5 Operational Excellence Basics You Should KnowAugust 3, 2016
When you’re running a business, operational excellence boils down whether or not your business is successful, whether or not it strives to continually improve, and whether or not your employees understand your business process and how to effectuate it. It’s one of those business catchphrases that has gained significant traction in recent years, with masters degree programs popping up in higher education institutions and with new roles being created (Director of Operational Excellence, Operational Excellence Manager) within companies across the US. Despite its widespread appearance in the business lexicon, many struggle to define it and what it encompasses. To help clarify, we’ve identified five operational basics you should know.
1: Identify Strategic Objectives
Part of achieving operational excellence is having a fundamental understanding of your business— including your marketing, IT, and overall business objectives. It’s imperative that you have strategies in place to reach those objectives. If you haven’t identified, defined, and established strategic business objectives, how would you know what you want your business to do? This is a central component to starting a business, and if these objectives were not defined, it could be why your business will struggle to achieve operational excellence, now and in the future.
2: Continuously Strive For Improvement
Once goals are reached, new goals need to be set. Essentially, if don’t have anything to work toward, you won’t have any impetus to strive for improvement, and your business will become stagnant. Similarly, once you have some experience under your belt, you may see new opportunities to streamline processes. Take advantage of that knowledge, and use it to grow your business. A Fast Co. article explained that if your business can sustain continuous innovation, staying ahead of the competition and market dynamics, then you in effect have achieved operational excellence through fiscal discipline, efficient use of resources, and maintaining profitability.
3: Make Communications a Priority
Communication is critical to the success of your business and to achieving operational excellence. And this means going beyond Monday Morning meetings and newsletters. Make sure that every aspect of your business flow is communicated to your employees so that they know the process well enough to anticipate and correct problems and keep things running smoothly. Many companies will incorporate visual flows to communicate this process to employees, making it overtly apparent what needs to be happening and when. The bottom line is that without proper communication, your business will surely struggle to achieve operational excellence.
4: Manage Risks Effectively
Every business has some element of risk, and you need to make sure that your business is managing your risks effectively. Make sure that you’ve got your best managers working to assess this with every project or new endeavor your business takes on. In order to achieve operational excellence for your business, you need to prepare, anticipate, and preemptively address any potential issues before they become problems. Operational excellence isn’t about reacting to problems after they happen — it’s about preventing them from happening in the first place.
5: Incorporate Business-Wide Efficiencies
Especially as new technology and old-fashioned experience can bring forth new ideas on how to streamline processes, it’s important that you take advantage of them. Operational excellence involves being efficient with time, resources, and budgets. When your business is running lean, it’s running effectively. Be sure to regularly evaluate your business for opportunities to make your business more profitable and successful (but not at the expense of treating your employees or customers unfairly).
Although our list wasn’t meant to be exhaustive, incorporating these tenets into your business strategy can help put you into the right direction so your business can achieve operational excellence.