Is Operational Excellence Dead?

Traditionally companies have chosen to compete in one of three ways: Customer Intimacy, Product Innovation, and Operational Excellence. But for the last few years it appears that all of the corporate focus has been on customer intimacy or product innovation. Operations has been the target of one round of cost cutting after another. Is operational excellence dead as a competitive differentiator?

All of the emphasis on outsourcing to low labor cost countries seems to imply that organizations no longer consider their operations strategic. The widespread adoption of generic off-the-shelf enterprise resource management, customer relationship management, and other operational information systems also contribute to commodity business practices.

Does all this mean that operational excellence is dead… or does it mean there is an entire competitive segment that has been neglected and is open for the taking? Could companies with generic and neglected operational capabilities be vulnerable to a competitor who emphasizes speed and agility? Aren’t there still markets for products or services with greater flexibility, produced in less time, with higher quality?

It sure seems like it. If all of the other competitors in an industry have their product/service supply chains stretched around the world, use the same information systems, have the same generic business processes, and starve out every penny of cost, it sure seems that if someone did the contrary to all of the above, they’d be a cheetah among the antelopes. 

Comments

[Maurice]

Depends on the industry. In some industries, operations rule! Take UPS for example. To achieve a high level of customer intimacy generally requires a high level of operational excellence.

--- Maurice