Operational Excellence

Operational Excellence – popularity gaining management philosophy

Management method, which puts managers into the role of coach

Most of manufacturing companies are used to have the so-called up-to-down management style: the manager says what the subordinate has to do. What if lets do it the opposite?

OE is a management philosopy, which is gathering more and more attention during the recent years, (and) which are being successfully practiced by many large and well-known companies all over the world. A step further from Lean and Six sigma methdos,  it offers the organisation a longer-term change and therefore has a more stable result.

The managers of the companies which are practising the OE, are in the role of a couch rather and they trust decision-making to employees – the key (of OE) is hidden into the empowerment of each employee. Employees share their ideas and think actively along how to improve results and working processes. Solutions how to decrease inefficiency – including the usage of working time, materials, processes etc – is seeked collectively. All companies’ employees are expected and favoured to share info about waste and deviations, and  say their opinion on how to make working more effective.  

However, the focus is not in the personal interest of employees, but the client is in focus. The employees who work in the companies which practise the OE, see the so-called big picture, understanding the client’s wishes, goals and directions and help the clients to reach these goals in a most effective way. With the help of this, the company - and in the end also the company - will get rid of ineffective working processes – frequently occuring problems are being brought up and the employees offer solutions how to solve these. And who else would know the mechanical details of a working tool better but not the person who is working with this tool every day? At the same time it might pay off to put into practise the employee’s other skills – there are so many skills within the  company that often are not used.

Deviations are accepted   

In order for this theory to work in practice, the manager needs to take an active approach in order to find the needs in the processes. For example, every workday  morning the manager  could organise a short meeting, let say 15min,  where people bring up their deviations; after which the person who brought up this problem as well as others are put into thinking how to solve it, but not neccessary during the meeting.   The manager needs to be skillful enough first to get the people talking, after that to motivate them to think along so that solutions are born. The task of the manager is to secure the constructiveness of the process, acting rather like a coach, who directs and motivates his team.

OE assumes that there is an attitude in the company that even if something is done wrong, it is acceptable, because it lays a foundation for change. Ignoring deviations does not give an opportunity to learn from these and improve the situation. The employees must be given time to get used to the new culture, where talking about their deviations is encouraged. I will illustrate this with an example from the rally team. The team will ask from  the driver for feedback after each race, in order to make the car better quicker way, so that each stage will be run with the a car that is a good as we.  Also, the team could asks the driver to help to choose tyres before the next race   – probably they will get a better result this way The faster we will discover what needs to be done better, the faster we can change it. Similarly as deviations, it is also important to discuss through what went well and why. It is important to communicate constantly. 

Also this will change the situation when the employee sees and feels that he is able to change somthing about his job – people start trusting the system and become more proactive. Many Swedish companies, that started with this management culture, were stuck with opposition from employees („Is this another new management theory again?“). True, many left, (many did not believe) but the majority understood, that the new method worked in favour of themselves – the managers started to listen to employees and that brought the employees opportunities to talk along in the development of company. Undoubtedly, the OE is a challenge not only to employees, but also to the managers – one must win the wish to do everything himself, it is important to trust employees and give them opportunities and involve them.

Common values as a foundation

The company’s values are in focus when we talk about how the OE functions. The manager gives employees responsibility, assuming that the employees are open. That means that „open attitude“ and „openness“ chould be the values of this company. This will be quite a challenge for Estonian companies because historically, a direct chain of command is more familiar here.

Values are soft and cognitive side of the company culture and defining them is a prerequisite when creating a common culture. When values are explained and discussed by empowering employees, it might be a longer-term process, but the result is probably also longer-term. Therefore, the management’s role in creating „open“ culture is pretty big – the management should be the one who directs his subordinates to the door of such a culture and makes them see these advantages.

In addition to the values, the OE company also defines factors (drivers), about how the company’s clients and market as a whole assess (value) the company. For example: quality, meaning that the company is a role model about everything that we do, including the product’s quality, the packaging, technical support or the information on the web-site, etc.

Values as well as principles direct employees to how to work every day and how to act when problems occur.

How in real-life?

It may sound simple, but does this all work in real life? A number of internationally know and successful companies are practising the OE, for example well-known international car producers, but also hospitals, banks, etc. Compared to competitors, these companies are stronger in terms of effectiveness, productivity, quality, inventory issues, meeting deadlines, have less sickness leave and working accidents, etc. Important is change in people’s motivation – if people like their job, they will naturally do it better and do not tend to change the employer so often. The company gets loyal employees and that in turn attracts valuable employees.

To sum up

The OE means quite a big change in management culture for those companies, who have a strong top-down management approach.  The OE works if the actions are not made campaign-wise and only in one time, but the actions must be done long-term and regularly – improving working process will end never.

Naturally, it will take time to thouroughly change the working culture and the OE might not bring such a quick change, but bear in mind that more stable these changes are when they once happen. For sure the employees will feel quickly a different management style and different attitude from managers and that will bring up the team spirit.

Take a time out in your company and think about the potential, that you might gain when using the OE philosophy. Notice that all your company employees are people with big experiences, who know their working process well and are able to think openly. Put these experiences to work in favour of the whole company – motivate the whole team to see the current deviations and how to deliver value to customers in a most effective way.



McLean & Laneman is management consulting firm that helps companies to improve their business processes, implement next generation software and create innovative solutions.

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