Operational excellence refers to an organization excelling at delivering high quality, low cost products and services with ease of purchase and service. It requires implementing a business execution system with four key elements: strategy deployment, performance management, process excellence, and high performance work teams. Organizations pursuing operational excellence focus on one value discipline, such as quality or cost, to the exclusion of others and continuously improve the one they provide best.

1. What Is Operational Excellence?
Contributed by Frank Adler on January 15, 2015 in Operations & Supply Chain
Perfection is not attainable, but if we chase
perfection we can catch excellence. – Vince
Lombardi
In “ The Discipline of Market Leaders – Choose
your Customers, Narrow your Focus,
Dominate your Market, ” Michael Treacy and
Fred Wiersema describe three distinct value
propositions or disciplines an organization can
choose to compete in their market or industry–
Operational Excellence , Product
Leadership , and Customer Intimacy .
Market leaders choose to excel in delivering extraordinary levels of one of these three value
propositions, while maintaining competitive standards in the other disciplines.

2. Based on Treacy’s and Wiersema’s findings, market leaders will not pursue a diffused
business strategy across two or even all three disciplines, but will continually focus on their
organizational design, processes, technology, and competencies to improve the one
particular value discipline that they want to provide to their Customers better than anyone
else.
Organizations pursuing an Operational Excellence differentiation strategy are able to deliver
a combination of quality, price, and ease of purchase and service that no other organization
in their market or industry can match.
Achieving Operational Excellence requires the successful implementation of a Business
Execution System that effectively and seamlessly integrates the following four building
blocks: Strategy Deployment , Performance Management , Process Excellence ,
and High Performance Work Teams .
First, Operational Excellence organizations follow a well defined Strategy and Operational
Planning & Deployment Process that ensures collaboration and alignment among the
different parts of the organization and effectively links strategic and operational objectives,
initiatives and execution. Strategy Mapping and Hoshin Planning provide this systematic
and collaborative planning, execution, and review process.

3. Second, Operational Excellence organizations are able to translate strategic or operational
objectives and initiatives into measurable success indicators and ensure alignment among
the different levels and parts of the organization.
The Balanced Scorecard Methodology provides a Performance Management framework to
ensure alignment of an organization towards common objectives and goals.
Third, Operational Excellence organizations are process-centered organizations that have
well designed, efficient, and effective management, value chain, and support processes to
deliver best-in-class products and services consistently.
Process Excellence concepts, methods and tools, including Six Sigma Methodology, Lean
Management Methodology, 8D Problem Solving Process, and Business Process
Improvement, are core competences and utilized at all levels of the organization.
You can learn more about Operational Excellence from the author’s training guides available on Flevy , including a
free-of-charge presentation, An Introduction to Operational Excellence .
Fourth, Operational Excellence can only be achieved and sustained with the right attitude,
the right mindset, and the right competencies. Operational Excellence organizations

4. continuously strive to increase the engagement and empowerment of their employees
through strong values, guiding principles, leadership development, coaching, and
continuous competence development.
About Frank Adler
Frank Adler co-founded Operational Excellence Consulting (OEC) in 2009 to follow his passion for
Operational Excellence and to be able to work with individuals and organizations that share this passion.
He has over 20 years of international executive leadership experience in General Management, multi-site
Operations & Supply Chain Management, Quality & Customer Support Management, and Operational
Excellence & Lean Six Sigma. View more of OEC's materials on Flevy here , including training guides
and free downloads.

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