We compiled all the information that is typically hosted in one of our playbooks, Implementing Operational Excellence, and broke it down into a practical, beautiful, and cohesive guide.
You'll learn about the fundamental barriers to implementing Operational Excellence, about our playbooks, and take a deep dive into the four workflows involved in implementing OpEx.
There’s certainly no shortage of content – books, websites, training videos, etc. – on operational excellence (OpEx) and related terms (e.g., enterprise excellence, Lean, continuous improvement, etc.). A simple amazon book search on the topic turns up hundreds of titles, including Operational Excellence: Journey to Creating Sustainable Value, Redefining Operational Excellence: New Strategies for Maximizing Performance and Profits Across the Organization, and Driving Operational Excellence: Successful Lean Six Sigma Secrets to Improve the Bottom Line.
What hopefully is apparent to anyone who takes the time to study operational excellence is that the critical principles, methods, and tools so often discussed in this ever-growing body of knowledge are exceedingly powerful but not exceedingly hard to understand. Take the concept of waste, or muda, as one example. The textbook definition from the Womack and Jones book Lean Thinking is, “any human activity which absorbs resources but creates no value (as defined by the customer).” This concept is not hard to internalize, particularly once you apply it to a practical circumstance in your business. However, the business impact from re-examining your value streams with fresh eyes in order to see waste that you hadn’t previously noticed can be astounding. I could make a similar point for methods and tools such as 5S, structured problem solving, visual management, and leader standard work…all are powerful when properly applied and none are beyond our capability to understand and internalize.
So if the path to understanding OpEx concepts, methods and tools is relatively straightforward, why is it that so many organizations struggle to make significant and sustainable progress in their operational excellence efforts? The answer is that there are two fundamental barriers to OpEx have little to do with one’s subject matter expertise.
Simply put, any time an organization is seeking to change attitudes, mindsets, behaviors, and work practices across a large segment of the workforce, a thoughtful, deliberate, aligned approach is required. Otherwise, the business will experience significant headwinds in the form of change resistance, conflicting priorities, and mis-matched definitions of success.
Unfortunately, all too often the organization gets excited to start applying OpEx in the business that it starts down the path without having answered certain fundamental questions, such as:
In our ebook titled, "How to Advance Operational Excellence in Your Business," we provide practical, specific guidance on how to strategically manage the introduction of OpEx in your organization. Additionally, we address some of the challenges and key considerations with OpEx management in our webinar recording titled "Understanding Strategic OpEx Management."
Many organizations get “tripped up” in their OpEx journey because they struggle to translate the critical concepts and tools into a practical and logical sequence of activities that actually move the business forward. Our view is that, despite an ever-growing library of resources on the subject, there is a fundamental dearth of resources that actually help the workforce to implement OpEx in a meaningful way.
Here’s an analogy to illustrate this point. Pretend that you go to a “ready to assemble” furniture store, such as Ikea, and pick out a new dresser. You bring the box home, open it up, and immediately start looking for the step-by-step instruction manual to help you build the dresser. Instead, what you find in the box is a book that tells you the origins of the “build it yourself” furniture business, the benefits of buying pre-assembled furniture (e.g., more cost effective, can transport it home yourself, etc.), and a couple of case studies about how other people just like you built their own dresser. However, nowhere do you find the actual instructions for how to build your dresser. So you’re now left to piece together the dresser using only the picture on the box to guide you. We’d venture to say that you’d be extremely disappointed in your experience if that were the case.
The point of the above analogy is not to make a direct comparison between building a dresser and implementing OpEx. However, it is certainly possible (we know because our clients are doing it) to dramatically close the gap between theory and practice through a robust combination of instructional guidance, assessment criteria, and implementation tools & templates on the key methods and best practices that you want to put in place. In fact, we have a name for this new, application focused, content model…it’s called a Playbook.
Playbooks are fully developed models that OpEx leaders and teams use to better manage their work and deliver important concepts, methods, and tools to the rest of the organization. Each playbook consists of a series of implementation toolkits that serve as a "one-stop shop" for a particular topic.
Each toolkit contains (a) simple self-assessment questions, (b) easy-to-read and highly practical descriptions, and (c) tools, templates, training, and other great resources related to the topic. Playbooks and toolkits are used to provide the business with much needed practical guidance for how to implement critical OpEx concepts, methods, and tools while working side-by-side with the OpEx team.
We’ve developed numerous playbooks on Operational Excellence, some of which are based upon industry standard models and others we developed through our own experience and access to subject matter experts. One such playbook is called “Implementing Operational Excellence” and, as the name implies, is focused on the practical application of fundamental OpEx methods and tools. As shown in Figure 1 below, there are 4 workflows displayed in the model:
For each of these workflows, there are multiple implementation toolkits, each of which is briefly summarized below. Where appropriate, we have linked to other resources that you may find useful.
The Leadership workflow contains the toolkits that relate directly to leadership’s role in driving operational excellence within the business, value stream, location, or function that they lead whether by setting expectations, managing change, or role modeling the right behaviors.
In order to best define the improvement agenda for the operation, there are two questions that need to be answered:
This implementation toolkit is primarily focused on understanding and articulating what is required for the operation to be successful. Put another way, the operation needs to understand the broader business context. Is the business in a growth phase thereby requiring the operation to increase product or service capacity? Or is the business in a cost management phase? Is the business diversifying its product or service portfolio thereby requiring the operation to produce a wider range of products or services?
The process of understanding and interpreting the broader organizational context and translating it into a concrete set of “to dos” is called strategy setting. The strategy should contain descriptions of specific policies that need to be instituted and/or initiatives that need to take place. These policies or initiatives are typically linked from “parent to child” within the organization, given a defined timeline (i.e., a date by which they should be completed), and connected one or more key performance indicators (KPIs).
Additional strategy setting resources:
Product or service quality is fundamental to maintaining and growing a business. To ensure that outcomes are consistently delivered to customer requirements, leadership must instil a commitment to the customer throughout the operation (i.e., quality that is maintained every day).
To achieve this goal, it’s critical to establish rituals and managing process that ensure that employees understand customer requirements and the cost (both tangible and intangible) of poor quality to the business.
There’s a famous quote by Sam Walton, the founder of Wal-Mart, in which he says, “There is only one boss, the customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”
With that in mind, operating teams look to their leaders for guidance, direction and priority. Management commitment is critical…leaders must establish a customer-focused mindset, and their actions must represent a true commitment to delivering consistent quality.
The day-to-day decisions and actions by leadership are what drives a customer-focused culture. For example, in manufacturing when leadership makes a “hard call” by downgrading expensive product that is of suspect or poor quality, it sends the message that quality really matters and in the end, we protect our customers. Or in healthcare, when a patient or patient’s family is raising a concern, how leaders respond to that concern in the moment signals to everybody else how to respond in the future.
Another way to “walk the talk” is to establish and visually track internal service quality metrics, such as:
By expanding the concept of quality beyond the finished product, leadership is reinforcing the belief that quality is important in all aspects of the operation.
In virtually all process-focused operating environments discipline and precision in executing standard business processes is critical. However, maintaining disciplined and precise work habits is much easier said than done because the conditions within and around the operating teams are constantly changing. Examples include:
Long story made short, variability is the enemy of good process and good performance. The focus of this implementation toolkit is on an often overlooked cause of variability; namely, the variability caused by inconsistent and reactive leadership behaviors.
Leader Standard Work (LSW) refers to the core set of activities performed by facility leaders across all levels (e.g., First-Line Supervisor, Department Manager, Facility Leader) on a repeatable schedule (e.g., shift-by-shift, daily, weekly, monthly, etc.) to ensure discipline and precision within the operation and make the work teams successful.
LSW is a layered, bottom-up process in which the standard tasks and routines at any level of leadership are determined by the core work requirements for employees working one level below. For example, standard work for a First Line Supervisor may be to conduct a start of day/shift meeting with the work team to review current status, communicate assignments, and clarify priorities. Any issues that the Supervisor surfaces during that meeting or throughout the day/shift that require department level input may get escalated to the Department Manager, who then reviews those issues with the department team as part of his/her LSW.
Additional leader standard work resources:
Performance management is a term that refers to the set of activities required to ensure that the operation achieves its short-term and long-term goals and objectives in delivering the results required to support the enterprise. Performance management is generally addressed at the following levels:
The primary focus for this implementation toolkit is on operation, department, and team performance management. Specifically, there are two critical aspects to performance management in the context of the operation, departments, and teams:
The process for setting the right objectives, KPIs, and targets at all levels of the organization is sometimes referred to as the “KPI Cascade” or the “KPI Flow Down” process. The reason for these terms is that the process should cascade (like a waterfall) from the enterprise to each operation to the departments and, finally, to the teams. When done properly, there should be complete alignment of objectives, KPIs, and targets at all levels of the organization.
Once the operation has aligned objectives, KPIs, and targets at all levels of the organization, the focus shifts toward putting the right managing processes in place to review performance and take action where performance is sub-optimal. The nature of these processes will vary by level.
Additional resources for KPIs & targets:
The statistics regarding change management are staggering. For example, according to research cited in the Harvard Business Review, about 70% of all change initiatives fail to achieve their desired results. And while there are many reasons that change initiatives fail, a critical one is the inability to engage those impacted by the change effort.
In other words, organizations are made up of groups of people, many of whom, all things being equal, do not want to change. The best run organizations invest time in making the case for change to their employees and helping them along the journey.
Organizational change management (OCM) refers to the process organizations follow to ensure that any significant change event, such as a major policy change, new software implementation, work reorganization, or the adoption of new workplace behaviors, is successful.
A typical change management process requires the organization to do the following:
Additional organizational change management resources:
It has been said that the farther removed a leader becomes from the place where the work gets done, the less effective he/she will be in supporting those who do the work. And while that statement may be largely accurate, it’s also true that all operational leaders, but particularly department leaders and above, are pulled in many different directions during a given day, week, or month and may not feel that they have time to spend out in the operation where the products are made or the services rendered.
Additionally, some leaders, particularly those that didn’t start out working in operational roles, may not know how to productively spend time in the operation. Where should they go? What should they observe? Who should they talk to?
A “Gemba” Walk, also referred to as a Line Walk, is a structured approach to getting leaders out of their offices and into the places where the critical work of the healthcare facility takes place to engage with the operation in a meaningful way and to look for signs of waste and inefficiency or other opportunities to improve. “Gemba” is a Japanese term that means “the real place”, “the actual place”, or “the place where value is created.”
Perhaps the best way to understand Gemba walks is to clarify what they are not. A Gemba walk is not a random, unplanned visit to “check up” on the workforce or catch employees being unproductive. It is also not the equivalent of a department meeting whereby leadership pull staff together to deliver a series of messages. Instead, a Gemba walk is a pre-planned and structured visit to a particular area or areas to better understand some aspect of the operation, dialogue with staff, and/or learn something that the leader can take back to his/her job. Along the way, the leader should be role modeling the behaviors that he/she expects from the broader workforce by identifying potential patient or employee safety hazards and other signs of waste or inefficiency to be addressed (e.g., disorganized work area, inefficient business processes, etc.).
The most effective Gemba walks are planned in advance and entered into with a particular objective in mind (e.g., teach something, learn something, role model a behavior, build a relationship, etc.). Contrary to popular opinion, the workforce will come to appreciate the presence of leadership in their place of work because it sends the signal that leaders want to understand the challenges they face every day and opens up opportunities for a constructive dialogue.
Additional resources on gemba walks:
This workflow contains a collection of implementation toolkits that, when taken together, will help to make the operation more stable and predictable by eliminating the variability in how work is performed and facilitating communication horizontally (i.e., across roles and functions) and vertically
Webster’s dictionary defines culture as “the set of shared attitudes, values, goals, and practices that characterizes an institution or organization.” In other words, every organization has a culture because every organization consists of groups of people who share similar attitudes, values, goals, and work practices. The question that this implementation toolkit seeks to answer is “what should be the culture of this operation as it relates to workplace safety?” To answer that question, it’s necessary to consider each of the inputs to culture described in the definition above; attitudes, values, goals, and work practices.
A key factor in establishing a safety culture is to keep workplace safety “top of mind” to employees every day. Many organizations accomplish this task by embedding safety-focused discussions into the established rituals and routines of the operation or by creating new rituals and routines around safety. Examples include:
It’s important to consider how to talk about safety consistently without losing the attention of employees. Think of creative ways to teach or reinforce a safe work practice, such as using pictures, short videos, or an interactive exercise. Also, real life examples tend to grab people’s attention, so be aware of safety incidents that occur outside the facility that you can highlight as examples of what can happen if safety is not the number one priority.
In the world of operations management, the purpose of the daily performance review is to examine the operation’s performance over the past 24 hours with an eye toward understanding and addressing the root causes of sub-optimal performance. If executed well, the daily performance review provides managers and specialists with all of the information they need to expertly support the shift-based operating teams who are charged with transforming the product. Similar to the shift starter, the daily performance review should answer three key questions:
Each participant should leave the meeting with a clear understanding as to the status of the operation as well as the decisions they need to make or the work they need to do that day to support the operating teams in keeping the operation running to its full potential.
In the period of time between downs in football, the offensive unit will gather in a circle often referred to as “the huddle.” The purpose for the huddle is to align the players on what needs to happen for the next offensive play to be successful. Questions answered in the huddle include:
Moving away from sports, so-called daily “huddles” are often used by software development teams to bring together developers, software testers, and project managers to review their performance and coordinate work. They’re also used at shift change in many manufacturing facilities and at the start of the work day in some retail establishments, such as the Home Depot. These huddles are an effective ritual for organizing the efforts of any team that works in close proximity and needs to review performance, plan the day’s activities, and communicate shared information.
Like a football huddle, the shift starter exists to align the shift teams in the operation on what needs to happen during the shift to make it successful.
Additional resources on shift starters:
The Project Execution workflow addresses how the organization should go about identifying, prioritization, selecting, and managing improvement projects.
Good data is an essential tool for good management. It provides the information needed to judge performance and make decisions. In the so-called “information age,” there is rarely a shortage of data but many operations struggle mightily to convert all of that data into useful, actionable information. This phenomenon often occurs because data gathering is put in place without a well thought-out plan for how the data will be consumed and for what purpose.
This implementation standard provides guidance on how to organize data in a manner that makes it easy to translate into information. There are two ways to think about how to use data to aid in decision making:
There is an important relationship between reporting and analytics. Reporting exists to identify performance problems or process constraints (i.e., what’s the problem?). Analytics serve as a form of decision support (i.e., why is the problem occurring and what can be done to solve it?). The foundational element to both reporting and analytics is high quality, well-organized data.
Simply stated, an improvement project is a discrete set of related activities involving the combined efforts of multiple people (i.e., a project team) in order to solve a problem or improve performance. Improvement projects should operate on a time scale and achieve measurable outcomes. They should be well-planned and follow a proven method.
Project execution should be considered from two perspectives:
This implementation toolkit is primarily concerned with project portfolio management with a particular focus on project prioritization, which can be a challenge because projects come seemingly in all shapes and sizes. They may exist to simplify a business process, install new equipment, or make use of new software & technology. They may reside within one department or require a coordinated effort across multiple departments. That’s why it’s critical to have a process for properly selecting the right projects to support.
For many operations with lots of improvement opportunities, the challenge is selecting and prioritizing the right projects at the right time. With limited resources (both people and financial), it is important to select the projects that will have the most positive impact on the organization, which is easier said than done because improvements that drive short term results may come at the expense of the long-term requirements and vice versa. Converting improvement opportunities into projects requires careful consideration of project resources, cost, and complexity.
In order to best define the improvement agenda for the operation, there are two questions that need to be answered:
This implementation toolkit is primarily focused on addressing question number two. The “gap to perfect” refers to the process for identifying performance improvement opportunities in the operation. The process involves clearly defining a “perfect” or “world class operation; namely, one that operates at peak efficiency and produces ideal outcomes (e.g., product/service quality, customer/patient satisfaction, etc.).
Once “perfect” has been quantified, then the next step is to understand the current state of the operation for the purposes of identifying the so-called gap to perfect. This gap to perfect represents the total potential improvement opportunity for the operation.
A key challenge with any gap to perfect analysis is to draw an “apples to apples” comparison across multiple performance categories. The best way to accomplish this task is to translate the performance opportunity into a financial opportunity. Once the opportunity across all categories is translated to a financial value, it’s relatively easy to make smart decisions about where and how to invest for improvement.
Additional resources on the gap to perfect:
According to the Project Management Institute (PMI), project management is, “the application of knowledge, skills and techniques to execute projects effectively and efficiently.” Within the context of healthcare, project management is the sum-total of all activities to execute a project as intended on time and within budget. To execute any improvement project correctly, it’s important to closely manage the following elements:
Once the project is underway, the project lead holds periodic, routine reviews of progress with the project team and department or facility leadership. If the project is not meeting objectives, the project team determines the appropriate actions to take to get it back on track.
Additional project management resources:
The Lean Basics workflow is concerned with the application of select Lean methods and tools that, if properly understood and applied, will help to eliminate waste and improve performance in any process.
There’s an old axiom that states, “What gets measured gets managed.” However the reality is that, in many operations, there are lots of measures in place yet the organization still struggles to get the entire workforce aligned on what matters most to the business. Visual management is a method to help create that alignment in two ways:
Simply put, transparency drives accountability. In other words, when employees (a) understand what is most important to the organization and (b) realize that their team’s performance is made visible for all to see, then they are more likely to take ownership for that performance in an effort to get the best results. We see this truism in effect all the time in the sports world. Professional athletes invariably try harder in games where the final score matters (e.g., playoff game) than they do in games where the final score is an afterthought (e.g., exhibition game).
In addition, there is significant value in going through the process of truly examining the performance profile for the operation to determine which performance characteristics either (a) keep the operation from going out of business entirely, we call these market qualifiers, or (b) help the operation to add increase the number of patients it serves, we call these market winners.
Additional visual management resources:
OpEx 101: One Visual Management Icon is Worth a Thousand Texts
A well-organized work environment is foundational to LEAN. For the work environment to be considered organized, everything has to have a place and everything must be kept in its place, including tools, supplies, equipment, and documentation (whether physical or virtual). It relies on engaged employees who commit themselves to maintaining an appropriate standard of organization and a disciplined, documented process for auditing compliance and correcting any variances.
A common method for organizing the work environment is called “5S.” 5S is based on 5 Japanese words that begin with the letter “S.” Those words are often translated to English as follows:
5S can and should be applied to both the physical environment and the virtual environment (e.g., shared file storage locations, intranet sites, etc.).
Additional organized work environment resources:
What’s All the Fuss About with 5S?
Structured problem solving refers to the application of a process to get to the root cause of a performance problem or process bottleneck. Structured problem solving can be applied in a host of situations in a healthcare operation. There are a variety of structured problem solving methods that can be employed to good effect, including:
The focus for this implementation toolkit is on two of the simpler, more common problem solving methods, 5 Whys and Fishbone Analysis. 5 Whys is so named because the method is designed to drive staff to think through a problem and avoid leaping to conclusions. The concept is to first define the problem in clear terms and then to ask the question “why” about that problem as many times as is required (i.e., it does not have to be 5 times exactly) in order to get to an actionable root cause. This method is typically applied when the problem is believed to be relatively “straightforward” so to speak and those involved believe that it can be traced to a limited set of potential causes.
The Fishbone Diagram, on the other hand, is a problem solving method that seeks to pull out a broader list of potential root causes for a particular problem. This method works well if the problem is likely to have multiple, interrelated root causes.
Everything you’ve read here is a broken out version of one of the “playbooks” that lives in our EON platform. Each playbook consists of a series of implementation toolkits that serve as a one stop shop for a particular OpEx related topic. Each toolkit contains (a) simple self-assessment questions, (b) easy-to-read and highly practical descriptions, and (c) tools, templates, training, and other great resources related to the topic. It’s a strong visualization tool and a great way to assess your business against industry standards, collect the resources related to each assessment, and have it live in one place for your organization to access it.
To see this playbook in action, click here to set up a time for us to walk you through it and give you access to click around on your own.