Chief operating officer, or COO, is not just a title for bragging rights. It is a role befitting someone who’s a great leader, communicator, and team builder. According to LinkedIn, a COO is an organization’s second in command; they work with the chief executive officer (CEO) to steer the company to success. If CEOs are the planners and goal setters, COOs are the executors of these plans and goals, implementing them throughout the organization.
For COOs and business leaders, operational excellence is a philosophy as it is a mindset and strategy. Whether you’re an aspiring COO or an employee, this article covers everything about operational excellence, from core principles to the engines behind achieving it.
What Is A COO?
A COO is a C-suite executive in charge of overseeing a company’s operations and achieving business goals through well-formulated strategies. They also report to the chief financial officer (CFO) and CEO.
Though job responsibilities may vary between industries and companies, below are the usual day-to-day tasks of a COO.
1. Manage Departments
From human resources to marketing, COOs manage various departments to ensure each one maintains operational excellence.
2. Collaborate With Department Leaders and Stakeholders
COOs boast strong leadership and interpersonal relationship skills. These skills allow them to collaborate, lead, and guide department leads in fostering camaraderie between teams. COOs also form strategic relationships with stakeholders and directors to ensure success.
3. Monitor and Improve Performance
COOs analyze data and key performance indicators (KPI) to improve the company’s operational excellence with well-informed, data-driven decisions.
4. Execute Plans and Strategies
If the CEO is a leader of vision, then the COO is a leader of action. The COO breaks a company’s plans and strategies into concrete steps to achieve short- and long-term business goals.
What Is Operational Excellence?
Operational excellence and operational efficiency may sound synonymous, but every business leader — especially the COO — knows the difference between the two. Operational excellence is a strategy that aims to gain a competitive advantage and foster continuous growth, improvement, and customer value.
However, don’t confuse operational excellence with operational efficiency. Operational efficiency aims to improve productivity and optimize costs and resources without compromising the quality of services.
Unlike operational excellence, which focuses on continuous improvement and competitive advantage, operational efficiency centers on balancing quality with cost-effectiveness.
What Are the Principles of Operational Excellence?
The Shingo Model by Dr. Shigeo Shingo lays the groundwork for achieving operational excellence. This operational framework contains five components: “Guiding Principles,” “Systems,” “Tools,” “Results,” and “Culture.”
In this article, we will only tackle the Shingo Model’s 10 guiding principles, which are categorized into four dimensions: “Cultural Enablers,” “Continuous Process Improvement,” “Enterprise Alignment,” and “Results.”
Cultural Enablers
1. Lead With Humility
Business leaders are expected to exhibit humility. They are open to change and new learnings, ask for feedback, and listen to other people’s thoughts, creating a culture of respect and trust between leaders and employees.
2. Respect Every Individual
While earning and giving respect are important, the Shingo Model asserts that respect must also be felt by each individual in the company. A workplace built on mutual respect helps create a safe, empathic, and communicative work environment where every employee feels valued.
Continuous Process Improvement
1. Focus On Process
This principle shifts the cause of problems from the employees to the process itself, allowing people to use mistakes as a catalyst for growth and improvement.
2. Embrace Scientific Thinking
Leaders need to think like scientists. Embracing scientific thinking entails continuous observation, hypothesis, experimentation, analysis, and learning to improve processes.
3. Flow and Pull Value
This principle doesn’t subscribe to the overproduction of goods. Business leaders must ensure that the production of goods is equal to the demand.
4. Assure Quality At the Source
Businesses must detect and reject defective products right away. The organization’s operational process must be continuously refined to avoid defects in the future.
5. Seek Perfection
Improvement is everywhere, a never-ending journey that businesses undertake. This builds a mindset of continuous improvement.
Enterprise Alignment
1. Create Constancy of Purpose
While change is inevitable, a business must have guiding principles and direction to ensure organizational alignment.
2. Think Systemically
Business leaders analyze the organization as a whole, including the interconnectedness of relationships, to guide improvements and decision making.
Results
1. Create Value for the Customer
Businesses must deliver customer value across the board, from meeting customers’ needs to creating high-quality goods and services.
How Can COOs Drive Operational Excellence?
It’s easy to be blinded by the title of “COO.” More than a prestigious title, it is a role that demands knowledge, action, accountability, compassion, and humility. That being said, here are ways to promote operational excellence in your organization.
1. Lead With Humility
Leadership is often associated with power and prestige. It is not about ruling with an iron fist and making people obey you without question. Good leaders understand that leadership takes hard work and humility. But here’s the million-dollar question: How does a COO lead with humility while commanding respect?
First and foremost, COOs must be role models. They are expected to exhibit behaviors that mirror the organization’s values. Second, COOs must remain respectful to employees. This sets the tone for a positive work environment for everyone. Finally, COOs must be receptive to feedback, so they know what needs to be worked on.
2. Align Values
While employees want that sweet paycheck, there’s more to work and career than money. In an interview with McKinsey & Company’s “McKinsey Talks Operations” podcast, Joris Wijpkema, McKinsey Chicago’s partner, asserted they “are looking for purpose.”
Cultivating this sense of purpose goes beyond reiterating the organization’s mission, vision, and core values; it’s about understanding the “whys” and establishing a sense of connection between employees and the organization.
COOs know that actions speak louder than words. When they lead by example, employees can get on board with the company’s values, mission, and vision and understand the rationale for demonstrating them in the workplace. This promotes employee empowerment and builds a purpose-driven culture, which helps retain individuals or attract new ones.
3. Encourage Continuous Improvement
There’s a reason why the quote “there’s always room for improvement” holds true not just in daily life, but in business as well. Building a culture of continuous improvement helps foster a growth mindset and love for lifelong learning. This means acknowledging and learning from mistakes to improve.
Just as employees can learn from COOs, the latter can also learn from their employees. Beyond asking for feedback, COOs can encourage employees to speak up and share their thoughts, so both parties can gain new insights, promote growth, and strive for operational improvement in the organization.
4. Value and Empower Employees
Employees want to feel valued and empowered, and the best way to do this is to practice active listening and ensure their thoughts don’t fall on deaf ears. By actively listening, you can build trust and establish a deeper connection with your employees, which helps establish a safe, inclusive environment where open dialogue between both parties is encouraged.
In addition, investing in professional development training empowers employees to grow and succeed in their roles. Likewise, celebrating milestones and achievements makes staff members feel valued for their performance and contributions to organizational improvement.
5. Build An Effective and Scalable Team
COOs want a high-performing team with competent members. High-performing teams are talented and goal-oriented, able to accept constructive criticism and set high standards for themselves and their work.
To build an effective, high-performing team, COOs must ensure that all members understand their role to develop accountability and ownership. Knowing the strengths and weaknesses of each individual also helps enhance teamwork and detect and close skill gaps, thus optimizing performance and workflow. Most importantly, team dynamics must be grounded in mutual trust and respect, which can be achieved through dialogue in a psychologically safe environment.
As workload increases, scaling teams without ballooning costs becomes a paramount strategy for achieving operational excellence. COOs can bring in more team members (but make sure they’re qualified) while equally redistributing the workload and minimizing inefficiencies on the production floor.
Because scaling is an ongoing process, COOs must continuously aim for process optimization and excellence.
6. Take Advantage of Data Analytics
Data is a staple of the modern business world and the key to working smarter. COOs who leverage data analytics set their organizations up for a competitive advantage in the market. With the power of data analytics at their fingertips, COOs can glean insights from any information, from employee performance metrics to customer feedback and behavior.
Such insights allow COOs to detect inefficiencies, identify high and poor performers, and assess customer satisfaction, helping them make data-driven decisions that drive operational excellence. Remember, to embrace data analytics is to embrace continuous improvement.
7. Utilize Risk Management
No matter the industry, risk management is a vital aspect of running a company. When combined with analytics, COOs can approach historical data analysis objectively rather than subjectively, allowing them to detect patterns and take appropriate action to cushion the impacts of potential risks without delay.
By integrating data analysis in risk management, COOs can predict future risks and implement risk management strategies — whether that’s formulating contingency plans or using best practices — to maintain operational excellence and business continuity.
8. Allocate Resources Smartly
Resource allocation refers to the delegation of assets, whether manpower or equipment, to complete a project. For COOs, smart resource allocation equals success. To effectively expedite resources, COOs must thoroughly assess the project’s complexity, scope, prioritization, and goals. Likewise, qualifications and skills must be factored in, so only the best-fit employees can work on the initiative.
Through smart resource allocation, COOs can optimize workflow, maintain quality, and avoid delays in deliverables. Not only that, employees will be more engaged and satisfied, too!
9. Outsource to A Service Provider
Businesses are hopping onto the outsourcing hype train not because it’s a trend, but because it is a strategic avenue for achieving competitive advantage and process excellence. To start, outsourcing is a practice of collaborating with a service provider, often based overseas, to expedite work and optimize labor costs.
While cost-effectiveness is one of the selling points of outsourcing, its appeal lies in its ability to achieve operational excellence through scalable outsourced teams, improved service quality, and streamlined operations. The best business process outsourcing (BPO) companies take the guesswork out of hiring and employ cutting-edge technologies that your organization may or may not have used before.
Not only does outsourcing create room for learning new technologies and processes, it also enhances employee and customer satisfaction. If your employees are stressed and overwhelmed with their workload, quality of service and customer satisfaction will deteriorate. Outsourcing, especially hybrid outsourcing, divides the labor in a way that it plays on the strengths of in-house and outsourced teams.
Tasks or job functions involving local knowledge and expertise are best left to in-house employees, while outsourced staff can take on non-critical tasks. This optimizes workflow and prevents inefficiencies from arising, which in turn, leads to enhanced customer satisfaction and higher quality of service.
Achieve Operational Excellence With KDCI Outsourcing
Operational excellence is something that every organization must strive for. Defining operational excellence involves taking its core principles to heart and demonstrating them for everyone to see. It unites people under common organizational values, creating alignment for future goals and outcomes. Most importantly, it elevates their mindsets from static to perpetual growth, which is as empowering as it is a driver for improvement opportunities.
However, driving operational excellence in an organization is not possible without COOs. They create improvement opportunities for everyone to achieve operational excellence goals. Although COOs are second in command, they don’t see themselves as above everyone else because they are humble and have high respect for others.
Want to drive operational excellence and provide the best customer experience? Choose KDCI as your outsourcing partner. We offer world-class outsourcing services that not only innovate your processes, but also support your business endeavors and encourage continuous improvement efforts across the board. From outsourced data entry to web design, KDCI Outsourcing’s high-performing offshore team can accomplish any task with little supervision.
Ready to outsource your job functions and build your offshore team with KDCI Outsourcing? Get in touch with us for a price quote, and let’s turn your operational excellence goals into a reality!
