Achieving Operational Excellence: Five Elements of Success in the ...

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4.
What blend of structural
and executional changes
does the company need?
Most companies strive for the proper
balance of structure and execution that
drives operational excellence. It’s not an
easy equilibrium to achieve. Given the
opportunities and threats presented by
the recent global financial crisis, we are
now seeing many companies in Japan,
Korea, India, and China seeking to place
much greater emphasis on regional
and global operating models and better
balancing their efforts across execution
excellence and operating model
changes. At the same time, we
are also seeing many companies in
developed economies focusing on
execution excellence while evolving
their operating models to better
compete in a changing world.
DuPont, for example, increased its
emphasis on cash generation in 2009
as it sought to maintain its financial
strength during the recession. A
main driver of the cost savings was
a corporate reorganization in which
the company integrated 23 strategic
business units into 13 businesses,
removing layers of management and
moving decision-making closer to its
customers. The restructuring also helped
the company to generate $3.4 billion in
free cash flow and achieve $1.1 billion
in fixed cost productivity.
At the same time, however, the
company did not pull back on
its innovation execution. DuPont
introduced more than 1,400 new
products in 2009—about 60 percent
more than in 2008—and filed more than
2,000 U.S. patent applications, the most
ever in a single year for the company.
5.
What change journey
will achieve operational
excellence?
It is not enough for executives to
know where they plan to take their
organizations, or the proper blend of
structural and executional excellence
they hope to achieve; how they
make those journeys will also have a
significant bearing on their companies’
eventual positioning. Choosing an
appropriate “change journey” is nontrivial
because each company has a
different context for change, a unique
starting point and its own “corporate
DNA”—all of which influence the type
of journey that will work best for
the organization. Business leaders at
chemical companies are no exception;
they must select the appropriate change
journey with care and embark on it
with wholehearted commitment and
full preparation.
Accenture has identified three main
types of change journeys (see table to
the right). For every company and every
leadership team, there will be, in theory,
one optimal response to discontinuity—
one “journey” that best suits the
company’s culture and positions it for
survival and/or leadership (Exhibit 5).