What is operational excellence?
Very simple – an approach to business management that focuses on continuous improvement. We even have very recognizable frameworks – Kaizen, IWS, Six Sigma. Though I believe all of this can be simplified to just three things
The Work – which may be in the form of a task or a process or an SLA or an SOP.
The System – which tracks the work.
And Feedback – which the system gives you on how well the work was done, and how it can be improved.
Almost everyone gets the first part right, understands the importance of the third but misses the second part. This issue is often more pronounced in core business operations as opposed to auxiliary or support functions such as finance or HR – where a long history of standardisation, training and research have built up best practices which are implemented as is across multiple industries.
It is business operations where each company defines itself and its moat in the space and it is often the case that best practices, or standardisation are either unknown to the business operators or perhaps even non-existent.
This eventually leads to executives authoring multiple docs – or playbooks – around each and everything and they often end up not being opened by anyone. Forgotten to the annals of cloud storage.
The playbook that thrives and gets implemented is not the one that is documented – don’t mistake this comment as undermining the importance of documentation though – but the one that gets embedded into a system.
Defining a System: Digital Tracking and Accountability
So far though system – seems like a very vague word. So let's define that a bit further. System to me is digital tracking of multiple moving parts interacting with more than one person, but with conflicting interests, responsible for the different parts that at equilibrium hold each other accountable.
This got complicated a bit too quickly! Keywords – multiple people with interest at odds with each other AND digital tracking.
Consider the following case. You are working as part of Dastgyr’s supply team exporting fresh produce from around the world. In any given week you are responsible for multiple shipments and some of those shipments will have claims come up for a variety of reasons. Now you also have suppliers breathing down your neck for payments. But wait, payments are done by finance and they are responsible for not overpaying and they need to factor in the fines for the complaints that came in. You also have an SLA defined – which is quite lengthy and goes into a number of details to map out all the possible scenarios that can come up. Who remembers that doc? No one! What happens next?
You get into a bit of in-fighting and then agree on a compromise or you delay payments while going through that document to figure out what to do next. The possible outcomes then being – a risk of overpayment or a risk of bruised relationship and in both cases a lot of frustration and valuable time lost to figuring out the right next step.
Getting back from the theatrics though – the document may not be very long and the time lost may not be too high – but the other outcomes are the same and yes the lost time in the long run adds up.
In this instance a system is essentially a simple excel sheet which encodes the same document to get you the outcome instantly. It can be a ticketing engine which tracks when the complaint came in and when it was resolved.
In all of this the requirement for more than one player playing at odds is critical to achieve an equilibrium because where one party becomes the executor the other becomes the checker. In the absence of a checker no system can achieve equilibrium – consider the solar system if the gravitational pull was not balanced by the forces generated by the orbital motions there’d be a lot of collapsed celestial bodies but no system.
The system is what enables the tracking and automation of work and is also the same thing which enables data-driven feedback and decision making.
Systems immortalise a playbook, process, SLA, SOP or whatever else you want to implement.
Final note, while there may be different frameworks on how to achieve operational excellence (which is kind of any oxymoron – how can you achieve something that is supposed to be continuous or without an end) but these three steps are the foundation upon which everything is built.