Operational Excellence and the Leadership Challenge

Do you really know what sustainable improvement in quality and efficiency requires?

By Fred Greulich, Director, Operational Excellence, Maxiom Group

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“Operational Excellence” has become the umbrella adopted by organizations across virtually all industries, including life sciences, to refer to the thrust for continuous improvement in all areas of business process performance while ensuring that this performance equals or exceeds that of “best in class” organizations.

Many organizations have taken to establishing Operational Excellence (OE) functions and large scale programs to govern, design, implement and nurture OE.  Others have taken a more scaled down approach, less programmatic and more focused on individual projects and initiatives. However, regardless of the model being utilized, OE is about “continuous change for the better” or, in the language of lean, “Kaizen”.

As most of us are aware from literature and  personal experience, active leadership is a critical factor for the success of any significant and sustainable change management effort.  However, as often as we cite this fact and as basic as it may seem, lack of organized, active management support continues to show up as a  major obstacle to organizational improvement efforts.  For example, in the latest Pharmaceutical Manufacturing Operational Excellence survey, 68% of the respondents indicated that top and middle management were “the biggest hindrances to improving organizational efficiencies and quality” in their organizations. As one respondent from a top pharmaceutical company noted, “We are trying to implement Lean Six Sigma but we only seem to ‘get started’ and never fully integrate the methodologies.  For example, we do 5S but we don’t follow through to make sure we are keeping up.”

What often happens is that organizations learn about and try to practice the identification and elimination of the seven wastes originally identified by Taichi Ohno as Defects, Overproduction, Waiting, Transporting, Motion, Overprocessing, and Inventory.  These wastes are very “operational” in nature and can be identified by properly utilizing a cross-section of the many OE tools designed for this purpose, including 5S, value-stream maps, spaghetti diagrams, day-in-the-life-of (DILO) analyses, and so on.

What is frequently not understood is that being successful in identifying and eliminating these operational wastes requires a strong foundation provided by the organization’s leaders.  Active and effective change leadership is frequently characterized by describing a set of behaviors supportive of the workforce and the effort to define and implement change.  Examples of these behaviors include:

  • Providing specific and timely team and individual feedback
  • Managing by wandering around (MBWA)
  • Being a good coach/teacher
  • Actively removing barriers to the organization’s success

While most would agree these behaviors are good things and have a significant place in the life of a successful change leader, there is a more fundamental foundation that must be implemented to truly set the stage for effective change leadership. This foundation deals with the establishment and management of a system to ensure a set of key leadership requirements is addressed.  It is not enough that individual leaders demonstrating the occasional one-off “good leadership behavior” will get the job done.

This foundation is defined by the willingness and ability of leaders as individuals and as a group to address in an organized fashion a set of leadership requirements, based on work by lean expert William Lareau. These are potentially even more important than the much more publicized “surface” wastes defined by Ohno and are absolutely essential to address if an organization is to establish a sustainable waste elimination culture:

  • Ownership of the Challenge – leaders as individuals and as a group “stepping up” to the continuous improvement challenge.

While seemingly an easy and straightforward concept, this requirement is often the most difficult for leaders to embrace. Life sciences leaders are typically used to managing within the boundaries of a functional area and driving improvement in an incremental fashion - to many there is a sense of safety and predictability in this.

The challenge in this leadership requirement, however, is much broader and based on the principles of Lean improvement.  Being willing and able to step outside their comfort zone, leaders must first internalize that the vast majority of the organization’s work efforts are, in fact, waste, to be identified and eliminated.

Additionally, leaders must begin to view the organization as performing a set of business processes that extend across functions, not managing a series of silo’ed functions.  This in turn requires leaders to collaborate across functions and work for the greater good of the larger organization, not a function.  It doesn’t take long to see where “owning the challenge” is a lot more emotionally and politically complex for leaders than at first blush.

  • Strong Governance Structure – leaders ensuring policies, procedures, regulations, organizational structure, metrics, and defined roles and responsibilities required to drive continuous improvement are in place.

It is imperative that these elements of the governance structure are aligned throughout the organization and directed  in a way that drives desired behaviors and the reduction of Ohno’s seven wastes.

Think for a minute about how the employees in your organization, if asked, might respond to these few questions as an indicator of the effectiveness of your governance structure:

  • As a materials receiving employee are the tasks you perform everyday well defined and documented?
  • As a manufacturing technician do you have a formal way to measure your individual performance on a daily basis?
  • Does your work group have a universally understood response to specific workplace problems?

It is in the answers to questions like these aimed at the operating level in an organization that the true strength of the governance structure can be determined.

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