Transformational Operational Excellence:

Transforming to What? And Why?

The Problem: Imbalance

Some organizations get to a point in their development when they realize they have the realistic potential for high performance. High-performance organizations are market leaders, and innovators and regularly “undergo transformation to stay relevant” (Flood & Klausner, 2018, "Introduction"). These high-performing organizations focus on cultivating people in teams and positivity and on highly specified management and production systems (O'Neill & Salas, 2018).

Often, organizations tilt in one direction or another: they bet on a change to their human or operational systems. For example, some focus their changes on organizational structure or strategies that pursue higher engagement. Others focus on new production systems and technologies. Finally, some organizations attempt to balance the human and operational systems changes. This last group pursues operational excellence through human development and standardized management processes. For example, the shift to remote working has recently appeared to improve productivity and happiness in some organizations (Choudhury, Foroughi, & Larson, 2021).

Organizations that balance their human and operational systems are pursuing one model for operational excellence. This model acknowledges the forces of culture, strategy, management, and leadership and their impact on the daily work experience. In essence, work is people doing processes to produce value; the daily work experience is their reality. This essay discusses a model for operational excellence that affects the work equation for the organization's benefit, its people, and those they serve, describing the purpose behind pursuing the model and the change effort to transform it.

The Model

At the center of an organization’s daily experience is the way it manages its processes and production. Management and how its employees perceive it is influenced mainly by four forces: how it manages improvement, the way it manages deploying strategy, the way its managers are leading, and its organizational culture. The first two forces cross the daily experience in an operational direction: shaping how the organization works and makes production. In other words, managing improvement and strategy impacts the operational aspects of production. On the other hand, the second two forces cut across the daily experience more humanly, shaping culture via leadership.

While the others narrowly define operational excellence, often focusing on cost reduction or waste elimination, I’ve constructed a comprehensive model based on the forces above. Moreover, I based the model on three rules. The first rule is that the forces usually behave how we describe them. For example, at any given moment, one or more forces are more potent than the others. Ultimately, equilibrium is the desired state.

Consequently, the second rule is that executive and strategic leaders are responsible for balancing the human and operational systems. Attempting to balance the human and the operational forces drives us towards equilibrium.

The third rule is that positivity in the human system creates positive performance. Culture and leadership are agnostic until strategic leaders shape and form them. Unfortunately, some organizations do this unwittingly, allowing negative attitudes and passive leadership to configure how these forces affect the daily experience. My model shapes organizational culture and leadership with positivity: a daily experience that is positive—engaging, valuable, and meaningful—for our people and the community where we live and work. The framework below captures the rough-hewn lines of the model.

You could ponder the construct above and think deeply about how they reflect the forces, balance, and positivity shown, asking, “How do I do these things?” You could also think about yourself and the teams you are on, asking, “How do we reflect this model and its rules?” Finally, you could consider the whole organization—the team of teams, the “us” level—and ask, “How does this affect us?” The answers to those questions are critical. If the model is worthy of reflection, why is it so to us? Why should we change? Why should I change?

Why?

When a person considers a change—something substantive, a change in behavior or mindset—they wrestle with the risks and rewards of the change. For example, exercising is a behavior change. Making up one’s mind to stop doing other things and start exercising—getting up an hour earlier to exercise for an hour—is a change in mindset. We will not do the new things we want to do unless we believe deeply that the new way will get us to a better place based on a deeply held value: in this case, wellness.

Similarly, organizations considering change must keep the deeply held value—Sinek (2009) called this the “why”—in view. Leaders must view the risk of the change relative to its reward, even if that reward is intrinsic. More precisely, an organization considering a change to how they manage and lead must know why they are doing it. Some organizations have pursued operational excellence simply because others in their industry have done it and found good results: those peers had some success in terms of operational improvement. That mistaken idea sees operational excellence as a best practice. However, like other best practices, successes based on them are elusive: what worked in one context or organization rarely works the same in another organization or context.

Others take the long view, looking past immediate results, setting their sights on an ideal: their “true north.” One way to articulate this navigational metaphor is to think of it as our ultimate destination, defining our direction of travel or where the organization is heading. Again, the wisdom is evident: aiming for a waypoint may lead to getting lost. More of an ideal than a strategy, this ultimate destination should be beyond our reach: we will most likely never fully arrive. Moreover, if the ideal lacks emotional power—the ability to call the organization forth—we may get bored along the way and drift.

Why organizations transform towards operational excellence must be powered by an idea that strikes at the collective heart of our organization. The change will fizzle and fail without the power to call people to do more than they think they can. Changes like this—with significant risks and vast rewards—require courageous leaders who can manage the transformation. These leaders will have to manage the change.

And embed it to make it stick.

References

Choudhury, P., Foroughi, C., & Larson, B. (2021). Work‐from‐anywhere : The productivity effects of geographic flexibility. Strategic Management Journal, 42(4), 655-683. https://doi.org/10.1002/smj.3251

Flood, F., & Klausner, M. (2018). High-performance work teams and organizations. Global Encyclopedia of Public Administration, Public Policy, and Governance; Springer Science and Business Media LLC: Berlin, Germany, 1-6.

O'Neill, T. A., & Salas, E. (2018). Creating high performance teamwork in organizations. Human Resource Management Review, 28(4), 325-331. https://doi.org/https://doi.org/10.1016/j.hrmr.2017.09.001

Sinek, S. (2009). How Great Leaders Inspire Action. https://www.ted.com/talks/simon_sinek_how_great_leaders_inspire_action?language=en