Every business faces different challenges, but achieving operational excellence can help drive a cycle of continuous improvement and adaptability.
Every business faces a unique set of challenges and opportunities. Approaching these from the individual viewpoint of the organisation is essential for executing a consistent and reliable operational strategy that helps solidify the business’s place in the competition. This is the goal of operational excellence.
What is operational excellence?
Operational excellence is a mindset that incorporates the tools and principles needed for an organisation to create a business-wide culture of excellence and deliver maximum value to its customers. The concept was first formalised in the United States in response to a crisis among large traditional companies that were losing market share due to an increasing volume of high-quality products being imported from Japan in the 1980s.
In the context of today’s increasingly technology-driven market, operational excellence largely revolves around the adoption of carefully chosen digital solutions and customised workflows built around them. At the core of this is an integrated approach to business management that gives everyone in the organisation a comprehensive view of the flow of value to the customer. This gives employees the opportunity to continuously optimise that value stream and fix issues before they become a problem to the detriment of customers.
The role of change management
The principle of operational excellence was first introduced with a view to modernising legacy business processes to accommodate the evolving global market of the 1980s. Today however, change is far more rapid and unpredictable that it ever has been. This is largely driven by the constantly evolving technology landscape and the changing customer expectations that come with it.
However, other factors, such as globalisation and the risk of global trade wars it brings can also cause enormous disruption, as we have seen from the coronavirus pandemic or the sanctions introduced against Russia in response to its invasion of Ukraine. Such challenges have a particularly worrisome habit of taking entire industries by surprise, further making clear the need to adopt a more resilient approach.
Business resilience, much like operational excellence, can only be achieved when businesses are able to adapt quickly to changing market conditions. This is arguably the biggest challenge that today’s businesses face, especially in the case of large enterprises managing dizzyingly complex global supply chains. These factors combined are the driving force behind the ever-growing need for operational excellence. Thus, building a business-wide culture of operational excellence begins with change management.
Depending on how they are chosen and implemented, digital solutions can either be a help or a hindrance in achieving operational excellence. On one hand, outdated legacy systems, such as in-house servers and software, are costly to maintain and lack the scalability and flexibility needed to adapt at sufficient speed to changing environments. On the other hand, a scalable and integrated approach that leverages software-defined models like cloud computing and software-as-a-service (SaaS) facilitates change management and, in turn, powers operational excellence.
To give an example from recent times, consider how businesses handled the pandemic, with varying degrees of success or failure. Faced with a sudden slew of work-from-home mandates and myriad other disruptions, millions of organisations around the world suddenly had to make radical changes to their operations overnight. Many established enterprises, particularly those with more conservative outlooks, found themselves having to make changes not only to their technology environments, but also to their entire business ethos.
Businesses that successfully weathered the storm were agile and technology-driven. In these businesses, workers already relied primarily on cloud-hosted resources, such as web-based software and virtual desktops, which could be accessed from any device with an internet connection. As such, knowledge workers could move almost immediately to the home-office environment and continue to perform their roles as normal.
Other businesses were not so lucky. For example, those which relied on desktop software and other in-house resources were unable to simply take their own computers and work from home without entirely changing their operational and technology infrastructure. Instead, critical apps and data were stuck on office machines and inaccessible from anywhere else. In these cases, businesses had to implement major changes very quickly, often at the cost of reduced security and efficiency.
Adapting to change with a software-defined business
Cloud-hosted software offers practically limitless scalability. Instead of installing applications on dedicated workstations or in-house servers, one only needs to open a new user account to allow an employee or team to access all the tools and data required for a given function. With a single, consolidated database where all mission-critical data resides in the cloud, employees can access their work from any connected device in any location.
No longer does business computing hardware need to be constantly updated or replaced, since employees can use their own devices to complete their work. Moreover, SaaS products are proactively maintained by their vendors, eliminating the need for software maintenance and patching. This ultimately allows businesses to scale their computing resources with demand, and that means they can adapt to change to achieve continuous operational excellence in practically any situation.
At the heart of this is an integrated business management system, which is hosted in the cloud and provides a single source of truth (SSoT) for the entire organisation. This breaks down the barriers between different departments and removes information siloes, since everyone has access to the same data. Moreover, an integrated approach fosters a culture of collaboration, which modern businesses depend on to deliver value to customers in a consistent and timely manner. This is important not least because the customer journey spans multiple touchpoints, and the overall experience that customers have when doing business with your company has by far the greatest influence on the bottom line.