The best performing businesses are all clear how they create value for their customers and build their business system accordingly. Put simply, you do not have the investment or capacity to be brilliant at everything.
Once you have decided that flawless delivery performance (often seen as Operational Excellence) is a strategic aim, you need to be clear on the capabilities that will support your strategy, and to excel in these. Often these include capabilities such as Sales and Operational Planning, Production control and Problem Solving. For each you need to ensure that you have great process, and great people discharging these capabilities and that they have a loud enough voice to drive your business decision making. Every company would want to be brilliant at Operational Excellence, Product Leadership and Customer Intimacy – the reality is you have to make strategic choices about where you will place your focus.
The Importance of Structure
It is incorrect to assume that Organisation Design is only about structure and reporting lines, however it is critically important to get the leadership roles right. For example, if your business has a complex value stream and relies on each element being integrated to deliver an ever-changing outcome, sales and operational planning needs to be at the top table with sufficient influence. A simple structural decision can have dramatic consequences through the organisation.
Take the example of McDonalds, whose focus is to provide a fast food experience for more than 1% of the world’s population every day. The McDonalds system is designed around scalable processes, systems and habits underpinned by standardisation, simplicity and economies of scale. Their people are organised in flat formalised hierarchies, based around a high division of labour, specialist tasks translated into repeatable habits and high levels of teamwork and integration from supplier through to point of sale.
Habits & Behaviours
So many technically orientated companies believe that writing down procedures and standards in a manual will deliver different outcomes. Generally, the biggest determinants are the behaviours and habits adopted by your people – from the conference room to the shop floor. These behaviours and habits should not be articulated in vague aspirational adjectives etched into the glass in your reception area, they should be built as habits and then planned, deployed and monitored. Core differentiating processes must be translated into patterns of behaviours which for your team members become habitual, whether that is something simple such as a daily stand up meeting or more complex habits such as problem solving. Leadership habits are also key – nobody escalated a problem twice if the first time they were met with apathy or worse, objection.
Infrastructure & Process Alignment
Organisations that excel in Operational Excellence are generally characterised by agility, speed of decision making, transparent performance and devolved accountability. Those who lag behind are often held back by traditional systems and processes which promote control, hierarchy, and bureaucracy. To sustain excellence every element of your organisation’s behaviours should be aligned to the intent – delegations of authority with four approval levels send a clearer message about how the organisation wants decisions to be made than any leadership briefing. Governance mechanisms such as meetings infrastructure, cadence and metrics must ensure that everyone throughout the organisation marches to the same beat.
People Protect What They Build
Systems that are developed in a conference room with small groups of leaders are rarely fully adopted and are almost never sustained. The more that are involved in developing the strategy the more that day to day decisions will be made with that strategic intent in mind, the more that are involved in the co-creation of habits, the more that will feel a sense of ownership for their continuous improvement. Start as you mean to go on – engagement is the basis of sustainment.
Achieving real transformation and Operational Excellence is about getting your entire organisation system aligned to this intent: ensuring you have identified the key capabilities that you will need and appropriately invested in them, ensuring that habits and behaviours from conference room to shop floor deliver excellence and ensuring that all elements of your business infrastructure reinforces as opposed to conflicts.
If you were to ask the majority of industrial or manufacturing executives, most would say that their primary concern is ensuring flawless delivery to their customers. Those that succeed in this aim have decided that Operational Excellence is a strategic aim, and they have thoughtfully designed and tuned each element of their organisational system with that in mind. Their teams deploy carefully engineered habits based on standards that they have been involved in creating and that they take responsibility for improving. The whole business sees satisfying their promise to the customer as their ‘true north’. Organisational System Design provides that alignment, and truly transforms business outcomes.