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Operational Governance – What is it, anyway?

February 23rd, 2012

We all hear a lot about corporate governance.  It’s a term that refers broadly to the rules, processes, or laws by which businesses are operated, regulated and controlled.  If you search on Financial, Legal or IT Governance you find a tremendous amount written on the subject.   Since we deal with Operation Excellence, I searched on Operational Governance to see how people were thinking about the organizational structures that drive and support Operational Excellence and business performance improvement.  I was surprised by how so much of the search results dealt with IT and BPM software, and not really what I was looking for.  I can’t help but take this as being a blind spot in how we run our companies.

Through our clients, we see various activities involved in running the business.  We see our clients define their customer, their customer’s needs, how to serve those needs and how to do it better than their competition.  These are their strategic decisions.  When they want to do better, we see our clients define initiatives for improvement.  Within Operations, these initiatives are called Operational Excellence, Continuous Improvement, Six Sigma, Lean Sigma, Quality and many other names.  These are operating activities and they have improved greatly over the last twenty years.

Between the strategic and operational level is where we see the least definition and the greatest variation in practices.  Sometimes we see no activities here at all!  We see improvement projects that bubble up from the bottom and aren’t filtered through any sort of decision matrix.  Other times we see all sorts of pieces including scorecards, dashboard, value streams, process maps, KPI and control charts but they are simply individual activities, reports and discussions.

Download Operational Excellence Roadmap Powerpoint Presentation

 a short Powerpoint presentation that walks through an operational excellence roadmap, with notes included.

Bringing this middle ground between the strategic decisions and the day to day performance and improvement activities is where we believe companies have the greatest potential for their next leg of performance growth.  These are management activities that center on operating decisions supported by continuous improvement.

Operational Governance is what we call these activities and when done right you see all the goals being addressed with improvement activities and all the improvement activities tied to goals.  People don’t just know what they are doing, but why they are doing it.  It is effective Operational Governance that turns strategy into results.  For more on Operational Governance see our web site.  And if you’d like to discuss the how to establish an effective Operational Governance system, feel free to contact me.

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