“Operational Excellence” or “Enterprise Excellence”?

by Ken Snyder

A few decades ago, we changed the name of the Shingo Prize to the Shingo Prize for Operational Excellence. This was appropriate at the time because the Prize was meant mainly for manufacturers, and applicants for the Prize were mainly the production facilities of manufacturing organizations. At the time, the assessment model we used consisted only of systems, tools, and results.

Before 2008, we observed many organizations that received the Shingo Prize and continued getting better (which are, by the way, great examples of continuous improvement). Unfortunately, some other organizations that received the Prize peaked, and then regressed. Few organizations, if any, stayed even. Organizations either kept getting better and better, or they regressed. We see this as the law of entropy in action.

When the Shingo Institute became aware of these two phenomena, we conducted research to identify why some Shingo Prize recipient organizations got better and better, and why others regressed. We learned a lot from that research and it resulted in our publishing the new Shingo Model published in 2008. It introduced, among other things, the missing elements of culture, the three insights, and the 10 guiding principles.

Another important thing we learned from that research is that the term “operational excellence” might be too limited because the excellence we found involved more than just operations. As reflected in the changes made to the Model, the organizations that continued to improve had three common factors:

  • Lean was a strategic initiative within the organization.
  • C-Suite executives led the Lean efforts.
  • Top executives worked to involve everyone in the Lean journey.

The term operational excellence implies that the goal is all about improving the operations (i.e., production) department. As a result, in too many organizations:

  • Lean is led by production managers and does not involve the C-Suite executives;
  • Lean involves line workers and their immediate supervisors but does not involve senior executives nor support functions; and
  • Lean is seen as a tactical effort and not a strategic effort.

In reaction to this, various organizations started using the term “enterprise excellence” to describe the insights, the purpose of the Model, and even the Prize itself. But this alternative term creates a different set of issues. The Shingo Institute does assess how well organizations implement the new product development process, the strategy deployment process, etc., but we don’t cross into other strategic issues. For example, we don’t assess, or teach to, the strategic process involved in selecting markets that organizations enter into or what products they choose to develop and sell. Shigeo Shingo didn’t either. As such, it is not appropriate to describe what we do as “enterprise excellence.”

But we don’t want to limit anyone’s thinking by using the term “operational excellence.” Toward that end, and in the spirit of continuing to improve continuous improvement, we have some new changes coming in early 2020 that will help us be clearer. They’re relatively small but we’re excited to share them with you. Stay tuned!

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1 thought on ““Operational Excellence” or “Enterprise Excellence”?”

  1. Such a thoughtful treatment of the power of words, as always. Our mentor, Paul O’Neill, has always used the words “habitual excellence.” We at Value Capture frequently use these words when coaching leaders to help them think about the state of being their systems should enable, allowing everyone, every day to pursue perfection in everything they do, individually and systemically. These words intentionally include everyone including strategic planning, finance, etc., using the same principles even though it is different work. We are proud that some of our healthcare clients are en route to habitual excellence with continual leadership action. Grist for the mill!

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