Every CEO yearns for it. It’s universally agreed to be A Good Thing. But beyond the motherhood and apple pie, what exactly is Operational Excellence? Is it like happiness: hard to define but we know it when we see it? And what part does BPM play in achieving Operational Excellence?
Prepping for a conference yesterday, I turn to Google for a definition for OE – but found no standard, and surprisingly little agreement.
We bounced it around in the office and came up with a definition, which naturally we tend to think is simply the best. But before I share it – here are the three most cogent definitions that Google threw up:
The US-based Institute for Operational Excellence defines OE as:
“…when each and every employee can see the flow of value to the customer, and fix that flow before it breaks down”.
Which is OK, but definitely rather static.
Kevin McManus bases his definition of OE on the Malcolm Baldrige Quality Award criteria:
“Operational excellence is demonstrated by results that reflect (1) sustained improvement over time, (2) improvement in all areas of importance, and (3) performance at a level that is at, or superior to, ‘best in class’ organizations.”
Which makes sense – ultimately it’s results that matter – but gives no clue as to how it is achieved.
The Dutch-based Opex Group defines OE as Reliability Centered Management so that:
“As a client of this organisation I know exactly what to expect and that is also what I actually get – right the first time, always on time and at a price that suits me.”
Which is also fine – serving customers is the ultimate purpose of any organization – but also a limited perspective.
So here’s what we came up with.
We defined OE as three interlinked capabilities:
- The capability to flawlessly translate strategy into the reality of operational processes
- The capability to engage the entire enterprise in collaboration on continuous process improvement
- The capability to integrate the management of risks, controls and compliance within the one enterprise process framework.
I like the way that it puts process at the heart of these capabilities, and positions BPM as the enabling platform for OE. It also gives the right prominence to governance, without which nothing is sustainable.