Dan Markovitz
September 20, 2016

Operational Excellence - The Greatest Developments, The Latest Predictions

With the release of our 6-part report series, ‘Operational Excellence: Snapshots, we wanted to hear some thoughts from our resident experts. Our first part of the series, ‘Operational Excellence: The Greatest Developments, the Latest Predictions', asked 150+ OpEx professionals what they considered to be the greatest development in Operational Excellence, and how they saw Operational Excellence developing in the future.

With this in mind, we asked Dan Markovitz, OpEx expert and Insights contributor, to share his thoughts.

Operational Excellence - The Greatest Developments, The Latest Predictions

“There are four purposes of improvement: easier, better, faster and cheaper. These four goals appear in the order of priority.”

                                                                                                - Shigeo Shingo, forefather of lean

“First we build people. Then we build cars.”

                                                                                                - Fujio Cho, former CEO, Toyota

Most organizations that pursue continuous improvement (by whatever name) often use cost reduction as the raison d’etre of the effort. By contrast, Shigeo Shingo, one of the fathers of the Toyota Production System, emphasized the primacy of the worker in continuous improvement. Removing cost (and making things faster and better) is important, but the main goal is to make the work for the employee easier.

Somehow, that message got lost in the journey of lean thinking to the United States and Europe. For years, the operational excellence community has been focused on using tools to take cost out of products and services. We’ve provided organizations with a library’s worth of techniques to deconstruct and rebuild their myriad processes. And those organizations have succeeded, to a point, making remarkable gains in productivity and quality. But in general, they’re unable to sustain those gains. They regress to the mean, and in short order, any trace of continuous improvement evaporates like the morning dew.

Shingo’s great insight is that continuous improvement must focus on the people in the company—not on the product the company produces. Toyota has gone even further in its development of lean thinking, making “respect for people” one of the two pillars in the Toyota Way—and by respect, the company means not just treating employees well, but embracing and honoring their capability to learn and grow. (Toyota actually takes a broader view of people, placing all stakeholders in that category, but the principle is the same: people come first.) Of course, the motivation for respect isn’t that we’re supposed to be “nice” or to make it onto a Best Places To Work list. Rather, Toyota realizes that placing people at the center of continuous improvement—indeed, making continuous improvement of its people the primary focus of the Toyota Production System—is the only way to ensure that improvements sustain, and compound, over time.

What is the main goal of Operational Excellence?The operational excellence community has finally come around to seeing the wisdom in Shingo’s words and Toyota’s philosophy by embracing the centrality of respect for people. The community now realizes that total focus on the use of a canonical set of tools (5S, value stream mapping, heijunka boards, six sigma analysis, etc.) is myopic at best, and counterproductive at worst. And thus OpEx leaders will be assigning more importance to interpersonal skills, operating culture, and—shockingly!—the customer, and paying (a little) less attention to simply driving out waste and reducing costs.

This is not an easy shift to make. Tools are easy to teach, and the quick wins companies realize by using these tools are the corporate equivalent of a sugar high. It’s hard to quit. But for long-term success, employees must come ahead of the income statement. So call your OpEx program whatever you like—lean, six sigma, lean six sigma, agile management, or process reengineering—but don’t leave people out of the equation.

Download 'Operational Excellence: The Greatest Developments, The Latest Predictions' free on BTOES Insights now.

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