Waste is the enemy of scale.
What I’ve realized over time is that scaling a business is impossible without cutting back on waste. If they haven’t started to affect you already, trust me – it won’t take long for you to see the effects of:
- Wasted time
- Wasted resources
- Wasted money
Cutting back on waste – and building up operational excellence – becomes more and more important as your business continues to grow.
In my time working at Motorola Solutions, the concept of operational excellence was front and center. Motorola Solutions is a major manufacturer of physical products, and few types of companies pay more attention to efficient use of resources than manufacturers.
At the time, employees at almost every group at nearly every level were put through at least some education on Six Sigma, a methodology they developed. The goal was to build an army of people looking for ways to make their processes more effective.
When I transitioned to Salesforce I was really impressed by how operationally excellent the sales team was. It always felt like every customer and every deal mattered. Even at the scale they were at when I joined, that’s an impressive feat.
Operational excellence has been around forever. The earliest credit I could find for the concept was in Adam Smith’s 1776 book, “An Inquiry into the Nature and Causes of the Wealth of Nations.” 1776 is the same year that the U.S. Declaration of Independence was signed.
Net…not a new concept.
Operational excellence has become more buzzword than an innovative thought, but should absolutely still be a priority for businesses looking to scale. The big question is…how?
You’d have no issue finding a textbook or intricate methodology to guide you here, but I’m a fan of trying to make things as simple as possible.
What does is take to create Operational Excellence?
Operational Excellence is being consistently great at two things: execution and utilization of resources.
To be operationally excellent, you need to repeatedly execute at a high level – you need to do high-quality work on the right problems.
You also need to do that work efficiently by utilizing the resources you have, like:
- Unique knowledge
Quick note, the goal isn’t Operational Perfection – your business or team will never be perfect. Still, it’s important to think about how Operational Excellence gets built into an organization, so you can reach progressively higher levels of excellence.
I like to think of Operational Excellence as a series of stages:
- Achieve repeatable success
- Put processes in place to repeat success more efficiently
- Understand the output that’s possible for each unit of input (capacity)
- Put clear expectations in place for each team member
- Commit to getting the details right
- Be transparent throughout your organization
- Hold everyone accountable to their targets
Operational Excellence starts at the bottom, with repeatable success. As you improve at each layer of the pyramid, you can move up to the next layer.
Repeating success, defining process, and reaching predictable capacity
Operational Excellence starts with having the ability to repeat success.
Building a business (whether product, service, or licensing) is inherently hard. You can’t rely on luck. But in the early stages, before you know what works, you also can’t rely on process – which will slow you down.
First, you have to have something that you define as success and can intentionally repeat.
Then, once you’ve demonstrated that you can repeat success, you can create a process to make it more efficient. At this stage, process makes sense – it lets you teach other how to repeat your success. Process lets you build a team and scale beyond yourself.
Once you have a defined process, you have to understand the capacity required to complete that process. This capacity could be human power or machine power, but either way you need to know what resources it takes to get your process done.
When thinking about the capacity of people, you have to answer questions like:
- How many tickets can a customer service agent reasonably process in a normal day?
- How many deals can a sales person reasonably be expected to close in a month?
- How much code can a developer reasonably write in a week or month?
The answer to these questions defines the capacity of a person – and helps you understand how many people you need to achieve the total volume of work you want done.
Expectations, details, visibility, and accountability
Now you have repeatable success. You have process. And, based on your capacity, you can start bringing in people.
When you bring in new people, it’s critical that you set clear expectations for what you need them to deliver. If you expect them to deliver against a certain ‘capacity’ and they are unaware of that, you probably won’t get the output you expect from them.
As you start to scale out a process by getting more people involved, you introduce more and more opportunity for variance. This is why the next critical element is commitment to detail.
You have to own the details of the process and strive to reduce variance – because variance in the output of your team will hurt capacity.
In order to manage the details, you need to have total visibility into the process and the way people execute it. If you can’t see the details, you can’t manage the details – which will allow variance to exist (and grow) in your business environment.
Once you have established visibility and can manage the details, you can hold people truly accountable to their targets. Without accountability, none of the things that came before are meaningful – without the things that come before accountability is nearly impossible to achieve.
Pursuit of Operational Excellence is an ongoing mission, one that will likely never end for an organization or team who truly embrace it.
If you think about Operational Excellence as something that you build (instead of something you acquire all at once), you can work on developing each layer of that pyramid. Each step of Operational Excellence is built on the foundation of things that came before – and without the appropriate foundation, your pursuit of a higher level of excellence will be difficult, if not impossible, to achieve.