Wednesday, May 11, 2011

The 4 top reasons that Operational Excellence programs fail

#4) The CEO and executive staff thinks that the road to Operational Excellence involves a “silver bullet” tool or concept.  
  Organizations with a silver bullet mentality often get very excited when an improvement programs start but lose interest quickly because they have not taken a comprehensive approach to operational excellence.  They think that one or two process improvement tools (i.e. Lean) are they key to success instead of realizing that they must develop a comprehensive Strategy Deployment process that utilizes many OE tools in order to become a top performing organization.

#3) The Operational Excellence Department does not have a seat at the “strategy table”, does not have adequate resources, and does not have support from other critical departments such as Finance and HR. 
The OE department needs to work closely with the CEO and executive staff to integrate operational excellence thinking into everyday tasks; this involves making sure that projects flow from the strategy and are not just “one-off” cost reduction exercises.  It also means that other departments support the OE implementation. Ffor example, HR must ensure that the performance evaluation process creates the proper alignment and incentives that encourage OE behaviors.

#2) The organization has a “strategy” but it lacks strategic focus and there is no structure and strategy deployment methodology in place to ensure execution.
Many organizations have strategies that are nothing more than “wish lists”. There are too many initiatives, they are poorly resourced, and there is little buy-in from the organization.   Because most initiatives do not have firm metrics and are not tightly aligned with driving actions there is poor strategy execution and little accountability. The organization needs to understand and deploy a strategy deployment methodology (ie Hoshin Kanri).

#1) The CEO and Board of Directors are involved with the Process Improvement effort but are not committed to success of the effort. 
“Committed” means that executives must spend a substantial amount of time and effort on promoting the Operational Excellence Program and supporting the efforts behind building an operational excellence culture. There efforts must go well beyond maintenance of the program and instead constantly work to expand the program so that it is embedded in the organizational culture.  CEO’s who are committed realize that their direct staff and all other employees don’t listen to what they say but rather, watch what they do.

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