Operational excellence has its origins in the automotive industry. Pioneers like Shigeo Shingo, Taiichi Ohno, and W. Edwards Deming laid down principles to become the foundation of successful business management across many industries.
In this article, I have selected a few quotes from these leaders that are both inspiring and highly relevant to any industry today, and IT is one of those.
Operational Excellent in IT?
Operational excellence can be applied reasonably well to any service-oriented type of business. While manufacturing can be viewed as a prime example, IT is not very far behind.
I hope these quotes and their interpretations (which are heavily inspired by the fantastic book The Toyota Way by Jeffrey K. Liker) can be a valuable tool to crystallize the ideas and concepts that underlie Operational excellence.
Table of Contents
- 1. Overview
- Table of Contents
- 2. Operational Excellence in Software Development
- 3. Principles of Operational Excellence
- 4. Further Reading
- 5. Featured Articles
2. Operational Excellence in Software Development
The concepts of lean manufacturing and Six Sigma then followed, and as time went by, many different industries picked up on some of the tools and techniques and applied them with varying degrees of success.
As you go on with this article, you will notice that the ideas and concepts we have presented apply to any industry where these three criteria are met:
Criteria 1: Service-Oriented Business
Service-oriented businesses share many similarities with the manufacturing industry. They all start with a client request that goes through a series of production processes before getting delivered to the customer. A company that provides goods and services can significantly benefit from applying the concepts of Operational excellence.
Criteria 2: Size and Complexity
If the production processes involved in producing the goods were simple and easy, there would need no talk about improvement. This is certainly not the case in car manufacturing; for example, this applies equally well to IT. The tasks required to successfully deliver quality software are indeed complex and heavy.
To succeed, a group of co-workers must collaborate very tight and cost-efficiently.
Criteria 3: Changing Environment
The environment is highly dynamic and constantly changing, so transformation, adaptation, and continuous improvement must be ever-present if the company wishes to stay in the game.
3. Principles of Operational Excellence
The following quotes embody the main concepts of Operational excellence as we understand and use them in this series of articles.
As you will probably notice, these concepts are not always technical. Often, they present metaphysical and philosophical aspects as well.
3.1 Ultimate Purpose of an Organization
In management, the first concern of the company is the happiness of people who are connected with it. If the people do not feel happy and cannot be made happy, that company does not deserve to exist.
Probably ever since the Industrial Revolution in the mid-19th century, the sole purpose of a corporation was to maximize its shareholder’s profit and outperform its competitors just to stay in the game.
That picture has now started to change.
That strategic impulse—to identify a higher-purpose mission that galvanizes the organization—is a common thread among the transformation 20, a new study by Innosight of the world’s most transformative companies. Fortifying this new view, the Business Roundtable last month released a statement signed by 181 CEOs stating that serving shareholders can no longer be the main purpose of a corporation; rather, it needs to be about serving society, through innovation, commitment to a healthy environment and economic opportunity for all.
Without a long-term altruistic goal, the organization has little or no incentive to sacrifice short-term financial goals to invest in its human assets.
3.2 Continuous Improvement
Are you too busy for improvement? Frequently, I am rebuffed by people who say they are too busy and have no time for such activities. I make it a point to respond by telling people, look, you’ll stop being busy either when you die or when the company goes bankrupt.
Achieving Operational excellence requires a relentless drive toward continuous improvement. And for that to happen, there are three necessary ingredients that need to be present.
Firstly, continuous improvement cannot happen sporadically or in spurts; it has to be engrained into the system’s processes.
To illustrate this concept, we need to look at the andon system that Toyota uses to signal a quality problem. The andon refers to the light signal for help. When the signal is lit, the production line is stopped, and the issue is investigated and resolved before work resumes. Even for a few seconds, stopping the production line was unthinkable outside Toyota.
The second ingredient has to do with company culture and the setting up of the reward and punishment system. How many times throughout your career have you heard the phrase “it’s not my problem”?
The third ingredient is about improving the processes. For this, Toyota has devised and perfected the Kaizen system of workshops whereby teams convene to discuss, improve, and apply the recommended changes.
To conclude this section, and circling back to software development processes, our main subject of interest, we find that continuous improvement has been observed in the last principle of the Agile manifesto:
3.3 Seeing for Yourself
Observe the production floor without preconceptions and with a blank mind.
“Go and see for yourself” is a philosophy advocated by Taiichi Ohno and is known as Genchi Genbutsu.
Most managers today rely heavily on reports from their subordinates to obtain a snapshot of the situation on the ground. It is considered a waste of time to go and see for yourself.
Moreover, the practice of “going and seeing for yourself” may perhaps be seen to convey a feeling of mistrust or a knack for micro-management, something a manager would probably want to avoid.
Reports, however, can be misleading. Data can be inaccurate or biased. It is also, at best, an indicator of what’s happening rather than a full description of the underlying processes.
Finally, observing a process with an experienced eye can yield vital Information that may not be visible to someone with less time on the job.
3.4 Root Cause Analysis
Repeat ‘why’ five times about every matter.
Have you ever conducted a post-mortem exercise and been disappointed with the results?
In most cases, the data retrieved during the investigation is taken at face value and lacks the necessary depth to properly understand the circumstances that led to the failure.
Asking “why” 5 times guarantees that level of thoroughness during an investigation but, more importantly, it underlines the seriousness and commitment to finding and resolving quality issues.
3.5 Eliminating Non-Value Adding Effort or Waste
When you buy bananas all you want is the fruit not the skin, but you have to pay for the skin also. It is a waste. And you the customer should not have to pay for the waste.
Waste can only be eliminated by closely observing the production processes and mapping those steps that add value to the final product.
If you are still wondering what the definition of business value is, it is those things the customer is willing to pay for.
To get an idea of how this works, consider the example of baking a fresh pie.
The process starts when the customer places an order and ends when she receives her pie. Calculate the time spent working on the pie vs the time spent taking the order, inquiring about the weather, waiting for the oven to heat, waiting for the pie to cool, and many other little things here and there. You might be astonished by the result.
The idea behind the production optimization philosophy is that TPS or lean manufacturing advocates lie in or around eliminating all forms of waste.
3.6 Support From Leadership
…every successful quality revolution has included the participation of upper management. We know of no exceptions.
Although Agile project management has been around for two decades, adoption has been relatively slow for many reasons.
According to the 14th State of Agile Survey, 46% of respondents cited “NOT ENOUGH LEADERSHIP PARTICIPATION” as a challenge and/or barrier to adopting and scaling Agile practices in their organization.
System-wide changes (such as the adoption of new project management methodologies like Agile) can carry a risk of disruption of business processes. This is why it needs to be sanctioned, perhaps even driven by higher management. Otherwise, they have no hope of being accomplished.
This applies to significant quality problems as well.
Quality issues that make it up to the end-user are usually not isolated patches or repeated mistakes.
They must be systematic defects in some of the processes. Fixing them will require changes on different levels, which is why individual initiatives may prove futile.
Successfully fixing systematic issues needs to involve the whole hierarchy and requires direct sponsorship from the leadership.
3.7 Change and Resistance to Change
Two basic rules of life are: 1) Change is inevitable. 2) Everybody resists change.
One of the major paradigm shifts that occurred with the Agile movement was the attitude towards changing requirements.
The traditional approach to Software Development usually consisted of requirements gathering phase at the very beginning of the project that was eventually followed by a design phase and then execution according to a certain plan.
In that scheme of things, there was little room for either improvement or iterations; any change in the requirements constituted an amount of rework and a measurable waste of time and effort.
To avoid that, traditional project delivery methodologies stuck to the original plan trying to deliver on time and on budget even when the end result did not meet the stakeholder’s expectations or produce the promised values.
The state of Software Development had become untenable. Something needed to be changed in the way that change was perceived.
Transformation of Project Delivery
People had to acknowledge that change was inevitable, and Software Development processes had to find ways to deal with it.
Modifying production processes through Agile and DevOps to engrain change in the Software Development DNA as a constant, ever-present factor was a major step toward Operational excellence in Software Development.
This is where the principles of Agile, about the ever-changing nature of software projects and requirements, became invaluable.
Shorter iterations, frequent software drops, earlier user feedback, and automated testing were adopted to respond to change better.
4. Further Reading
- The Toyota Way — Jeffrey K. Liker is a must-read.
- Organizational Culture and Leadership — Edgar Schein is indispensable.
- Six Frames for Thinking About Information — Edgar de Bono