Never has Opex been so important when it comes to Industry 4.0 and Digital Transformations so how to get it back in the Boardroom?

There was a time where I would attend Opex conferences on a regular basis but after hearing the same type of stories and noticing that Opex had left the Boardroom I came to the conclusion that this was no longer perceived as a value added activity at the Highest Level, ie the Boardroom. As thing change and because "Opex" and "Digital Transformation" are often mentioned in the same sentence I decided it was time to see how Opex had evolved in the last 1-2 years.

Is Opex back in the Boardroom? Well not quite: Opex is alive for sure and giving a good run at Digital Transformation. The funny thing is that none of this matters or shouldn’t so we have to ask ourselves a few questions about why we still talk of Opex and Digital as if they were company goals (Here is a secret: they are just tools!). Before I do so allow me to share some thoughts about the following questions raised by the audience at an Opex conference I attended back in December 2017:

I don’t know about you but it seems to me that many of these questions are of a very tactical/activity-based nature: No question talks about Customer Satisfaction, how to solve Customer problems, Business Goals or Innovation. Why Innovation? well the title of the conference was “Unleashing Innovation in Operational Excellence”...

• Question 1 is akin to wanting to boil the Ocean and seems to be looking for a silver bullet. Are we really wanting large companies to be Agile or to be able to respond to Customer needs in lightning speed? Was there ever a time where large companies were agile? Yet, they have survived, some have even prospered as they grew in size. Is it not about better understanding the Voice of the Customer (VoC) and the Environment of the Customer (EoC) that Companies will keep on providing Customer Satisfaction. You don’t need to be agile if you are providing solutions that resolve the Customers’ Jobs-To-Be-Done.
• Question 2 immediately labels Robotic Process Automation (RPA) as a Challenge and something which has bad sides to it, is it really? RPA has always been there, maybe on a smaller case: who has not used MS Excel macros, MS Word mail merging, etc? Reading between the lines and having attended the conference RPA is seen as a job killer. Well what about the wheel, horses, steam engines and the internet? Humanity has lived through each of these technology disrupters and level of unemployment have not increased significantly because of them over the centuries. Humans adapt so why spend time talking about something we know we are going to adapt to, lets get on with it!
• Questions 3 and 4 go back to these dreaded “Things” we call Change, Resistance to Change and Managing Change. So here is my issue, and I speak as a former sinner, the Opex community has spent more time talking about Change, building complex models about Change, designing sophisticated tools to drive Change than actually making Change. Question 4 actually give clues as to why there is a problem: Desire for Change that does not come from Leadership is bound to fail. Companies are not democraties. If something was really important for the Success of a company why would you setup a different management team to make it happen? Yet this is what many Organizations do when they setup Opex Initiatives, Programs, Departments or Functions… For those who want to see an example of a company that has been creating Enterprise value consistently go and monitor the value of Danaher and guess what: they have created and deployed what they call the Danaher Business System. Enterprise Value is no longer short lived either because of the arrival and departure of a charismatic Leader (eg GE, Henkel just to name 2) or the end launch and subsequent close of some Lean, Six Sigma, Lean Six Sigma initiative.
• Question 5 is interesting as it implies that outsourced information is more likely to be hacked than holding it internally…Really? As if it made a difference: most Organisations use remote Call centers, Data Servers that are spread across the World and connected via the web. At some point information goes across public domain whether it is to another office or another company. I have ask myself why is this top of mind when coming to an Opex conference? I look forward to comments and replies.
• My answer to question 6 would be "Zero to all 3": I would give my 100 points to make Customers happy and loyal. Those who think that 80% Customer retention is a great achievement are basically saying they are happy that they Change their entire Customer base every 5 years (Do the maths if you don't believe me) All 3 items are outcomes of increased Customer Satisfaction so why try to divide attention across all 3 when you could focus on just one?

When asked what Operational Excellence means to you see responses from an audience of 50.

From talking to the Poll organiser it only took 4 votes for Quality and 3 votes for “Improvement” and “Efficiency”: Somewhat surprised in more ways than one considering approximately 50 people answered this quiz. So here we have it:

• Operational Excellence means many different things: 8% alignment within this audience.
• Opex Community is still internally focussed and centered on defects. If not Customer Satisfaction would have come first and many more times.

We now begin to see why Opex has left the Boardroom: over time it has been condensed into a set of tools and techniques to deal with Tactical issues. Maybe this has something to do with the fact that Opex implies we do try to get things right first time and that we accept it can't be without some extensive effort. To get Opex back into the Boardroom we need to associate it to what matters to Leaders: Growth, Profit and People.

For this final part of this article I look into a second set of questions that were raised by conference attendees on the second day of this event, no prizes for guessing which one was mine!

• Question 1 is again one of those questions that will not help even if we have the answer. Reading between the lines one it implies a centralised “Command & Control” approach. What if Improvement was locally driven, would we be asking this question? Are we really saying that some Cultures are more interested in Operational Excellence than others or are we finding that a "One-Size-fits-all" method is the night the right way to guide an WorldWide Organisation?
• Question 2 seems to suggest that some Opex approaches are and some are not Sustainable, really? This question seems to suggest that Sustainability can be modellised and achieved through application of Tools. Most Successful Organisations will tell you that it is not about tools. Don't do Lean, Use Lean is what we teach our Customers. For another good example I suggest you look up the performance of Ingersoll Rand and spend time looking at this following video:https://youtu.be/OTQgFRINm4k. While I don't like to think of this as a Tactical question here are 7 things that could be done: 1) Opex does not answer needs of Middle Managers so look to resolve this 2) Opex vocabulary increases Resistance to Change as it often implies operators are doing it wrong. Use that language only amongst practitioners and don't try to teach people new words 3) Talk Less, do more 4) Think about strategy for deploying Opex 5) Leverage Digital solutions to automate that infamous "Controls" phase. 6) Let people owns the Change: Standardization does not have to be a straightjacket. Allow some room for variation as long as people go in the right direction 7) Opex is more about attitude and behaviour than adoption of standard tools.
• Question 3: Is this not about returning to a more holistic view of Opex? Thinking about Growth, Customers and People? I recently answered this question by saying that "Opex is about moving from Humans driven by Process and supported by Technology to Process driven by Technology and supported by Humans". By keeping the discussion at this level it will force leaders to think about Opex in a Strategic way. Lets also not forget that Opex is the not the Goal, just one of the ways to get there!
• Question 4: the way we achieve this is by engaging people in the creation of their own roadmap. If you think of this as a project (since it is a one-off and hopefully non recurring activity) then it is all about managing the flow of Knowledge, Decisions and Managing Risk between your current state and your desire Future state. If you want to get there quickly all I will say is to stay away from conventional Gantt chart project management. Ask us about Flow Mapping and be prepared to get where you want in half the estimated time.
• Question 5 is more about whether you want to have a Business System that is based on Compliance or Standard Work. In one case you freeze Change to an acceptable level of Performance in the other you provide the means to continuously improve. There are cases where you will need one or the other. In some cases you will need both. Audits are like weapons: some will see them as instrument of War, others as instrument of Peace. The real question is whether you have a Business System or not: too often Quality Systems are setup because there is no proper Business System.

In conclusion I'd say that stop thinking that Opex is about rectifying problems, this is simply reactive behaviour. Think of company goals, think about strategy to get there and think that Opex is a state of mind rather than a Program. The best companies don't have Opex Departments simply because Opex is not seen as something on top of day job.