Hey! Got a question for you:
On a scale of 1 to 10, how would you rate your agency?
I see you cringing over there.
We all strive to be a 10. But we know that excellence can only be achieved through continuous improvement.
Whether you’re operating a small or a huge business, there’s always room for it! Change is an essential factor for the prosperity of your enterprise, but what is the type of change you need?
Yup, you guessed it: continuous improvement.
Operational excellence is a reliable roadmap toward continuous, sustainable improvement, especially in a complex business environment.
In today’s digital era, digital agencies must be proficient at streamlining operations Streamlined operations drastically improve your ability to provide effective, efficient services and meet the constantly evolving needs of modern clients.
In this article, you'll learn that tactics and strategies required to leverage operational excellence to your agency's maximum advantage.
What Is Operational Excellence?
Operational excellence can be defined in various ways. But the basic idea is to operate your business in a better way that outshines your competitors.
We can define operational excellence as a philosophy that incorporates problem-solving and leadership skills as the basis for continuous improvement. However, operational excellence involves more than cost reduction and process improvements to achieve long-term sustainable growth.
In the light of operation excellence, you always want to have the best final product — whether an item or a service — that appeals to your customers.
So, you can adopt a customer-centric approach with our concept of operational excellence. The ultimate result is that every employee can visualize, deliver, and enhance the flow of value to a client. This will create a culture of excellence that attracts customers and increases repeat revenue generation.
Evolution of operational excellence and its application in the context of digital agencies
Dr. Joseph Juran introduced the concept of operational excellence in the 1970s. Juran taught Japanese business leaders how to establish stronger and more competitive businesses, with the concept of operational excellence first practiced in the automotive industry.
Today, operational excellence is a familiar term in practically all economic sectors worldwide. Initially, the term only appeared relevant to large companies with many resources. However, operational excellence applies to any size of business today.
It is now more critical than ever for us to adopt the philosophy of operational excellence in our digital agencies so we can offer maximum value to our clients and ensure their businesses thrive.
Besides, digital agencies manage multiple projects for different clients every day. Operation excellence can be a lifesaver helping agencies achieve their goals and maintain high-quality services.
Key Components of Operational Excellence in Digital Agencies
A common definition of operational excellence is that it is a change of mindset, not a methodology. To achieve operational excellence, we need to identify potential problems or work areas and develop streamlining tactics to improve them.
Key components of operational excellence include:
To make our digital agencies sustainable, we need to streamline internal processes for maximum productivity through operational efficiency. This means utilizing our resources, such as checklists, and processes to achieve higher profitability and reduced costs.
We can achieve operational efficiency by optimizing our systems and processes and coordinating our staff’s focus on attaining the highest quality. This efficiency will result in operational excellence since we’ve fully optimized all our systems and processes to perform at their best levels.
To make our digital agencies more attractive to customers, we need to have rapid responses to market changes and client demands. In our digital marketplace today, customer needs and tastes are changing unpredictably and quickly.
Only if we are flexible enough to respond quickly and efficiently to changes while upholding consistent quality can we withstand the stiff competition. We need to acquire the latest technologies such as AI and machine learning to expedite our response.
In the digital world, we all understand that quality is king. Our ability to deliver consistently superior services is what keeps our clients engaged and loyal to us. Our customers quickly spread the news about our superior services, helping us increase our client base.
Our continuous improvement and evolution in service provision will stabilize our digital agency businesses despite market changes. A culture of innovation in our agencies can help to increase our revenue, reduce operational costs, and promote a positive company culture. Innovative cultures also promote our employees’ ability to prevent errors and equip them to provide solutions to our clients.
Developing strategies for optimizing output and performance can help our digital agencies achieve operational excellence.
We can achieve operational excellence by using standardized processes and perpetually improving them. This provides a template for running our businesses that is easy to relocate to new offices or assign to different teams, facilitating growth and productivity.
Leadership's Role in Operational Excellence
Although we may overlook the role of leadership in the success of our operational excellence strategy, it's an indispensable factor.
To execute an operational excellence plan successfully, our leaders must have a sincere desire and commitment toward this objective, irrespective of their level. Only effective leadership can help instill a culture of operational excellence in an entire organization.
How can agency leaders champion the values of operational excellence?
As an agency leader, you need to develop the following competencies to steer operational excellence in your business:
- Focus, leadership will, determination, and resilience. Agencies need leaders who can lead them through the entire process without giving up even when members delay adopting operational excellence initiatives or revert to old habits. A leader should assess the process when a mistake occurs and rectify it to get ideal results.
- Respect for everyone. An agency leader should respect the employees under them and coach the team to respect one another. Such leaders provide growth opportunities for all teams, acknowledge achieved operational excellence milestones, and foster transparent communication and interactions.
- Humility. An agency leader should implement management systems where they seek input from their teams. They should listen and learn from this feedback, admit their shortcomings, and seek ways of improving.
- Constancy of purpose. Agency leaders should inform their teams about the company’s vision and mission. All employees should know the company’s objectives and mission, and how to accomplish them in every project.
- Driving innovation and collaboration. Agency leaders should embrace scientific thinking by creating a culture where teams can experiment and test new ideas to foster innovation.
How can you put this into practice? Let's cover the strategy and how to execute it next.
Operational Excellence in Action: Strategy and Execution
As business professionals, we talk about operational excellence and want to achieve it, but only a few know how to implement it effectively. At its heart, what does operational excellence mean? It means identifying inefficiencies in our project management processes and improving them.
We need to integrate and implement several factors successfully to achieve operational excellence. The integrated business execution system we need to implement when pursuing operational effectiveness consists of four fundamental elements.
#1. Strategy deployment
Developing a strategic plan and strategy maps can help agencies establish effective performance management systems.
Begin with a strategic plan that will enable your organization to define long-term objectives while monitoring a set of activities required to keep the projects running successfully.
A well-defined strategy ensures collaboration and alignment of projects among different teams.
#2. Performance management
A well-designed strategy will help you translate your agency’s operational objectives into measurable success indicators. It will also help align the different teams in the organization.
#3. Process excellence (or continuous improvement)
Well-crafted, efficient, and effective processes are the basis of operational excellence success. The right management and support processes enable digital agencies to consistently deliver top-notch services.
#4. High-performance teams
Once you've successfully implemented operational excellence, you'll need to consistently train and nurture your employees to form strong values, competence, leadership, and teamwork. This encourages workers to embrace the company’s success because it's directly tied to their success.
Implementing operational excellence
Considering another operational excellence definition, we can visualize operation excellence as an ongoing journey and not a final destination. In this context, the focus is on continuous improvement, where agency leaders and employees find ways of becoming better at what they do.
It's important to set goals and define metrics to evaluate if and how things are improving. These metrics, key performance indicators (KPIs), can include sales increases, workforce retention rates, etc.
The types of goals you can include in operational excellence-based processes are as follows:
- Operational goals. Evaluate how the company operates, including its efficiency. For example, a company may choose to speed up its order-to-cash process or improve its service delivery.
- Financial goals. Analyze sales and loss metrics. The goals could be to increase customer engagement, penetrate new markets efficiently, or improve marketing strategies.
- Culture and workforce goals. Measure worker satisfaction, professional development, and worker retention initiatives. This could involve creating a more inclusive culture, developing equitable compensation plans, or incentivizing professional development.
There are five core steps for implementing operational excellence across your digital agency.
Steps for Implementing Operational Excellence:
- Define strategic goals and plans
- Assess the current circumstances and identify areas of improvement
- Leverage operational excellence tools and methodologies
- Train employees
- Monitor and evaluate processes
It's not enough to simply know the steps. You also need to understand where to implement them for maximum effectiveness.
Where to Implement Operational Excellence
You can implement operational excellence in any organization that wants to optimize its processes. It can be manufacturing, healthcare, government, supply chain management, digital agencies, and other industries.
So, what are operational excellence examples? Operational excellence examples include Toyota Production System, Starbucks, Marriott International, General Electric(GE), Southwest Airlines, and Amazon.
Tools and Techniques for Achieving Operational Excellence
The tools and techniques you can use to achieve operational excellence are also known as operational excellence methodologies.
For example, the Shingo Institute brought a new way of thinking into the business world through its edge-cutting initiative, the Shingo model.
Other methodologies have been developed based on the core principles of operational excellence and the Shingo model approach. These include lean management, Six Sigma, Kaizen, Kanban, and others.
Lean manufacturing focuses on eliminating waste from the production system. According to Lean, every process has a bottleneck, and focusing on fixing it creates the quickest path to success.
Lean manufacturing follows five basic principles, namely, adding value to customers, optimizing the process, creating a consistent production flow, waste elimination, and continuous improvement.
Six Sigma is a collection of tools, techniques, and methodologies aimed at improving business processes and minimizing defects. A defect is anything that doesn’t meet customer expectations.
Six Sigma is based on the five principles acronym 'DMAIC.'
- Define – identify the problem
- Measure – collect and measure available data related to business processes
- Analysis – analyze the data to determine the cause of the problem
- Improvement – develop and implement solutions to solve the problem and improve processes
- Control – monitor your processes to detect and fix arising issues. Uphold continuous improvement to ensure your process remains effective
Six Sigma is an ideal operational excellence strategy for improving customer satisfaction and retention.
Kaizen means “continuous improvement” in Japanese. Kaizen’s guiding principles are teamwork, collaboration, taking responsibility, and positive processes to make incremental improvements.
Operational excellence methodologies in digital agency operations
Most digital operations are performed remotely. Using operational excellence methodologies can help teams collaborate on various projects to enhance value for clients. Team leads can identify defects and make necessary improvements before the final projects are sent to clients.
The methodologies encourage team members to take responsibility for their actions and seek help as needed. This prevents a bad image for the agency and boosts the inflow of clients.
Challenges and Overcoming Obstacles
The type of operational excellence defined in literature isn’t what we find on the ground most of the time. Theoretical operational excellence appears simple but the practical aspect of it comes with various challenges.
Common challenges and possible solutions to achieve operational excellence:
- Sustaining change. Since sustaining change can be a big challenge to team leads, incorporate a culture of continuous improvement in your agency’s DNA. Make continued small changes as the need arises.
- Budget limitations. Implementing operational excellence may require a huge upfront budget which might be burdensome to an agency. Remember that only the initial cost is huge. After successful implementation, process improvements will generate enough to cover their cost.
- Project scope creep. This is when clients ask for additional tasks or request changes that were not included in the initial project scope.
- Internal resistance. When you implement change, some team members may resist the change or delay in adopting changes. To overcome this, consistently remind teams why you're implementing the changes and how it will positively boost their growth.
- Maintaining a customer-centric approach throughout. Digital agencies work for various clients with different expectations. It becomes difficult for them to differentiate enhancing the flow of value to the giver of the task or the final consumer of their services. We can overcome this by communicating with clients to agree about it.
- New technology. Technology advances daily, and the advancement may take over some of the agencies' jobs. Overcome this challenge by encouraging team members to diversify their skills to take up different roles. Also, upskill yourself with the new technology and use it to find other opportunities.
Anything worth doing in business takes a substantial amount of effort. But a digital agency that is operationally excellent will lead to sustainable growth, a more engaged workforce, and happier customers.
Implement Operational Excellence and Stand Out in the Crowd
In the current technology-driven era, agencies need to implement operational excellence more than ever. Achieving operational excellence is the best way for digital agencies to survive the stiff competition. Once you’ve achieved operational excellence, you can enjoy low costs, high productivity, and happy clients who are willing to come back for more. You'll also enjoy many referrals.
To sum everything up, take note of these points:
- Operational excellence is a business strategy that helps us optimize agency operations and improve performance. It focuses on continuous improvement, increasing productivity and quality, saving costs, and gaining a competitive advantage.
- Be efficient, agile, innovative, productive, and always producing high-quality outputs to make your digital agency stand out from competitors.
- As the key persons, agency leaders should have focus, leadership will, determination, and resilience to be effective.
- Take advantage of the tools and techniques listed here in executing business strategies to make overcoming obstacles easier.
Take the opportunity today to begin your journey to operational excellence. Track your progress with our project management checklist.