Companies that successfully reach higher planes of operational excellence work through three key steps:
1. Assessing the operating models needed.
Focused companies are very clear about the discontinuities that are the primary catalysts for their change journeys. They then work through a diagnostic exercise to assess their current operating models and to validate their target operating models, focusing on both the strategic operating models that define their capabilities in the face of the discontinuities they confront and on the operating models that focus on getting greater efficiencies out of existing business processes.
For global companies, choosing the right operating model requires a set of thoughtful tradeoffs between the need for local market agility vs. leveraging global scale in processes and capacity, the cultural acceptance of standardization and various other factors ranging from the availability of talent to the strength of the core culture.
The right operating model is a function of a company’s response to global market changes and the ability of each company to evolve and grow as they take advantage of the agility of being both super global and super local.
2. Being realistic about which is the right journey.
Making clear-eyed comparisons of their “to be” and current operating models, those companies can more easily select the change journey that is most likely to be successful for them. Their choices are determined largely by the company’s own characteristicsthat is, its capacity for change, the skills and experience of the leadership team, its openness and transparency, its goals and expectations, its operating efficiency, and moreas well as by the personal characteristics and leanings of its top managers.
Interestingly, we have also found that the industry itself may provide a clue as to what is most likely to succeed. For example, most banks tend to choose targeted interventions whereas retailers tend to choose continuous improvement.
The key point here is that successful companies have hewed to a disciplined approach in choosing the change journey that they can say, with reasonable certainty, will work for them. The approach ensures that the right decision steps occur in appropriate order, andlaterthat the right execution steps are taken in the right order.
3. Improving the odds of executing well.
With the change journey selected, these companies then pay close attention to the factors that improve
the odds of execution successputting in place the right governance systems, appointing the right staff to the right teams, establishing the right incentives, identifying the most crucial project milestones, and tracking progress against them.
