Read time: 5 minutes
In this edition
Vilfredo Pareto never knew his observation about wealth distribution in Italy would one day underpin a vast body of business and quality management theory.
An Italian economist and sociologist, Pareto merely observed that roughly 80% of Italy’s land was owned by 20% of the population. Some two decades after his death, an engineer and management consultant by the name of Joseph Juran would take Pareto’s observation and generalize it to process quality with the principle that, when dealing with quality, one should focus on the “vital few” rather than the “trivial many.” Thus was born the “Pareto Principle.”
One of the interesting things, though, about this principle is that—particularly in a high-tech world—it’s easy to do the “vital few” things. What ends differentiating companies is going after the “trivial many.” For the little details are only “trivial” when we consider them in isolation. When you do a lot of little things together, the resulting performance impact becomes a significant competitive moat, both in terms of operational prowess and leadership effectiveness. Every quarter turn of the screwdriver, every little hole that is patched, every annoying little glitch that is ironed out…over time these amount to real money.
You’ll never get to 100%, but in pursuing the so-called “trivial many,” you will build a culture of excellence, innovation, and pride. Here’s how you do it.
Operational Excellence
Introduction
Continuous improvement is the practice of constantly seeking ways to enhance processes, products, and services. Operational excellence, however, is not just about making improvements; it’s about ensuring these improvements are explicitly linked to performance. It’s about driving superior outcomes through incremental changes. Small, continuous improvements encourage creative problem-solving and lead to larger innovations over time. Engaging employees in this process not only enhances their sense of ownership but also connects them more deeply to the company’s success.
Laying the Foundation for Continuous Improvement
The journey towards continuous improvement starts with embedding the need for excellence into the vision of the organization. People need to understand that operational excellence matters.
Of course, this is only the beginning. You can say it matters, but the next question is “ok, what are we going to do about it?” This is where clear and measurable goals (and accountability for achieving these goals) comes into play. Operational excellence begins by defining what improvement and excellence looks like. This may be a reduction in error rate, or shorter delivery times, or reduced manual processes. It can be fewer software defects, or smoother customer onboarding, or smoother employee onboarding, or shorter delays in contract approvals.
Every department can pursue operational excellence.
But for people to pursue it, someone must be accountable for delivering it. That means executive support to prioritize resources and actions so that there is a person accountable for delivering, and that person has the necessary resources (people, money, access to tech, etc.) to perform the activities leading to the desired outcomes. In larger companies, there may be a whole department devoted to this (a Project Management Office/PMO, Strategy team, or Business Operations team). In smaller companies, it may be just a few people who are carved off from the team to work on this, whose goals and progress are monitored alongside everyone else’s.
Leadership Requirements
As a leader in this environment, you need to ensure you encourage the team working “on” the business and keep it joined up with the people working “in” the business.
- Feedback Loops: Regular check-ins and performance reviews keep everyone focused. Feedback loops help identify what’s working and what isn’t, allowing for quick adjustments and continuous progress.
- Recognition: Tracking progress against goals and trumpeting the wins creates a positive momentum and encourages further innovation and effort. Model + incentive = behavior change!
- Integrate improvement into the broader team: Encourage employees, wherever they are, to identify and implement small, incremental improvements. Find ways to incorporate improvement activities into daily work processes. This ensures that continuous improvement becomes a natural part of the workday, rather than an additional task.
Overcoming Challenges
Resource limitations and dual responsibilities can complicate continuous improvement initiatives. There will always be competing initiatives. Moreover, the business needs to balance immediate production needs with longer-term goals of continuous improvement. When it is focused too much on the latter, it leads to a culture of navel-gazing and overcaution. The best way to avoid this is to prioritize improvements based on impact, achievability, and their ability to be integrated into the broader business.
Resistance to change is another common challenge. Overcoming this requires clear communication and demonstrating the benefits of improvements. This is where leadership commitment is essential: leaders need to create the narrative that this matters, and then back up the words by action. Engaging employees early in the process and address their concerns openly can help.
Real-life examples: tuning APIs
In a previous role, I led an operations team that, among other things, was responsible for the health of our application programming interfaces (APIs) with other systems. API integrations are living, breathing things. They are temperamental things. And they can be frustrating things when they are built by engineers without any ability for non-engineers to query, observe, troubleshoot or improve them.
Over a period of a year, my operations team worked with the developers to create tools that allowed us to provide front-line support for the APIs. We could quickly troubleshoot problems. Better yet, because we understood all the use cases, we could make suggestions that would improve API performance. We got so good, that they even gave us the ability to configure the APIs in a live environment.
That year, we improved API performance by 60%, which had a massive impact on our revenue and gross profit.
Conclusion
Operational excellence is not achieved through grand gestures or sweeping changes but through the persistent, incremental improvements that accumulate over time. By embedding the principles of continuous improvement into the very fabric of your organization, you create a resilient, adaptable culture capable of consistently delivering superior performance.
Remember, the pursuit of excellence is a journey, not a destination. It requires a steadfast commitment to improvement, a willingness to learn from failures, and the resolve to empower every member of your team to contribute to the process. In the end, it’s the small, deliberate steps taken consistently that lead to operational excellence and set your organization apart from the competition.
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