The Importance of Operational Excellence
by Bill Seufert - Principal, Prism Hospitality Group, LLC
When you hear the words “operational excellence” what comes to your mind? Even if you are not familiar with this term, chances are you have assisted in the execution of or have been on the receiving end of operational excellence. Delivering operational excellence is crucial to the success any customer-centric business and is especially important in the hospitality services industry.
Operational Excellence can be defined as “A philosophy of the workplace where problem-solving, teamwork, and leadership results in the ongoing improvement in an organization. The process involves focusing on the customers' needs, keeping the employees positive and empowered, and continually improving the current activities in the workplace.”
While operational excellence and continuous improvement are not the same, they are closely related in concept and principle.
In order for operational excellence to truly be successful, every person, at every level of the organization must be consistently involved in the execution, because every role (should be) involved in doing something that brings value to the customer. As such, their role is part of the critical path to success.
Many consider Dr. Shiego Shingo to be the Father of operational excellence. Dr. Shingo wrote about ensuring quality at the source, flowing value and just in time inventory, long before Six Sigma became well known and popular.
Dr Shingo’s ten principles of operational excellence include:
Respect for Every Individual – when people feel respected, they are more likely to become emotionally invested in achieving the desired result.
Lead with Humility – Leaders must be willing to seek input, listen and learn.
Seek Perfection – while not realistically attainable, seeking perfection creates an environment for a culture of operational excellence. Individuals and team that seek perfection focus on long term solutions, rather than temporary fixes.
Embrace Scientific Thinking – this includes the testing of ideas with experimentation, observation and analysis (think of Lean Six Sigma as a process tool here).
Focus on Process - Even the smartest and most engaged employees cannot consistently produce high-quality results with poor processes.
Assure Quality at the Source - Excellence can only be attained when every element of work is performed correctly the first time. If there is a problem, it must be uncovered and fixed where and when it was created.
Flow & Pull Value - Maximizing value for customers means creating it in response to demand and maintaining an uninterrupted flow. When the flow is disrupted or when excess inventory occurs, waste is produced.
Think Systemically - Operationally excellent organizations understand that processes are intertwined and that the most significant problems often occur when work is moved from one process or team to another.
Create Consistency of Purpose – Strategic alignment within all levels of a business or organization is required to achieve operational excellence.
Create Value for the Customer – as business professionals, we know that customer value is defined mainly by what and how much the customer is willing to pay for a particular good or service.
A business method that works hand in hand with operational excellence is Lean Six Sigma. Although they are not the same thing, they do amplify each other when used correctly. Lean Six Sigma is different from the traditional Six Sigma; here’s a look at the differences and how together, Lean and Six Sigma complement one another.
Lean is different from Six Sigma because its main focus is efficiency. Lean is concerned with “inefficient activities within operational processes that are attributed to delays, errors, or waste”. Its main goal is to keep those three things to a minimum in order to maximize efficiency. Complementing Lean, Six Sigma emphasizes the quality and consistency of a company’s products and services.
When Lean and Six Sigma are combined, Lean Six Sigma is the result. Lean Six Sigma serves as a hybrid of the two methods. In the end, it “combines the best of Six Sigma (quality and consistency) with the best of Lean (efficiency) to help organizations deliver maximum customer value through efficient operations and high-quality standards.” Using the Lean Six Sigma approach can ultimately result in the production of higher quality products and services and thus contributes to a higher level of operational excellence.
Operational excellence is a key ingredient in the long-term success of any organization, and in the world of hospitality, it is of utmost importance. Significant components of operational excellence are providing top-notch service to customers and listening to their feedback. Another component is empowering employees. Creating a positive environment focused on teamwork makes everyone feel included. Building up a team of individuals who work well together not only maximizes productivity but increases output.
Operational excellence might look a little different depending on the type of business establishing and implementing it, and ultimately it is a vital tool, as operational excellence contributes to the success of businesses both far and wide. Providing excellent products and services, empowering employees, listening to your guests and continuous improvement will not go unnoticed by your customers. So, what does operational excellence mean to you?