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Operational Excellence, what is and what is not..

Posted by: Jasmiza on 23rd February 2019 13:57:31.


At this point of Google search on the term 'operational excellence', you must already be overwhelmed with these words, or jargons for some :
- OEx or Opex as a short form
- 6 sigma, agile scrump is operational excellence
- it is about process improvement
- it is about getting everything automated 
- it is a department name 
- it is the management theme of the year
- it is somebody's job title
- it is a corporate training center branding 
- wiki said.. Operational Excellence is the execution of the business strategy more consistently and reliably than the competition. Operational Excellence is evidenced by results.

Now before I put more confusion to your brain, let us agree to start the exploration with these principles:
1. lets nickname Operational Excellence as OEx , so we do not get confused with Opex and Capex as in operational expenditure and capital expenditure.
2. Excellence is an ideal state, hence its almost impossible to get there, except, we define the limitations or ceiling standards ourselves.
3. Operation does not mean, we are talking just about operation department in an organisation. It means, something we DO everyday to produce a set of desired results, hence it becomes operational rather than strategic.
4. A strategy sometimes is not something strategic, hence, we must always discuss OEx in the right context of business model and value chain.

Ok, as a start, let me use this caselet as to introduce a context where Operational Excellence takes place in an organisation.

An organisation was formed to manage a set of activities to add value to their targeted clients. It is a profit centered organisation as they have defined themselves as a business entity. (This is an important context setting because OEx also happens in non profit organisation, as long as there are a set of activities that they need to do to achieve result, they qualify to OEx).

A normal practice is, activities that were put together for this organisation to deliver their results, is explained in their business model and value chain. And to make this activities alive, resources including people, systems and technology are put together in sync to produce. hence, they are operating their business according to some designs that they have adopted. (Most of the times, organisation just operate by default, meaning, they just keep on adding in functions (in their organisational structure) to make things work).
Familiar with this?

If your answer is no, then after reading this column, you might want to take a break to go understand business, so you can appreciate OEx better. You can always come back when you start to see things more clearly , from the helicopter view. Try these keyword : business models, value chain

If your answer is yes, lets have a look at this pyramid:
Organisational Key Activities Pyramid

I was having a hard time to look for the original scholar for this pyramid , but as a practitioner I have been using it hundreds of time, so if you know where this originated from, please leave a comment so I can properly cite the reference.

Ok, lets have a look at where operation is in regards of delivering organisation results. In most cases (In my 12 years of practice with 200 or more value chains i served I have never seen other than this); most companies will have one vision statement, a few lines of mission statement that explains their business model and then their organisation chart, clarifying who deliver what in which position. This can be understood deeper in organisational development, or better known as OD in OEx fraternity.

In a layman explanation,
Vision - how do you see your end state a period of time , where you want to be
Strategy - how to get there
Tactical - how do you execute the strategy
Operation - what are the daily routine/exercise that is in the execution plan
Culture - how everything is done in your organisation (have you heard that culture eats your OEx for breakfast?) 

Ok lets not fret about getting eaten.

If we match this diagram with your value chain, you will see that, we are almost getting to the practical meaning of OEx..
- OEx or Opex as a short form 
- 6 sigma, agile scrump is operational excellence
- it is about process improvement
- it is about getting everything automated 
- it is a department name 
- it is the management theme of the year
- it is somebody's job title
- it is a corporate training center branding 

- wiki said.. Operational Excellence is the execution of the business strategy more consistently and reliably than the competition. Operational Excellence is evidenced by results.

Maybe this model here can help you narrow down and putting OEx in a nutshell:


OEx is about how we put together all resources, especially human activities, in a systematic manner with the help of technology to deliver desired results. Be it at any functions in an organisation, every manager must ensure they are operating according to a designed work processes that meet requirement and always looking forward for a better practices to deliver more , better and faster results. 

OEx is not another management fad, it is a state of where all activities are in flawless and seamless synchronisation where the key output will impact either in generating more revenues or reduce cost, not just operating cost, but also initiatives and other unplanned expenses.

Consider this triangle I picked up from OPEX Week Asia Summit 2019:


I hope this will give you a clearer picture of OEx.

In my next write, I will explain more about Business Model and Value Chain.  Please do leave a comment of what else I can help explain to you in regards of OEx, OD, Capabilities and Performance.

Shake hands!



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