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JWI 550 (1208) Page 1 of 13
JWI 550: Operational Excellence
Week One Lecture Notes
University.
JWI 550 (1208) Page 2 of 13
INTRODUCTION TO OPERATIONAL EXCELLENCE
What It Means

For many years, the term operations management, or OM, was
applied almost exclusively to
manufacturing. More recently, the tools of OM have also been
recognized for their potential to improve
operations in the service sector. Still, some view the discipline
too narrowly, identifying it as the purview of
those who hold the title of “operations manager.” Operational
excellence is a broader concept that applies
to all job functions and all pursuits that keep the organization
running in top form. It is the ongoing search
for better ways of achieving results. However, it’s not about
just ‘fine tuning’ the flow of work as it currently
exists, but about stepping back, asking good questions, and
finding ways to improve how the entire
organization operates. The ultimate objective is to leverage
those improvements to strengthen the
organization’s competitive advantage.
Why It Matters
• Operational excellence is a competitive advantage. If your
organization can run faster and leaner
and can deliver products or services to your customers that are
less expensive or better quality
than your competitors can, you will have an edge in the
marketplace.
• Seeking a better way every day encourages team members to
challenge themselves, get their
brains in the game, find ways to reduce tasks that waste
resources, and redirect their time and
energy to tasks that add real value.
• Adopting a broader view of operations opens the door to using

the tools of operational analysis to
examine what you do, ask better questions, and make changes
that can be evaluated against
meaningful metrics.
“Every task performed by every employee in
every organization is, by definition, an
operation. How well these are performed will
result in more or less time taken to complete
the task, more or less money spent to get it
done, and greater or fewer mistakes being
made. And all this, by extension, contributes
to making the company more (or less)
competitive.”
Jack Welch
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JWI 550 (1208) Page 3 of 13

INTRODUCTION
Welcome to the Course
If you’ve never worked in or studied operations management,
the subject may be a bit of a mystery to
you. You may have images of factory managers with clipboards
and stopwatches standing beside
assembly lines, measuring output and doing obscure math to
calculate “something” that you’re not sure
you understand. This can be especially true if you work in a
service industry where production metrics are
not front and center every day. You may think that OM is
something other people do, and while you
certainly want them to do well and contribute to your
organization, the impact of OM on your daily life is a
passing interest.
If any of the above is true, you may also see this course as a
“necessary evil” – a required hurdle to
overcome on your path to earning an MBA.
We are going to make sure this is not the case. Throughout the
course, we will focus on solving real-
world problems and on the practical application of the tools we
study. In each topic we address, you will
find a consistent pattern in the approach we take:
1. Understand the current state of operational performance
2. Identify opportunities for improvement
3. Ask the right questions, focusing on what really matters
4. Gather the right data and apply the right tools to answer

those questions
5. Develop, present, and implement viable solutions to improve
performance and outcomes
This approach is designed to help you become a better manager
and a more effective leader. You will
hone the skills that will help you take your organization forward
and increase its competitive strength.
The Pursuit of Excellence Impacts Every Part of the
Organization
Management of operations is not the domain of any single
function or department. It is not limited to the
factory floor or to supply chains or to production quality. It
isn’t just part of administration or a company’s
back-office functions. The pursuit of operational excellence is
multifaceted, and seeks to realize multiple
goals and implement process improvements that are:
• Effective – actually addressing the company’s needs
• Efficient – cost-effective and not wasteful
• Global – taking into context the greater economic environment
• Sustainable – not creating long-term liabilities in the pursuit
of short-term gains
• Responsible – fulfilling the business’s fiduciary and
community obligations, such as maintaining
long-term solvency

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JWI 550 (1208) Page 4 of 13
Operations management involves everyone in the company and
can affect all of the company’s physical
assets, resources, and organizations. It requires constant focus
and deliberate, decisive action for
business leaders to manage operations properly and
beneficially. The decisions made in pursuit of
operational excellence can drive critical business activities such
as:
• The development of new products
• Quality planning, control, and improvement
• Production and capacity planning
• Supply chain and inventory management
A business entity must constantly customize products and
services, shorten product and service life
cycles, satisfy more informed and quality-savvy consumers, and
leverage innovation and renewal – or
creative destruction – in the industry or business sector. It must
also take advantage of the promise and
potential of new technology, new products, and new processes.
None of this happens unless business
leaders make informed decisions about managing the company’s

operations.
Achieving Competitive Advantage Through Operations
All organizations, be they individual companies or countries
whose governments and citizens trade with
one another, constantly vie for competitive advantage. They
implement different business strategies, and,
therefore, different operations management practices, in order
to achieve this competitive advantage.
For example, retail giant Walmart maintains low inventories and
low costs, thus remaining more
responsive to consumer demands. The low inventory makes it
possible for Walmart to offer perceived
value that outpaces many of its competitors, granting it a
competitive advantage. Customers come to
Walmart rather than other retailers hoping to get the best deal,
increasing Walmart’s sales and thus
increasing its profits.
University.
JWI 550 (1208) Page 5 of 13

LECTURE NOTES FOR THIS COURSE
The purpose of the lecture notes in this course is not to reteach
topics that are covered in the core texts,
readings, and videos. The purpose of these notes is to:
1. Help you assess your starting point by providing a realistic
picture of the challenges you may
face, but also the payoff that comes from mastering the
necessary skills.
2. Focus your work on the most important themes and
takeaways from each week’s materials.
3. Provide tips on applying what you are learning in your own
workplace to help you become a more
effective business leader.
You are encouraged to read the lecture notes first each week,
and then to reread them after you have
completed your other coursework in order to reinforce what you
have learned.
The core text for this course, Value Stream Mapping by Karen
Martin and Mike Osterling, is introduced in
Week 1. It identifies a key objective of pursuing operational
excellence – adding value. The book offers
not only a rationale for value stream mapping, but also practical
steps that leaders can use in assembling

mapping teams, analyzing value streams, and improving how
work gets done. Other core resources in
our course include OM modules from Harvard Business School,
as well as LinkedIn Learning videos.
These are used primarily to introduce the more “technical”
elements of the tools of OM. Throughout the
course, we strive to maintain a balance between big-picture
ideas and specific tools. While OM tools are
critical to success, they are not sufficient. Placing tools before
people is not the right approach. The most
successful operations leaders always keep the big-picture
objectives in focus, apply the appropriate tools
to help them ask the right questions, and leverage
methodologies that guide the organization on a path to
excellence.
THE CHALLENGE AND OPPORTUNITY FOR MANAGERS
In each set of lecture notes, we will include a section: “The
Challenge and Opportunity for Managers.”
This will introduce the topics addressed that week, present some
of the barriers that managers may face,
and explain how the tools and practices we cover can help you
become a better leader.
Learning about the tools of OM can seem intimidating. You will
encounter jargon and unfamiliar
terminology. It’s easy to let those technical terms become a
barrier to your education. However, if you
take the time to engage the course materials, you’ll find that
what you learn is a lot easier to apply than
you might have believed. In fact, with a little effort, that barrier

may just crumble completely.
As Jack said, one of the most important actions that effective
leaders take to drive positive results is to
ask probing questions that uncover assumptions. These
questions can be starting points to help you
assess your own challenges and opportunities.
University.
JWI 550 (1208) Page 6 of 13
YOUR STARTING POINT
1. When was the last time you stepped back from your regular
work and thought about how you
might be able to do that work more effectively and efficiently?
2. Are you and/or your colleagues frustrated by some of the
work processes or tasks that you

have to perform? Do some of these seem overly cumbersome or
weighed down by
bureaucracy or sub-par communication with other workers or
departments?
3. How do quality issues impact your deliverables? For
example, even if the final output performs
at a high standard, have there been multiple inspection and
repair steps required before the
product was released? How might those steps be reduced
without compromising quality?
4. How do your production metrics compare to those of your
competitors? Are they able to deliver
similar products/services to customers faster, cheaper, or that
perform better?
5. Is senior management eager to engage frontline workers in
finding better ways of working? Is
your organization one that values “getting every brain in the

game”? If not, how might you start
to change the culture to support a team-based approach to
operational excellence?
6. How could operational improvements strengthen your
organization’s competitive advantage?
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JWI 550 (1208) Page 7 of 13
THE PURSUIT OF OPERATIONAL EXCELLENCE
There is a saying that the longest journey begins with a single
step. While the pursuit of operational
excellence is a never-ending journey, don’t despair. Operational
“wins” are tangible and come in all sizes.
It’s not always about retooling the entire workflow for a huge
factory or reinventing a global supply chain.
Once you think about operational excellence as a way to

increase competitive strength, you will start to
see opportunities everywhere.
So, whether you work in a manufacturing company or a service
company, for-profit or not-for-profit, large
business or small business, there is one element that every
organization has in common – work. The core
issue, then, is how that work adds value – whether measured by
customer/revenue growth, shareholder
value, or employee satisfaction about the work they exchange
for the paycheck they earn. When you and
your colleagues come to work each day, do the systems, tasks,
tools, and processes enable you to deliver
your product or service effectively and efficiently?
If you are not sure about the answer to that question, you’re not
alone. Martin and Osterling summarize
the challenge as follows:
“The lack of understanding about how work flows – or more
commonly, doesn’t flow – across a
work system that’s sole purpose is to deliver value to a
customer is a fundamental problem that
results in poor performance, poor business decisions, and poor
work environments. Conflicting
priorities, interdepartmental tension, and – in the worst cases –
infighting within leadership teams
are common outcomes when a company attempts to operate
without a clear understanding about
how an organization’s various parts fit together and how value
is delivered to its customers. And
significant time and money is wasted when organizations
attempt to make improvement without a
clearly defined, externally focused improvement strategy that
places the customer in the center.

Enter the concepts of value streams and value stream mapping.”
Value Stream Mapping, pp. 1-2
VALUE STREAM MAPPING
So, What Is a Value Stream?
As you have likely gathered from the title of our core text,
we’re going to be using the term “value stream”
quite a bit throughout the course. So, let’s address the
definition:
“A value stream is the sequence of activities an organization
undertakes to deliver on a customer
request. More broadly, a value stream is the sequence of
activities required to design, produce,
and deliver a good or service to a customer, and it includes the
dual flows of information and
material.”
Value Stream Mapping, p. 2

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JWI 550 (1208) Page 8 of 13
And a Value Stream Map…?
The “map” is pretty much what it sounds like. Just like a
roadmap, it is a way to visualize a journey. It
shows how you get from one place to another place. Most maps
don’t show every single detail about the
terrain or other specific elements, such as speed limits and
altitudes. Which features of the map are most
important will vary by user and purpose. If the map is too
general, critical information may be missing. But
if it is too detailed, the overall journey can get lost in the
weeds. The same is true of a value stream map.
As we progress through the first several weeks of the course, we
will explore several important topics: (1)
the purpose of value stream maps, (2) what it takes to create a
useful one, and (3) when and why we
would need to drill down deeper into individual “processes” –
which we will explore more in Weeks 3 and
4 – to identify workflow shortcomings and opportunities for
improvement.
As Martin and Osterling point out, value stream maps are not
the same as process maps. “[They] offer a
holistic view of how work flows through entire systems, and
they differ from process maps in several
significant ways.”

1. Value stream maps provide a powerful means to establish a
strategic direction for improvements.
2. Value stream maps provide a visual, full-cycle view of how
work progresses from a request to its
fulfillment.
3. Value stream mapping deepens organizational understanding
about work systems that deliver
value, leading to better decision making and work design.
4. The quantitative nature of value stream maps lays the
foundation for a data-driven, strategic
decision making.
5. Value stream maps reflect work flow as a customer
experiences it, as opposed to process-level
maps that are internally focused.
Value Stream Mapping, pp. 7-10
CHANGE IS HARD
You Can’t See the Forest for the Trees
As the authors note, “[t]ransformation requires fundamental
changes in an organization’s DNA; done well,
value stream mapping can be instrumental in facilitating the
necessary shifts in mindsets and behaviors”
(p. 11). The core of the challenge of change is that the people
who are involved in doing and overseeing
the work often don’t see the big picture of the flow. This sounds

ironic, but if you reflect on your own work
experiences, chances are your days are pretty busy just keeping
everything going. You likely joined an
organization that was already up and running, and that means
you stepped into a “machine” that has
systems, processes, and protocols for how work gets done. Some
of these probably work fairly well, and
some of them leave you wanting to pull your hair out. But
every day, there are dozens of tasks to be
completed, leaving very little time to step back and analyze the
big picture of how work flows.
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JWI 550 (1208) Page 9 of 13
Are You Seeing What I’m Seeing?
Martin and Osterling describe the value stream map as a “visual
unification tool.” They argue that “[t]he
ability to visualize non-visible work is an essential first step in
gaining clarity about and consensus around
how work gets done” (p. 12), noting that “[t]his degree of
clarity helps an organization make the transition

from internally focused thinking to customer-focused thinking,
which is the foundation for providing
greater and greater value” (p. 12). In fact, they go as far as to
say, “we’ve found no more powerful way to
heal the tension that often exists between functional areas, such
as sales and operations, quality and
production, and IT and…well, everyone!” (p. 14). That’s a
pretty exciting claim!
They do, however, offer an interesting caveat, noting, “It’s the
process of value stream mapping rather
than the maps themselves that carries the greatest power by
instilling transformational mindsets and
behaviors into the DNA of an organization” (p. 17).
“…improvements that begin with a value stream perspective are
more likely to be sustained and
lead to both top-line and bottom-line growth. In the case of
government agencies and nonprofit
organizations, proper value stream design and management can
reduce costs, improve
organizational effectiveness, reduce the risk of privatization,
free up cash to reinvest in the
agency, and improve employee morale and constituent
satisfaction.”
Like most complex undertakings, there are more ways to get it
wrong than there are to get it right. There
are multiple potential “failings” of value stream mapping
initiatives. These include creating maps without
taking any action, and mapping with the wrong team – or even
without involving the team at all. But
perhaps the biggest failing is mapping without metrics:

“The timeline is, by extension, where value stream mapping
shines its brightest light. Using a
‘ticking clock’ to measure throughput and the time it takes for
people to actually perform work
tasks reveals more about work flow than any analytical tool to
date.”
“How do you measure whether you’ve made improvements
without a baseline from which to
measure? How do you know what to focus on if you don’t know
how the value stream truly
performs? While a picture’s worth a thousand words, value
stream maps without metrics have
limited use. And one could argue that value stream maps
without metrics aren’t value stream
maps at all.”
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JWI 550 (1208) Page 10 of 13
GETTING STARTED RIGHT

While there is a lot to get excited about when it comes to value
stream mapping, there is some guidance
about the road ahead:
“Too many organizations dive into value stream mapping before
the organization is properly
prepared and the activity has been properly scoped. Effective
planning is a significant contributor
in elevating value stream mapping from a ‘tool’ to a
management practice that produces long-
lasting transformation.”
“Getting tangled up in the weeds is a common reason why
process improvement efforts fail to
deliver sustainable results, and why inserting value stream
mapping into the improvement
process helps an organization make faster and deeper progress.”
Value Stream Mapping, p. 27, 29
Assembling the Team
Process mapping, like any change initiative, is not a solo
activity. While the size and composition of the
team may vary according to circumstances, Martin and
Osterling offer the following guidance:
“If the ripple effect of the projected improvements is somewhat
contained, you can limit the
overview to the team members and those leaders who oversee

the areas within the value stream
being transformed. If the projected improvement(s) will touch a
large percentage of the workforce,
it’s best to include the entire leadership team. For your first few
value stream mapping activities,
it’s also helpful to include leadership from support services,
such as human resources,
information technology, and finance so that they, too, can begin
to see the interconnectedness
within the organization and the benefits of viewing work
through a value stream lens. Ultimately,
every leader needs to understand the organization’s key value
streams and how his or her team
supports the delivery of value to external customers.”
The remainder of the chapter explains the role and components
of a Value Stream Mapping Charter (pp.
31-47). This is an important tool to align the team around a
common objective and define the scope of the
project. Review this guidance carefully before you embark on
this step of your operational excellence
initiative. Like many undertakings, success or failure are
largely determined in the planning stages.
Getting the right team in place means including: (1) affected
leadership, (2) mapping team members who
will help build and analyze the maps, and (3) workers in areas
that will be included in the value stream
walk.

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JWI 550 (1208) Page 11 of 13
AND SO, OUR JOURNEY BEGINS…
Our readings this week lay the foundation for the core
principles upon which our course is built. They also
introduce the concept of value streams and the practice of value
stream mapping.
Specifically, we have learned:
• The pursuit of operational excellence is a never-ending
activity. You don’t “get there.”
• Finding ways to improve the value stream is a team activity,
not a solo undertaking. It truly is, as
Jack so often said, about “getting every brain in the game.”
• Metrics matter – a lot!
• Value stream mapping, and operational excellence in general,
must be customer-centric, not self-
contained or internally focused.
• The mission and values of the organization must guide why
you are doing what you are doing.

Now that we have considered all these important topics, and
before we can even begin to think about
making any operational changes, we have to get an accurate
picture of how the workflow is functioning in
the current state. But that is our topic for next week…
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JWI 550 (1208) Page 12 of 13
SUCCEEDING BEYOND THE COURSE
As you read the materials and participate in class activities, stay
focused on the key learning outcomes
for each week and think about how they can be applied to your
job. These are presented at the top of the
weekly course pages in Blackboard and in the Course Guide and
are also summarized in this section of
the lecture notes.
• Explore the importance of operations in achieving competitive

advantage
As you begin to explore operational excellence, start close to
home. Don’t try to analyze the
competitive strength of your entire organization – there will be
opportunities for that later. Think
about how you and your team deliver value to the organization
through the work you do and the
outputs you produce. What would the benefits look like if you
could deliver more and/or better
products or services with the same inputs and resources, or if
you could continue to meet your
current output requirements more efficiently? Don’t worry too
much about how you could do this
just yet – focus on the impact. If output or costs could be
improved by, say, 15%, how could that
make the organization more competitive?
• Describe key characteristics of operational excellence
One of the best ways to appreciate the topics we will cover in
this course is to take what you are
learning and test it out in your own job. This “testing” doesn’t
have to mean making any actual
changes just yet; it can be evaluating the concept to see if it
holds water when applied to what
you and your team do. The characteristics of operational
excellence include, but are not limited
to, delivering outputs faster, cheaper, and with fewer errors in a
way that is safe and sustainable.
Make a list of what that would include for your job. Then, rank
your list in terms of priority. Which
of these improvements would have the greatest impact on other
parts of the organization? Why?

• Understand the role of value stream mapping as a tool to
manage operations
The methodology we explored this week is value stream
mapping. Stay focused on that for now.
Don’t speculate too much on other tools you may be able to
apply to your job. Rather, reflect on
the end-to-end processes you are responsible for and the
necessary tasks – from the point at
which you receive a request to the point at which you complete
it and hand it off to the next step,
whether that is the customer or another team. Start to visualize
this as a stream in which value is
added. When the output leaves your hands, how is it worth more
than when it came to you? How
much more can be difficult to determine. Don’t worry about that
right now. Focus on what you and
your team have done that adds some value. As you do this, you
will also begin to identify actions
that don’t seem to add any value. Maximizing the former and
minimizing the latter will be the topic
of upcoming weeks in our course.

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JWI 550 (1208) Page 13 of 13
ACTION PLAN
To apply what I have learned this week in my course to my job,
I will…
Action Item(s)
Resources and Tools Needed (from this course and in my
workplace)
Timeline and Milestones

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