Top 5 Reasons Why Operational Excellence Projects Fail

The OE Implementation World

By: Fernando Martinez, P.Eng. REM Canada Director

Operational Excellence (OE) projects can fail in many ways (causes). In this post, I will discuss 5 of the most common failure modes. However, keep in mind that usually, more than one cause is present. Hopefully, by being aware of them, you can mitigate them.

  1.  Divided / unconvinced leadership. This happens when the OE initiative has started under the wing of a tenacious and convinced leader, but other top leaders in the organization are skeptical, or silently opposing it. It usually occurs when the organization has money available for “improvement initiatives” and the leadership team decides to give it a try. Moving an OE effort under the threat of “divided we fall” is a toxic approach. As soon as the OE effort struggles at delivering its promised benefits, or as soon as the financial situation of the company gets tough, funding assigned to OE is cut, and the leadership in opposition finds the perfect excuse to kill the project.
  2. OE as the flavor of the moment. Continuous improvement fashions have always been around, propelled by the gurus of the moment, and by consulting firms trying to get an edge by re-branding the same old improvement concepts or methodologies. In the recent decades, we have seen: TPM, Six Sigma ( a TPM sequel), TQM, Re-Engineering, Value Stream Mapping, DMAIC, A3s, 5S,  PDSA…the list is long. While all of them are valuable tools in the tool box, the usual error is to believe that the tool is the systemic solution. The tool approach or flavor of the moment fails to recognize, that operational excellence is the result of an aligned organization, where people, processes and tools (in each organic function), should enable management of business performance as part of their daily activities, and not as initiatives pursued by few individuals; black belts, improvement leaders, etc. In the larger scheme of things, it’s all about systemic reliability and efficiency management (REM). The flavor of the moment usually lasts until the next initiative is sold to the incumbent management team.
  3. OE as the cash cow. This happens when the consulting company, usually a large one with many people in its payroll, finds a client with big pockets, and makes its way in, by sweet talking the top management of the organization. A conflict arises between the consulting company trying to maximized its revenue, and the OE initiative trying to reduce operational cost. Typically, the conflicted consulting company will pursue two objectives. First, to make the scope of the OE project as large as possible, usually involving a remake of information systems. Second, to invoice as many hours as possible by mobilizing a large team in order to execute as much consulting fluff as possible; i.e. unnecessary assessments, team building activities, group sessions to re-invent the wheel or document the obvious, etc.  Usually after many dollars are spent, the company pushes back on the OE effort, reducing the scope and hours to the consultant, and finally, either taking the OE effort as a limited internal initiative, or, letting it die as the consultant leaves.
  4. Fear of Change. This is perhaps the most common cause. Defense of the status quo is always present. However, the worst kind of road block is the one that comes from elements in top leadership positions who blend fear of future change with fear of letting the past go. This scenario occurs when the need for improvement is pushed from top levels in the corporation, creating a stressful environment for the fearful plant leadership. It is a difficult issue to solve and sadly, it frequently ends in the removal or resignation of the opposing individual(s), therefore wasting valuable time. In contrast, cultural opposition to change, at the plant floor level is easier to manage, as it is mostly driven by the fear of job loss but not as much as for love of the status quo. In such scenario, a good change management plan, understating the maturity path of the culture, with open, honest and ongoing communication, always works.
  5. Failing to recognize OE is a maturity journey. Imagine you have built the most technologically advanced process, with well documented best practices, and information technology which is properly tailored to support operational performance, and then, you staff your business with cavemen just recently discovered. Imagine you have recruited the best staff from a best in class company, and have brought them to operate your production facility, which still remains as it was built in the 70’s, with backdated maintenance practices (if it breaks, it’s fixed), with poorly configured information systems, and no documented processes or suitable tools. Do you get my point? Successful OE efforts require a delicate balance between the current business needs for bottom line results, and improvements in people skills, processes and technology.  Very often, OE projects are formulated as implementations of software systems (i.e. SAP, Scheduling), including a certain number of work practices, called “Elements”. This approach, even though it brings limited improvement at a high cost, it falls short at achieving OE as the result of an integrated management system for operational performance, that drives continuous improvement in a coordinated and cost effective way.

REM Canada with its holistic and lean approach can help you to obtain Operational Excellence. Therefore, avoiding costly mistakes.