What is the definition your organisation uses for Operational Excellence, do you know it, is it consistently understood, how does it “maximise value from operations” for the organisation?
The oil and gas industry has been going through a tough time with low commodity prices which most analysts agree is likely to remain low for some time. For the industry, a frequent heard phrase is that it needs to prepare for a “lower for longer” oil price.
This is an industry I have been in for over 25 years so why, in an industry with historic instability, do we find ourselves in such a tough place with such high operating costs?
It has easy for the industry to blame the low oil price, and that’s “OPEC’s fault” or in fact anyone’s fault but our own. But this is fundamentally wrong, the problem isn’t the low price now it is what the industry continued to do (and not do) during the unusual period of four years of stable higher oil prices before this crash. The industry got bloated, accepted and continued to build additional inefficiencies into the business and sometimes this was done in the name operational excellence. Processes, systems, gold-plated approaches were adopted to make us ‘better, but ‘better’ for what? The reality is that operational excellence forgot its purpose, forgot the bottom line, it got disconnected from business performance and revenue generation.
What is operational excellence? It’s not easy to define and a multitude of definitions can be found; “Being world class,” “Being the best globally,” “Excellence in everything we do” or is it ”continuous improvement”. As a result, it is often the case that many different interpretations of Operational Excellence can be found in an organisation which can lead to misalignments in understanding and direction. This is often made worse when most of the definitions for operations excellence are difficult to translate into practical actions.
A key to achieving operational excellence starts with the right definition.
The one that works for us at Acrometis is:
“Operational Excellence is the execution of the right business strategy more consistently and reliably than the competition”
This is why in the first stage of the Acrometis model focuses on understanding the strategy in an operational context using our Six Dimensions approach. From this we can assess the operational alignment with the strategy creating an organisation that is built in order to deliver exceptional and reliable business performance aligned to maximising value to the organisation.
If you want to know more about the Acrometis approach please contact us.
First published April 2016