Operational excellence

Operational excellence refers to the systematic implementation of principles and tools designed to enhance organizational performance and create a culture focused on continuous improvement. It enables employees at all levels to identify, deliver, and enhance the flow of value to customers. Common frameworks associated with operational excellence include Lean management and Six Sigma, which emphasize efficiency, waste reduction, and quality improvement. Organizations that adopt these practices often report increased customer satisfaction and operational efficiency.

This approach employs the tools of earlier continuous improvement methodologies, such as lean thinking, Six Sigma, OKAPI and scientific management.

The concept of operational excellence was first introduced in the early 1970s by Dr. Joseph M. Juran while teaching Japanese business leaders how to improve quality. It was formalized in the United States in the 1980s in response to "the crisis" among large companies whose market share was shrinking due to quality goods imported from Japan.

Key components

There are five key components fundamental to operational excellence, illustrated in Juran's Model, that lead to better business results and cultural excellence.

The first component, an integrated management system (IMS), consists of a framework of processes and standards that define where the organization is going, identify the risks to getting there, mitigate them, manage change, and continuously improve. Having one single, integrated management system reduces overlap, redundancy, and conflict. Early adopters of this practice have been companies such as Exxon and Chevron utilizing Operations Integrity Management System (OIMS) and Operations Excellence Management Systems (OEMS), respectively.

The second component, a culture of operational discipline, is commonly described as doing the right thing, the right way, every time. This culture is built upon five guiding principles developed from the United States Nuclear Navy, a high reliability organization. Those principles are integrity, questioning attitude, level of knowledge, watch team backup, and formality. These values are used to identify the behaviors expected of each and every employee and how they support the organization's mission and outcomes.

The Juran model

The core components principles of Juran’s model for operational excellence are as follows:

1. Grasp Juran's guiding principles that lay the foundation for excellence.

2. Move your culture from thinking about quality as a product attribute (little q) to quality as a great customer experience (Big Q).

3. Understand when and how to engage leadership and the workforce to drive performance.

4. Build an effective and efficient change infrastructure using the appropriate tools and methods.

5. Drive business process effectiveness and agility.

The Shingo model

The Shingo Institute, an organization that awards the Shingo Prize, has identified ten "Guiding Principles in the Shingo Model" as forming the basis for building a sustainable culture of organizational excellence:

1. Respect every individual
2. Lead with humility
3. Seek perfection
4. Assure quality at the source
5. Flow and pull value
6. Embrace scientific thinking
7. Focus on process
8. Think systemically
9. Create constancy of purpose
10. Create value for the customer

Flawless execution (FLEX) methodology

The FLEX methodology, also known as PBED (Plan-Brief-Execute-Debrief), is an iterative management system initially developed for use by fighter pilots and adapted for business contexts in 1998. It incorporates elements reminiscent of Agile software development and emphasizes flexibility and adaptation based on real-world influences, particularly through a process called debriefing. This process fosters a 'nameless and rankless' culture, promoting objective assessment and solution development independent of hierarchical position within an organization.

The methodology consists of four key steps:

• Plan: Formulating a strategy and aligning objectives among team members.
• Brief: Effectively communicating the plan to the execution team to ensure understanding.
• Execute: Implementing the plan while maintaining focus on the defined objectives.
• Debrief: Analyzing the results of the execution against the initial plan, identifying lessons learned, and adjusting objectives as necessary for future iterations.

See also

• Lean manufacturing
• Lean services
• Shingo Prize for Operational Excellence
• Six Sigma
• The Toyota Way
• Toyota Production System