Operational Excellence and the Leadership Challenge

Feb. 26, 2009
Do you really know what sustainable improvement in quality and efficiency requires?

“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.
•   Well-Defined Organizational Focus – leaders ensuring the organization is aligned on key objectives and/or initiatives.

Many times senior leaders provide high level direction intended to focus the organization and think this is enough.  Statements such as “we will improve internal quality management” or “we will create a more effective clinical development model” are made by senior leadership with the belief that they are fulfilling their obligation to provide focus and direction to the organization. While providing general direction, it is not enough.

Real organizational focus is achieved when leaders throughout the organization work to translate the high level message into a more detailed message targeted to each employee and workgroup.  This message tells them what their part is in achieving the goal, then leaders must work with them to ensure they’re able to stay on task.  Herein lays the challenge in fulfilling this leadership requirement.

  • Unwavering Organizational Discipline – leaders providing feedback, follow-up, coaching, and applying a “system of consequence” regarding behaviors of individuals and teams.

Without this requirement in place, others like “Strong Governance Structure” and “Well-Defined Organizational Focus” cannot be sustained.  Having the fortitude to stay the course while managing change is certainly a part of this requirement, however, more fundamentally, this it also includes driving the organization to live by the commitments made by individuals and work groups and provides consequences when these commitments are or aren’t met.

How many times have we sat in meetings where “next steps” have been identified and apparently agreed to, only to find later that only a handful had been completed on time if at all?  Can you recall the amount of frustration and waste that occurred as a result? Effective leaders, by example, and by providing consequences to the workforce cannot allow this lack of discipline, and frankly, disrespect to exist within their organization.

  • Applying Appropriate Resources to Priorities – leaders ensuring appropriate time, money, and talent is committed to high priority efforts and that people who do the work are involved in addressing improvements that impact their work.

“We demonstrate what’s important by actions, not words.”  This adage is certainly true when it comes to leaders and organizational priorities.  It is incumbent upon good leaders to remove obstacles that prevent their employees and organizations from being successful. In our experience, no obstacle is more frustrating and wasteful to the workforce than having leadership pronounce something as a priority and not having the willingness or ability to properly support it.

  • Ensuring Integration of Initiatives – leaders managing the efficient implementation of initiatives by ensuring they benefit from the appropriate sharing of ideas, resources, training, and the like.

As previously discussed, the habit of behaving in functional silos is frequently an obstacle to leaders accepting “Ownership of the Challenge”.  In a similar manner, leaders, particularly in life sciences, often manage initiatives as isolated silos, foregoing the efficiencies associated with managing initiatives as a portfolio, where cross-initiative learning and sharing is the norm.  Additionally, the practice of silo’ed initiative management inevitably leads to sub-optimization of business results and, in many cases, business processes that are disconnected and won’t operate together.

So why don’t life sciences leaders simply act on these leadership requirements? They are fairly straightforward.   In our experience, there are a number of unique challenges that often make addressing these leadership requirements more difficult in life sciences organizations.  This is likely a key reason why most lean improvement efforts have had such a difficult time taking root in the industry.  These challenges include the fact that:

  • Many life sciences leaders come from a science, not a business leadership, background, resulting in a lack of familiarity with some of the concepts.  Additionally, many times these leaders don’t possess the skills, comfort or willingness to address these leadership requirements or, on another level, can’t internalize the need.
  • Many life sciences organizations are very immature in terms of their business environment.  For many the focus has been on getting business processes in place, not optimizing them. Therefore, identifying and eliminating process waste has not been a priority and, furthermore, addressing change leadership issues to help facilitate this waste elimination hasn’t even been a consideration.
  • Life Sciences organizations tend to be very functionally silo’ed caused by a focus on “the science” and a very strong perceived need for content depth and specialization.  As we’ve discussed, many leaders tend to think and behave along these same lines, making it difficult for them to embrace the cross-functional nature of these leadership system requirements.

Regardless of the situation or difficulty to implement, these leadership requirements are very important to address for many reasons. 

For example, the lack of addressing one or more of these requirements can and will cause instances of Ohno’s wastes.  One doesn’t have to look very far to find examples where the lack of proper resource allocation or clear roles and responsibilities has caused a key project to be managed inefficiently or examples of the “initiative of the week” where key priorities seem to shift on a whim.  The waste, frustration, and lack of confidence bred by these poor, but all too common, leadership behaviors are enormous.

Additionally, a sustainable culture of continuous improvement and operational waste elimination is not possible if these leadership requirements are not addressed in a significant way. Weakness in any of the leadership requirements will put the organization’s ability to identify and eliminate surface wastes and sustain improvements in serious jeopardy.  It’s relatively easy, for example, to develop a new business process that minimizes waste.  It’s another thing altogether to demonstrate the “Unwavering Organizational Discipline” leadership requirement and ensure that the roles and responsibilities and steps of the new process are adhered to and that inertia doesn’t pull the organization back into old habits and behaviors.

We also see instances where leadership attention and resources are too quickly removed from a newly implemented or improved business process, resulting in its inability to be sustained.  This phenomenon of “declaring victory too early” is very enticing and points to leadership’s misunderstanding of what it takes to make change stick, demonstrating weakness in the leadership areas of “Well-Defined Organizational Focus” and “Applying Appropriate Resource to Priorities.”


As we’ve discussed, effective leadership is a cornerstone requirement for any organization that’s serious about embracing Operational Excellence.  However, effective leadership is not defined by individual leaders demonstrating good leadership behaviors in a one-off, disconnected fashion.

Rather, we believe that there are a connected set of requirements that all of an organization’s leaders as individuals and as a group must understand and subscribe to as the condition for true leadership effectiveness.

About the Author

Fred Greulich is Director of Operational Excellence in the Strategy and Operations practice at Maxiom Group.  He brings extensive skill and experience in the design and implementation of major operational improvement programs at small and large clients.  Mr. Greulich has a distinguished record in business process improvement, value chain management, change management, and manufacturing, with significant experience applying Lean manufacturing and Six Sigma methodologies.  He has led results-driven initiatives at multinational clients in a wide variety of industries including life sciences, food, chemicals & plastics, and consumer packaged goods.  Prior to Maxiom, Mr. Greulich served in Manufacturing, Quality Assurance and Regulatory Compliance, and Plant Engineering at Procter & Gamble and Frito-Lay.  He went on to hold senior management positions at a number of consultancies including GEN3 Partners, Benchmarking Partners, and Gemini Consulting.  Mr. Greulich earned a B.S. with distinction in Civil Engineering from Worcester Polytechnic Institute.  He can be reached at [email protected] or 781/250-4955.

About the Author

Fred Greulich | Director