and commitment to excellence. One such report from MIT Sloan Management Review and Capgemini Consulting shows that 63 percent of executives and managers feel the pace of technological change in their workplaces is too slow. Other repots point to a disengaged workforce, largely driven by business leaders’ lack of focus on equipping their employees with the tools and processes needed to reach a desired state of excellence. Disloyal, disengaged and inactive employees lead to weakened client relationships and, potentially, diminished public perception.
  • Stagnation: Organizations not centered on continuous improvement quickly reach a point of stagnation, or become stilted. In so doing, the status quo becomes the accepted norm. Stagnation can take on many forms—like a technology rollout that never moves into the adoption stage or two systems that remain siloed for years. And when organizations get stuck in a state of stagnation, they take several steps away from transformation.

What’s Tomorrow’s Regret?

Think back to that one business challenge I asked you to identify at the beginning of this post. Remember it? Now think of one that is present in your current business environment. Write that down.

Realistically, if you don’t prioritize operational excellence, the business challenge you just wrote down will become the first obstacle you thought of—both falling into the category of “I wish I tackled this at the time.”

So… what’s one step you can take today to make sure that item doesn’t become tomorrow’s regret?

Further Reading:

Three Steps to Prepare an Organization for Operational Excellence

WHITE PAPER: Three Steps to Prepare an Organization for Operational Excellence  

  • Explaining Operational Excellence in Terms Employees Understand

  • Encouraging Employee Engagement

  • Securing Management & Leadership Support

Download the White Paper Now

About the AuthorBusiness Processes and Systems: Do All Signs Point to Change?

Tim Hebert, CEO and Founder, TrilixChief Managed Services Officer, Carousel Industries 

A perennial entrepreneur and innovator, Tim Hebert is committed to expounding on the importance of digital transformation, change management and the fusion of people, process and technology to derive positive business outcomes.

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