Professional Documents
Culture Documents
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Top 10 CEO Challenges & Priorities
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Operational Excellence – A Definition
A Business Strategy: In "The Discipline of Market Leaders“ (1995), Michael Treacy and
Fred Wiersema describe three distinct value propositions or disciplines: Product
Leadership, Customer Intimacy and Operational Excellence.
Market leaders choose to excel in delivering extraordinary levels of one of these three
value propositions, while maintaining reasonable standards in the other disciplines.
Market leaders will not pursue a diffused business strategy across two
or even all three disciplines, but will continually focus on their
organizational design, processes, technology and competencies to
improve the one particular value discipline that they want to provide to
their Customers better than anyone else.
Organizations pursuing an Operational Excellence strategy, strive to
deliver a combination of quality, price, and ease of purchase and
service that no other organization in their market or industry can
match.
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What is Operational Excellence?
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What is Operational Excellence?
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Operational Excellence – Strategy Planning and Deployment
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Operational Excellence – Strategy Planning and Deployment
Lack of a proper strategy is a serious problem that can result in ad hoc improvements that don't
contribute to the organization’s overall needs.
Non-Strategy #1: ‘The Wall Placard Strategy’
Some organizations will go to great lengths to create great Vision and Mission statements, but then
their planning stops there.
Non-Strategy #2: ‘The Stratospheric Strategy’
These strategies start in the clouds and they never come down, making them extremely difficult to
make actionable. The result will usually be some nice slick-looking verbiage for the organization’s
website and annual reports.
Non-Strategy #3: ‘The KPI Strategy’
When asked to present their strategies, some organizations excitedly pull out a beautiful PowerPoint
slide that states their goals in terms of a metric. Examples are ‘double revenue in three years’ or
‘achieve 20% margin by 2013’. This is not a strategy.
Non-Strategy #4: ‘The Govern-less Strategy’
Some strategies are actually quite well constructed, but they miss one crucial element: a governance
process. A strategy is worthless unless it has a clear process on who will lead the reviews, what
specifically will be covered and what the frequency will be.
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Operational Excellence – Strategy Planning and Deployment
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Operational Excellence – Strategy Planning and Deployment
Once you have completed the strategic grid, go back and make sure everything fits with your overall strategy. A set
of strategic grids should provide the strategic model for running the business, outlining the specifics of the
strategy. All stakeholders should be able to look at the grids and follow the flow of the organization’s strategy.
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Operational Excellence – Strategy Planning and Deployment
strategic objectives, Rev: 1.0 Revised: ___ / ___ / ______ Author: ___________________ Status: Draft - Not Released
strategic initiatives,
key performance indicators,
Resource Planning
● Primary Relationship
○ Secondary Relationship
The Hoshin X-Matrix enables an organization to easily review the alignment of its
strategic objectives, strategic initiatives, key performance indicators, key action items
and human resources.
The Hoshin X-Matrix, if used properly, improves the likelihood of a successful
execution of the strategic plan.
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Operational Excellence – Strategy Planning and Deployment
Organization’s
Strategic Initiatives Organization’s Human
Organization’s Resource Allocation
Annual Strategic & Tactics
Goals & Objectives
Organization’s Key
Organization’s 3- Performance Indicator
5 Year Breakthrough (Balanced Scorecard)
Goals & Objectives
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Operational Excellence – Strategy Planning and Deployment
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Operational Excellence – Strategy Planning and Deployment
Strategic Initiatives
Catchball
Strategic Objectives
Catchball
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Strategy Planning & Deployment Training Module
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What is Operational Excellence?
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Operational Excellence – Performance Management
“Balanced Scorecards tell you the knowledge, skills and systems that
your employees will need (learning and growth) to innovate and build
the right strategic capabilities and efficiencies (internal processes) that
deliver specific value to the market (customer) which will eventually lead
to higher shareholder value (financial).”
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“Tell me how you will measure me, and then I will tell you
how I will behave. If you measure me in an illogical way, don’t
complain about illogical behavior.”
Eli Goldratt – “The Goal”
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Operational Excellence – Performance Management
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Operational Excellence – Performance Management Process
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Operational Excellence – Performance Management
FINANCIALS
How do you want to look to your shareholders? -
Indicators focus on whether your strategic and
operational plan contributes to your top-line,
bottom-line and/or market share.
Objectives Indicators Targets Projects
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Operational Excellence – Performance Management
For each objective on your strategic grids, you need at least one performance indicator. Can you have
an objective without a performance indicator? Yes, it is possible, but not having a measurement
makes it difficult to manage the objective. It’s best to revisit this objective and ask the question: Why
is this an objective?
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Operational Excellence – Performance Management
OPERATIONAL EXCELLENCE BALANCED S CORECARD
KPI 4 KP I
Na me
(Unit)
KPI Firs t Name
5 Champio n
10
Las t Name
S TRETCH 7
9
8
7 GOAL
6
5
8
4
3 BAS E
2
1
0 ZERO
6 WEIGHT
2010 RESULTS
0
TOTAL S CORE
JANUARY
FEBRUARY
MARCH
APRIL
12
MAY
JUNE For9each strategic objective on your strategic grid, you need at
JULY
AUGUS T least one performance indicator. Can you have an objective
S EPTEMBER
OCTOBER without a performance indicator? Yes, it is possible, but not
NOVEMBER
DECEMBER
having a measurement makes it difficult to manage the
CURRENT S CORE objective.
3 7 10this2 objective 3 and ask 5the
It’s4 best to revisit 6
TOTAL
9
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Operational Excellence – Performance Management
Customer
M4 M3 M4 M3
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Operational Excellence – Performance Management
Organization’s
Customer Satisfaction measured through
the Net Promoter Score
Customer Service
Customer Satisfaction
measured through First Call
Resolution
Purchasing
Sales & Marketing Performance measured
Performance measured through Material
through 90-Days Replenishment Lead Time
Forecast Accuracy
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Balanced Scorecard Deployment Training Module
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What is Operational Excellence?
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Operational Excellence – Process Excellence
BPI 7 A3 or 8D
5. Pursuit
Perfection
1. Define
4. Establish
Pull
Lean Value
Principles
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Operational Excellence – Process Excellence
Sub-Process #1
Input
A1 B1 B2 C1
Sub-Process #2
A2 A3 B3 B4 C2
Sub-Process #3 Output
C3 B6 B5 A4
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Operational Excellence – Process Excellence
1 Background
2 Current Conditions
5 Countermeasures
6 Implementation
7 Follow Up
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Operational Excellence – Process Excellence
Project Management
D M A I C
Process
Excellence
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Operational Excellence – Process Excellence
Process Input:
Strategic and Annual Operating Plan Process Output:
(Objectives, Goals, Initiatives) Exceeding the Plan
Develop and
Select the Select and Manage for
Implement Sustain the
Right Train the Excellence in
Improvement Execution
Gains
Projects Right People Plans
•• Clarify
Clarify big
big picture
picture •• Ensure
Ensure the
the right
right •• Utilize
Utilize the
the right
right •• Stay
Stay focused
focused •• Implement
Implement effective
effective
using
using strategic &&
strategic leadership
leadership andand improvement
improvement •• Frequently
Frequently review
review control plans
control plans
operating
operating plan
plan ownership
ownership methodology
methodology for for progress
progress and remove
and remove •• Conduct
Conduct regular
regular
•• Prioritize
Prioritize projects
projects •• Select
Select the
the right
right team
team the right project
the right project barriers
barriers training
training focused on
focused on the
the
based
based on on impact,
impact, leader
leader && team
team •• Check
Check real
real business
business process
process
value, resources,
value, resources, •• Develop
Develop aa training
training impact
impact •• Review
Review thethe system
system
timing
timing plan
plan •• Continuously effectiveness
effectiveness at at least
least
Continuously
•• Select
Select key
key projects
projects •• Dedicate
Dedicate time
time for
for communicate
communicate quarterly
quarterly
with
with leadership
leadership buy-in
buy-in training &
training & progress
progress •• Continually
Continually identify
identify and
and
•• Check
Check accountability
accountability -- application
application •• Link launch
launch new
new projects
projects
Link to
to performance
performance
business
business andand personal
personal •• Ensure
Ensure the
the right
right management
management and and based
based onon strategic
strategic &&
support
support resources
resources R&R
R&R operating
operating plan
plan
are
are available
available
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Operational Excellence – Process Excellence
CUSTOMERS
LEARNING &
PROCESSES
FINANCIALS
GROWTH
Balanced Scorecard Project Selection Matrix
DURATION OF PROJECT
CAPITAL RESOURCES
PEOPLE RESOURCES
PROJECT STATUS
MANAGEMENT RISK
TECHNICAL RISK
TOTAL EFFORT
TOTAL IMPACT
TOTAL RISK
KPI #1
KPI #2
KPI #3
KPI #4
KPI #5
KPI #6
KPI #7
KPI #8
Weights 20 10 15 10 5 20 10 10 100 50 30 20 100 70 30 100
Project Definition CORRELATION MATRIX
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Operational Excellence – Process Excellence
10
6 3
IMPACT
3
1
2
4 5
1
2
0
0 1 2 3 4 5 6 7 8 9 10
EFFORT
Size of the Ball = Size of the Risk
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Operational Excellence – Process Excellence
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Process Excellence Training Modules
To learn more about the different Process Excellence Methodologies, please review our Lean
Management, Six Sigma Methodology, Business Process Improvement, and 8D Problem
Solving Process Training Modules.
The COMPLETE LEAN MANAGEMENT Training Module Library includes the latest
version of all seven currently publicly available Lean Management training modules with over
900 PowerPoint slides and many additional templates, worksheets, and forms to support your
organization's Lean Management initiative.
The COMPLETE SIX SIGMA METHODOLOGY Training Module Library includes the
latest version of all six currently publicly available Six Sigma training modules with over 700
PowerPoint slides and many additional templates, worksheets, and forms to support your
organization's Six Sigma initiative.
The Business Process Improvement (BPI 7) Methodology Training Module includes a MS
PowerPoint Presentation, as well as additional worksheets and templates, covering our Business
Process Improvement Methodology (BPI 7).
The 8D (Disciplines) Problem Solving Process Training Module includes a MS PowerPoint
Presentation covering the Global 8D Problem Solving Process & Tools, a Case Study, and 7
Workshop Exercises.
The A3 Problem Solving Process Training Module includes a MS PowerPoint Presentation
covering the A3 Problem Solving Process & Tools, a Case Study, and 7 Workshop Exercises.
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What is Operational Excellence?
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“The rate at which organizations learn may soon become
the only sustainable source of competitive advantage.”
Peter Senge
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Operational Excellence – High Performance Work Teams
E * E * E
= = =
Engage Educate Empower
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Operational Excellence – High Performance Work Teams
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Operational Excellence – High Performance Work Teams
Operational Excellence can and can only be achieved and sustained with the right
attitude, the right mindset, and the right competencies.
Empowerment = 0,
if Authority or Resources or Information or Accountability = 0
The Empowerment
Continuum
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Operational Excellence – High Performance Work Teams
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Operational Excellence – High Performance Work Teams
WORTHWHILE WORK
1. Knowing we make the world a better place.
2. Everyone works toward a shared goal.
3. Values guide plans, decisions, and actions.
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Operational Excellence – High Performance Work Teams
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Operational Excellence – High Performance Work Teams
CHEERING OTHERS ON
1. Active or passive, congratulations must be TRUE.
2. No score, no game, and cheer the progress.
3. E = m · c2 – Enthusiasm equals mission times cash and
congratulations.
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Operational Excellence – High Performance Work Teams
Coach
Living Barrier
Example Buster
Leader ≠ Manager
Result Business
Catalyst Analyzer
Facilitator
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What is Operational Excellence?
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About Operational Excellence Consulting LLC
Email: info@oec-us.com
Phone: +1 (888) 372 – 8705
Website: www.oec-us.com
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