What Exactly is Operational Excellence?

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How Would You Define Operational Excellence?

Daniel Horgan , the founder and CEO of CoLabL , recently asked me this question when I served as a panelist during a Breakthrough Mentoring event he hosted with a cohort of PIMCO and Black Girl Ventures .

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His question was perfectly timed considering my recent two-part article on 5 Lessons in Operational Excellence from Cambodia’s Angkor Wat, Part 1 and Part 2 .

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Here’s my definition of operational excellence:

Operational excellence is a cultural mindset that permeates throughout everything everyone does in an organization to deliver value to customers. It implies a hyperfocus on value-adding activities and is rooted in principles of consistent quality, being customer-centric, and continuous improvement.

While there are many keywords to highlight in the above definition, mindset is the one I’d like to elaborate on.

In this instance, mindset represents the collective culture that exists within an organization. And culture is driven by leaders. Without proper leadership, it is difficult for a mindset of operational excellence to exist. Sadly, there are many leaders including corporate executives and small business founders who don’t understand the link between streamlined operations and profitability let alone espouse the tenets of operational excellence.

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That’s why it’s always heartbreaking for me when students I teach lean principles to report not being able to gain traction with their process improvement initiatives. Their proverbial lightbulbs of ideas are dimmed when their projects don’t receive the funding and/or leadership support required for their process improvement initiatives to take root and flourish.

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Simply put, process improvement initiatives will likely never get approved in organizations that only see operations as a cost center instead of an opportunity to be a profit center through expense reduction, new product innovation, and efficient deliveries that allow more to be done without major capital investments.

Examples of Companies that are Operationally Excellent

Operational excellence encompasses frameworks like total quality management , lean six sigma , and business infrastructure . And in order for it be effective, all levels of leadership, starting at the top, must become advocates.

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It’s not a feat easy to accomplish. A quick search of companies that embody operational excellence will likely include Toyota and Amazon among others. I’m fortunate to have interviewed people close to both organizations on the Business Infrastructure podcast.

Tim Leslie is a former 20-year Amazon executive that led the expansion of Prime Video into 200 countries. He speaks candidly about what operational excellence means at Amazon and how its laid the foundation for it becoming a trillion-dollar company.

Jeffrey Liker , author of The Toyota Way , also shares what operational excellence is and how it transformed Toyota from its humble beginnings in the weaving industry into an automotive giant. This video is a little longer, but well worth the watch due to the valuable insights included.

More Resources on Operational Excellence

Operational excellence is also destination that, once there, doesn't end. It's a continuous journey. If you'd like to learn more about it and how to achieve it in your organization, I highly recommend this article by Lean CX . I also recommend listening to Season 13 of the Business Infrastructure podcast . It focuses exclusively on operational excellence and includes guests like transportation and logistics expert, Tim Dooner , lean six sigma specialist Lauren Hisey , and multi-million dollar podcast operations guru Kate Erickson Dumas .

If this information is helpful, then subscribe to this newsletter to continue receiving strategies, tips, and tactics to enhance your company's operations.

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About the Author

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Alicia Butler Pierre is the Founder & CEO of?Equilibria, Inc. ?– an operations management firm specializing in increasing enterprise value for fast-growing small businesses. She’s a software inventor, a?two-time Amazon bestselling ?author, and producer of a?top 2% podcast .

Alicia also serves on the boards of three education-focused organizations and is an adjunct instructor of Lean Principles at?Purdue University .?

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She serves as the USA Chair of the?G100’s ?Micro, Small, and Medium Enterprises. The?Process Excellence Network ?recognized her as a Top 50 Thought Leader in Operational Excellence. A chemical engineer turned entrepreneur, she’s designed and optimized processes for small businesses, large enterprises, non-profits, and government organizations alike.