Operational excellence

From CEOpedia | Management online

Operational excellence describes the ideal state of an operating enterprise. It has great cachet at the highest executive levels and is being incorporated into the working culture by organizations committed to being the very best in all business, mission, and operating activities. Whether yours is among the great performing enterprises dedicated to remaining great, a good performer aspiring to become great, or one of the large number who know improvements are essential for continuing success.

The operational excellence initiative can originate at the mid levels of an enterprise, as have so many successful functional improvement initiatives. Principles and process set forth for operational excellence are exceptionally powerful and can be used effectively to gain improvement objectives within a function, such as production/operations or maintenance. A mid-level champion needs to make every effort to communicate and promote principles and benefits of operational excellence to executive management and keep them advised of progress and successes. With demonstrated successes, the operational excellence functional champion has solid justification for broadening the initiative [1].

The principles of operational excellence

To achieve operational excellence and become a high-performance office, one not only needs a destination, but a roadmap as well. The combination of a destination and a roadmap allows us to make significant improvement to the office as a whole in a short amount of time. Creating this roadmap involves implementing a specific set of principles that will make operational excellence a reality in the office and everywhere in the organization. There are eight principles of operational excellence and they must be applied in order.

Operational excellence in the office:

  1. Design lean value streams
  2. Make lean value streams flow
  3. Make flow visual
  4. Create standard work for flow
  5. Make abnormal flow visual
  6. Create standard work for abnormal flow
  7. Have employees in the flow improve the flow
  8. Perform offense activities

Once the first seven principles of operational excellence have been completed, the organization is ready to commence with the eighth and final principle in earnest, as it is here that the true power of operational excellence is revealed[2].

The Toyota Way as the path to excellence

The Toyota Way provides an in-depth case study of one company's pursuit of operational excellence through continuous improvement and how it turned that pursuit into a strategic differentiator. From the senior to small groups of team members on the shop floor, there is a feeling of intense energy focused on getting better. Liker summarized the management principles he derived from intensively studying Toyota as a 4P model: an integrated system of philosophy, processes, people, and problem solving. The philosophy is the foundation: Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals[3].


  1. J.S. Mitchell 2015, p.7-9
  2. K.J. Duggan, T. Healey 2016, p.10
  3. J.K. Liker, J.K. Franz 2011, p.109

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Author: Adam Jawor