Operational Excellence is a philosophy of leadership, teamwork, and problem-solving resulting in continuous improvement throughout the organization by focusing on the needs of the customer, empowering employees, and optimizing existing activities in the process. It is the execution of the business strategy more consistently and reliably than the competition, with lower operational risk, lower operating costs, and increased revenues relative to its competitor. It is evidenced by results.
Strategic alignment, on the other hand, is a process that senior leaders should implement and guide in order to ensure that all the assets of the organization - people, processes, and technology - are aligned with its mission, vision, and strategy. The strategic alignment between the strategy and the business model ensures the company's profitability and longevity.
Understanding Operational Excellence
Operational Excellence is not a new phenomenon. The concept has been around for decades, and it has been applied successfully in many industries. It is a systematic approach to productivity and quality improvement that relies on the use of specific principles, systems, and tools. The goal is to reduce waste, increase productivity, and improve quality and customer satisfaction.
The principles of Operational Excellence apply to all levels and departments of an organization, from the executive suite to the shop floor. It is not just a set of tools and practices, but a mindset and culture that must be cultivated and nurtured. This requires strong leadership, clear communication, and a commitment to continuous learning and improvement.
Principles of Operational Excellence
The principles of Operational Excellence are derived from the teachings of such quality gurus as W. Edwards Deming, Philip B. Crosby, and Joseph M. Juran. They include the following: Respect for people, Lead with humility, Seek perfection, Assure quality at the source, Flow and pull value, Think systemically, Create constancy of purpose, Create value for the customer.
These principles are not standalone. They are interrelated and should be implemented in a holistic manner. For example, respect for people is not just about treating people with dignity and respect, but also about empowering them with the knowledge and tools to do their jobs effectively and efficiently. Similarly, leading with humility is about recognizing that everyone has a role to play in the organization's success and that no one has all the answers.
Systems and Tools of Operational Excellence
Operational Excellence relies on the use of a variety of systems and tools. These include Lean Manufacturing, Six Sigma, Total Quality Management (TQM), and others. These systems and tools are designed to identify, analyze, and eliminate waste and variation in processes.
Lean Manufacturing, for example, focuses on eliminating waste in all forms, including overproduction, waiting time, transportation, over-processing, excess inventory, unnecessary motion, and defects. Six Sigma, on the other hand, is a data-driven approach to eliminating defects and reducing variation in processes. TQM is a management approach to long-term success through customer satisfaction. It involves all members of an organization participating in improving processes, products, services, and the culture in which they work.
Understanding Strategic Alignment
Strategic alignment is the process of bringing the actions of an organization's business divisions and employees in line with the organization's planned strategy. Strategic alignment is a fundamental business concept that determines the competitiveness of an organization. The concept aligns strategy with projects and the day-to-day work at all levels of the organization.
Strategic alignment ensures that all organizational units and employees move in the same direction to achieve the business goals. It involves aligning the organizational structure, the performance measures, and the reward systems with the strategy. It also involves aligning the organization's culture and values with its strategy.
Elements of Strategic Alignment
Strategic alignment involves several key elements. These include the following: Vision and Mission, Strategy and Tactics, Culture and Values, Structure and Systems, Performance Measures, and Reward Systems.
The vision and mission provide the direction for the organization. The strategy and tactics provide the roadmap for how to get there. The culture and values guide the behavior of the organization's members. The structure and systems provide the framework for carrying out the strategy. The performance measures provide the means for tracking progress towards the strategic goals. The reward systems provide the incentives for achieving the strategic goals.
Benefits of Strategic Alignment
Strategic alignment has several benefits. First, it ensures that all parts of the organization are working towards the same goals. This reduces the risk of conflicting objectives and wasted effort. Second, it improves communication and cooperation among different parts of the organization. This leads to better decision-making and problem-solving. Third, it increases the likelihood of achieving the strategic goals, as all parts of the organization are pulling in the same direction.
Furthermore, strategic alignment can lead to higher employee engagement and morale, as employees understand how their work contributes to the organization's success. It can also lead to better customer satisfaction, as the organization is better able to deliver on its promise to customers. Finally, strategic alignment can lead to better financial performance, as resources are used more effectively and efficiently to achieve the strategic goals.
Strategic Alignment and Operational Excellence
Strategic alignment and operational excellence are closely linked. Strategic alignment sets the direction for the organization, while operational excellence provides the means to get there. Both are necessary for an organization to achieve its goals and objectives.
Operational excellence helps to implement the strategy by improving the efficiency and effectiveness of the organization's processes. It does this by reducing waste, improving quality, and increasing productivity. This leads to lower costs, higher revenues, and better customer satisfaction, all of which contribute to achieving the strategic goals.
Role of Leadership
Leadership plays a critical role in both strategic alignment and operational excellence. Leaders set the vision and strategy for the organization. They communicate the strategy to all members of the organization and ensure that it is understood and embraced. They also create the culture and environment that enable operational excellence.
Leaders need to model the behaviors they want to see in their employees. They need to demonstrate commitment to the strategy and to continuous improvement. They need to empower their employees and provide them with the tools and training they need to improve their processes. They also need to recognize and reward good performance and improvement efforts.
Role of Employees
Employees also play a critical role in strategic alignment and operational excellence. They are the ones who carry out the processes that create value for the customers. They are the ones who identify problems and opportunities for improvement. They are the ones who come up with ideas for improving processes and reducing waste.
Employees need to understand the strategy and how their work contributes to it. They need to be committed to continuous improvement and to delivering quality products and services to the customers. They need to be empowered to make improvements and to make decisions that affect their work. They also need to be recognized and rewarded for their improvement efforts and their contributions to the organization's success.
Conclusion
Strategic alignment and operational excellence are two sides of the same coin. Both are necessary for an organization to achieve its goals and objectives. Strategic alignment sets the direction, while operational excellence provides the means to get there. Together, they create a powerful engine for business success.
Implementing strategic alignment and operational excellence requires strong leadership, clear communication, and a culture of continuous improvement. It requires the active involvement of all members of the organization. It is not an easy task, but the rewards are worth the effort. Organizations that achieve strategic alignment and operational excellence are more competitive, more profitable, and more able to deliver value to their customers.
