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Three Insights Into Operational Excellence

Posted by Matt Banna

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Jan 15, 2020 1:32:07 PM

insightsThe Shingo Institute is a program in the John M. Huntsman School of Business at Utah State University. It is named after Dr. Shigeo Shingo, a Japanese industrial engineer, and Toyota advisor. Dr. Shingo is recognized as one of the world’s thought leaders in terms of improvement techniques, management systems, and business culture concepts. His work contributed to the Toyota Production System. The Shingo Institute is known for it’s Shingo Prize, an award that recognizes organizations that demonstrate an exceptional culture that fosters continuous improvement. Business Week once called it the “Noble Prize of Improvement.”

Drawing from Dr. Shingo’s teachings and years of experience working with organizations worldwide, the Shingo Institute developed the Shingo Model™, which introduces the Shingo Guiding Principles that outline the path to enterprise excellence.

The Culture Imperative

In developing those principles, the participants realized that something vital was missing from how most organizations are managed. Regardless of the aim of the organization, most leaders focus on results, and implement the systems and tools needed to achieve the desired results. When the target results are not met, leaders make changes to the systems and tools in place.

The problem is that this “Results-Systems-Tools” approach misses the fact that it is people who operate the systems and tools. Every person has a set of beliefs and values that determine their behaviors. The aggregate of people’s actions determines organizational culture. Ultimately, it is culture that sets the limits around results.

After identifying culture as the basis for operational excellence, the Institute asked some critical questions:

  • What are the behaviors one would see in an operationally excellent organization?
  • How might their results be different from an organization with an undeveloped culture?
  • How are these organizations able to manage their culture rather than letting it control them?

The answers to these questions led to three crucial insights.

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Insight #1 - Ideal Results Require Ideal Behaviors

Whether the goals of your organization are financial or altruistic, every organization seeks to achieve some kind of results through various methods. Ideal results are excellent, sustainable over the long term, and continually improving. Studying successful organizations shows that ideal results are not achieved by adding new tools or adjusting systems. Instead, leaders in these organizations understand the relationship between behavior and outcomes and work to create the conditions under which ideal behaviors are practiced by every team member.

Insight #2 - Purpose and Systems Drive Behavior

The best way to illustrate this insight is with the example of a commissioned sales representative. Most sales representatives have the purpose of maximizing commissions. The commission structure is the system that has a profound impact on the behavior of the sales representative. In many cases, the business results can be changed by altering the commission structure to incent different behavior on behalf of the sales representatives. Want to sell more of product A vs. product B? Simply change how the reps are paid.

Unfortunately, the link between most systems and behavior is not as visible. For example, performance measurement systems that are focused on throughput might have a detrimental impact on quality. In operationally excellent organizations, leaders work to ensure alignment between purpose, systems, and ideal behavior.

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Insight #3 - Principles Inform Ideal Behaviors

Principles are a set of rules that govern the positive and negative consequences of behavior. Understanding the principles of operational excellence helps people make decisions about how they behave. Systems can be tested against the principles to determine if they create the conditions for ideal behaviors. The better aligned systems are to the principles, but higher the chance of creating a culture of sustainable excellence.

You can read more about the Shingo Institute’s ten guiding principles here.

This is how Dr. Shingo himself summed up these insights, “The more deeply leaders, managers, and associates understand the principles of operational excellence and the more perfectly systems are aligned to reinforce ideal behavior, the greater the probability of creating a sustainable culture of excellence where achieving ideal results is the norm rather than the exception.”

That’s certainly something worth working hard to achieve.

Topics: Operational Excellence

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