When we talk about increasing profit margins, the advice is often outdated and predictable- cut costs or raise prices. But for your company to be successful, Operational Excellence must be in your profitability arsenal!
Horst Schulze, former president and COO of the Ritz-Carlton Hotel Company boldly states, “Many companies prefer to make money by cutting costs. I prefer to do it by creating excellence.”
But what is Operational Excellence?
Guru Kevin Duggan succinctly explains that Operational Excellence is when every employee can see the flow of value to the customer and fix that flow when it breaks down.
It’s each employee knowing the process implicitly. It’s each employee knowing how to move from step A to step B fluidly. And it’s each employee knowing how to fix any problem that occurs while consistently maintaining high service quality… without needing a supervisor, a manager, or a meeting.
When employees can manage themselves with little or no intervention, this frees your time to grow the business, network, develop new products and services, and tap into new markets.
Take a lesson from Hypertherm, a small company in New Hampshire capitalizing on this ‘self-monitoring’ strategy. With over 600 employees, there is virtually no management! The staff has been trained to work from visual charts and solve process flow problems, without managerial assistance. Because the business is self-sustaining; management can spend their time focusing on customers, marketing, and business growth.
Demystifying Operational Excellence
1. Put the process on paper!
The first step in creating Operational Excellence, is designing a visual illustration of the process. A process is of no value in your mind! The graphic must be a beginning-to-end flow chart that connects a process from step-to-step.
Here’s a simple Laundry Operational Flow Chart.
Note: This chart is intended to give you an idea, but I recommend your graphic also include images for each step. Visuals are memorable!
2. Bring it to the people.
Once you have created your flowchart, train your employees by using the chart to thoroughly review, expand and expound upon each step in the process.
In the laundry flowchart, the employees can see that the first step is collecting soiled linens. But they still need to learn at what time, in what manner, and how frequently soiled linens are to be collected.
3. The process in-between the process
From the Laundry Flow Chart, we see that the laundry is dried and then folded. What you don’t see is how the laundry gets to the folding location – and this is where a lot of processes fail!
You must teach employees the process for their work and the process between the processes.
4. Make abnormal flow visual
The Flow Chart is great, and your employees know what to do, when to do it, and why they’re doing it. But even the best made plans are subject to human fallibility, so this step is crucial!
You also want to create a visual chart for abnormal flow – the unexpected. Then empower your employees with the ability to recognize and fix problems. Think of this step as Plan B for the main process.
5. Give them the answers!!!
How would you like self-sufficient employees that don’t need micro-managing every other minute?
The secret is to give them the answers ahead of time!
Identify the most common process challenges, create solutions, and provide employees with problem solving tools –in advance. Now, when a questionable situation occurs, your staff already knows the answer.
This foresight makes room for the process to manage, rather than forcing people to micro-manage.
Hint: Even with all this planning, give employees some authority to tweak the process in favor of delivering a better customer experience.
When managers focus on empowering employees and employees focus on engaging customers, Operational Excellence will successfully increase profitability. #ThatMakesProfitableSense
Originally published by Linette Montae on LinkedIn May 11, 2019