Building operating excellence

Management literature is filled with powerful management advice. Some advice published in the Harvard Business Review asks business owners to focus on three issues in their organizations—internal operations, customer intimacy and innovation. Business consultants refer to these as value disciplines. The idea is to be as good as your competition in two out of the three value disciplines and be superior in one. The one you choose to be best at is the one that gives you the most competitive advantage.

Let's consider your company's internal operations. You've probably been pushed to improve internal operations through quality initiatives. Customers have demanded improvements, and you probably have made similar demands on your suppliers. The question is whether you have done enough. The first things to examine are how to improve specific tasks, minimize costs, and eliminate redundancy or intermediate steps. But there are other ways to improve operational excellence.

Looking inside

For example, I know an insulation contracting company that reduced insurance costs by implementing processes that led to reduced workplace accidents. The company cut its accident incident rate from 14.5 to 2.5 per 100 manyears (2,000 hours equal one manyear) in just six years. How did the company do it?