Operational Excellence Adapted from “The Operational Excellence Manifesto” by Joseph F Paris Jr, XONITEK Group

Market Leaders* & Operational Excellence An organization can choose three value propositions to compete in market or industry: Operational Excellence Product Leadership Customer Intimacy Market leaders generally choose to excel in delivering one of these three while maintaining competitive standards in other two * “The Discipline of Market Leaders – Choose your customers, Narrow your focus, Dominate your Market” by Michael Treacy & Fred Wiersema

Operational Excellence “Operational Excellence is achieved when all efforts throughout the organization are in a state of alignment for achieving its goals and where the corporate culture is committed to continuous and deliberate improvement of company performance and the circumstances of those who work there –  to pursue operational excellence by design and not by coincidence”  Joseph F Paris Jr; Chairman, XONITEK Group of Companies

Culture of Excellence Culture of Excellence: is a long journey with many steps starting with few success stories and gradually gripping the whole organization. A momentum is created where nothing but the best satisfies employees who start taking pride in being the best in business produces a learning environment where people continuously develop skills keeping up with latest trends in industry. Challenging status quo and constant search for improvement are pursued & valued is a flexible environment where each employee is willing to change as needed. The culture is stable in vision, mission and values but elastic in structure and operations. Focused on external adaptation and internal operation, satisfying customers and employees simultaneously shows as high self-confidence in employees who seem willing to take up seemingly impossible tasks for execution without hesitation Is characterised by “success” becoming a habit

Operational Excellence – High Level Framework Successful implementation of a “Business Execution System” integrates four building blocks: Strategy Deployment – Alignment, linking objectives/initiative/execution through mapping & planning Performance Management – KPI & cross functional alignment Process Excellence – Being process centered, efficient & effective management, value chain & support processes High Performance Work Team – Values, right attitude & mindset, employee engagement/empowerment, coaching leadership development

“DuPont” Operational Excellence model – the concept

“DuPont” Operational Excellence model – Key elements Strategic Clarity : business model, SWOT analysis Culture of operational excellence : continuous improvement, benchmarking, outward looking, unending passion, energy Advantaged architecture & processes : effective organizational structure, processes, systems, competitiveness, reward/recognition Well orchestrated journey : vision, mission, goals, leadership, road map, incremental improvements, change Superior alignment and execution : strategic alignment, superior execution, training  strangely the ‘DuPont’ operational excellence model does not show the customer in its excellence model !!

“DuPont” Operational Excellence – Management System model

Storebrand1 Operational Excellence Model Customers Processes Capital People Customer satisfaction Branding Distribution strategy & segmenting Cross-sales Worksite sales Moving into new markets Lean project Increased quality and speed Release resources to handle growth Management and cultural change Capital efficiency Economic capital and product strategy Basel II2 and Solvency II3 Management and employee training Tracking employee satisfaction and effect of measures 1 : A Norwegian finance and insurance company 2 : Recommendation on banking laws & regulation issued by Basel committee on banking supervision 3 : an EU directive that codifies and harmonizes the EU insurance regulation

Store brand Operational Excellence Model – Key elements Customers : Customer satisfaction, branding, growth Processes : Lean project, quality, speed, management and cultural change Capital : Efficiency, product strategy, financial ethics People : Management training, employee satisfaction

Operational Excellence – Planning from inception Company: What is the best type and structure for the company?  Where is the best place for the company to be formed? Professional Services:  who will be the best service providers for the company and their respective expertise?  Is their expertise in alignment with the requirements of the company? Finance:  What is the best capital finance structure for the organization? How much equity versus debt?  What is the collateralization of the debt and what are the conditions associated with the loans? Development (Design Engineering):  Who is the principal designer of the service or product offer?  What should be produced and then perpetuated in value? Facilities and Production Assets:  Where are the production facilities to be located and what characteristics are required for the facility site?  What is needed to produce the product or service? People Resources:  What talent is required to produce, deliver and service the offerings?  How do you find and effectively hire it? Marketing:  Who are the customers, how to reach them and what’s the message? Is that the message customers want to hear?

Operational Excellence – Planning from inception … cont’d Sales:   How to get best value for the product offered? Front-Office Operations:  How to make sure the business entity is running smoothly and that the transactions are moving through the company rapidly with accuracy & minimum resistance. Supply Chain:  Do the suppliers know what is needed, to what specifications/ quantities and when? Production (product or service):  How to generate the product or services in the most efficient and effective manner? Logistics & Delivery:  How to efficiently and effectively convey the ownership of your product or services to the customer? Post-Sale Service:  Once product or service is introduced in market, how to keep customers happy with their having placed their trust in you?

Operational Excellence – Explanation of phrases Operational excellence is achieved: “… when all efforts throughout an organization…” – all interactions, actions and initiatives in any form, energy or cash, used in all parts of the organization and its value-chain. “… are in a state of alignment…” – there exists communication and transparency within and across functions such that unity of purpose and existence are realized. “… for achieving its goals…” – the goals of the organization have been effectively conveyed and are constantly on radar screen for focus. “… and where the corporate culture is committed to…” there exists a commitment throughout the organization that it is devoted to this cause without reservation.  This comes from leadership, stewardship, mentorship and engagement, all existing simultaneously. “… the continuous and deliberate…” not just always moving forward, but moving forward in an intentional and calculated manner with a sense of purpose. “… improvement of company performance…” – to improve efficiency, revenue, profit, community service, “shareholder-value”, and whatever other performance goals are set up.

Operational Excellence – Explanation of phrases… cont’d “… and the circumstances of those who work there…” – in addition to improvements in company performance, improvements in the circumstances of those who make the company successful are equally considered. Employees are given a sense of pride and ownership. “…to pursue…” – this is a never-ending quest and efforts continue for ever !!! “… Operational Excellence by design…” – the quest is conducted with a sense of purpose and in an engineered fashion with clearly defined goals, clear and concise plans communicated effectively and transparently, proper commitment, support and alignment throughout the organization and strong leadership during execution. “… and not by coincidence…” – Operational Excellence cannot be achieved by an accident.

Operational Excellence manifestation “Operational Excellence” is a result that comes when everybody in a company is contributing over and above what is generally expected of him on a day to day basis. The efforts to improve company performance ensure the company is always innovative and competitively positioned in its value-proposition to its present and future customers and to drive both short-term and long-term value. This will generally manifest itself as: High degree of employee initiative & ownership Employees working relentlessly towards self development & learning Rapid conflict resolution No blame culture Future focus Benchmarking