 this is Sonali. Thank you all for coming out sometime for attending today's webinar on the episode 6 of BX Academy, Business Excellence Mentoring and Coaching. Today's episode is on how to achieve operational excellence. To all the attendees out there, please type in any questions you might have in the Q&A section and we'll try to answer as many as possible at the end of the session. I would now like to welcome our speaker, Mr. Gaurav Mariah, Chairman and founder of the Franchise India Group. A very warm welcome to you, sir. Thank you. Thank you, Sonali. Welcome friends and welcome to another session with BusinessX. This is our series which we started after finishing one big series which we did on how to value your business, how to find the right exit and how to scale your business. So we did that series for 30 episodes and then we started another series on business excellence and this is actually designed to help a lot of our community which is our, we have Franchise India has a very large small business or a startup community and I normally bring these series to really reach out to them and give some kind of insights on different topics. Today's topic is operational excellence. I'll talk about that in a while and we'll use this forum very interactive so you can use the Q&A box and continue to ask as many questions as you have. So today's topic is why it's very interesting because in the current times when these times are going on almost everything is destructive. You know, you're the way we used to do businesses, the way our teams used to operate, the entire financial structure of organizations, the consumer behavior, everything is disrupted. So really finding sense out of merely building your, at this stage, excellence or your operational excellence at this moment is a very, very difficult part and probably this can be an opportunity for a lot of companies to really revisit their organizations and like to see how they can really improve smallest of the processes in this business. I've seen the very clear, you know, differentiation of companies which were very well laid and very well structured. They were able to really handle this situation much better. It's not really about what product you were in but they were able to handle this situation much better. I've even seen this great organizations in the hospitality sector which has absolutely been, you know, out of business but they're still able to really, you know, really use their workforce to more creative ways to be engaged. What's the law of other people who are not so structured? They were just riding the wave and as any disruption like this would happen, they would go out of the business. So what are we going to cover in this today's discussion is following. I will talk about what is operational excellence. We'll talk about that. We'll also talk about how you set goals in your operational excellence. We'll also talk about how it is very important and how it matters to your business. We'll also talk about, you know, various models being used and some of the models I can give some examples. Then we'll talk about some kind of implementation strategies which you can use and finally I'll leave you with the seven golden rules which I would say has to be used when it comes to operational excellence. So let's start the operational excellence part of it. What is important? Why is it important for organizations? Operational excellence is a continuous journey. It is a continuous journey. It is not something which ends. You know, it's a part of your company's culture that you continue to thrive to get better for your consumer, better for your employees, better for everything you do. It is not really one part of this piece. It's almost every touching almost every part of your organization and try to seek excellence in every part. And this is also sometimes a journey which is, which is, you know, not really getting you results too quickly. This is one of the things happened. A lot of people attempt doing that and they leave it in between because they feel that they want some very fast returns. This is a journey which gives you results over the time. When you are seeking operational excellence, you need to really give the organization time to really settle down and get part of your culture. And then only the results will serve. There's a good quote which I read in the morning. It's be committed to the process without being emotionally attached to the result. That's very important part. You know, if you are committed to the process, then you'll start working on that. So what is operational excellence? Excellent says defined as a philosophy of the workforce where problem solving, teamwork, and leadership results in a continuous improvement in any organization. The process involves focusing on the customer needs, keeping the eyes on your employees positivity and empowerment, and also a continuous improvement in every part of your workplace, which means that every smallest piece of your workplace has to see that improvement. And there are many, many methods which are being used by different organizations, especially large manufacturing. This started happening when after the Second World War, I think if you really see the Japanese companies were the first ones to really use these principles. A lot of these principles actually come from Japanese large organizations like Teota and a lot of these companies have really put this kind of operational excellence in place. And a lot of these global goals are actually used by these global manufacturing giants who really use these principles to bring better efficiencies in their business model. And some of the models which are very popular is obviously Six Sigma, Lean Management, Kaiser, and a lot of these models are very, very important. Like Lean Management could work on two big pillars. One is just in time kind of inventory because they believe in inventories in businesses or anywhere, like even retail environments. If you see the retail environments most of the time, especially in small businesses, you need to go out and do that. And if you really do their inventory to turn ratios and you find a lot of inventories are lying in the stores, which have no meaning. So it shows in your books, but has no meaning, it doesn't turn. And this happens with almost every organization I would work with as a consulting company. We would work with different companies and we will go out and see their businesses and we find that they are not efficient. They are running on a lot of dead inventory, which is sitting in their books for doing nothing for them. So how do you really work on building what I call just in time kind of inventory based and also focusing other part is would be the quality. So a lot of implementation has to be done between what I call any process which is done in your organization. You need to really see, is it adding value? Anything which can be your stocks, inventory, any kind of process which works in, is it adding value? Then it's fine, it should stay there. If it is a waste, which means that it is not doing anything to you, it has to be removed. So the entire organization has to be really seen into what are the areas which doesn't make any sense. You need to remove those areas out of the structure. That's what a lean thinking would be. So work on if you're a manufacturing company then you have to work on, are you in line with your production cycles? And especially in these days where demand is not very clearly predicted, sometimes the demand would go up and sometimes demand would go down. How do you really align your production capabilities and sourcing capabilities? Especially people who are just in trading, they sometimes find it even more difficult because they don't know when to order, how much to order and keep them back. So how do you really do that? Another thing which you need to really focus in, what is the kind of timelines you need to deliver to your customers? What is the waiting cycle and how do you continue to improve that? If you look at a company like Amazon, is constantly working only on the principle that how they can really bring the product faster in a better form to the customer. That's entire endeavor of the organization is to really do the excellence in their fulfillment. And that's something which is very, very important. And almost every company, the platforms are the same. Everybody has the same product. You can go out and order in the different platforms. Why would you trust one platform to another platform? Because purely on efficiency. And how do you really also work on what I call the every single process which has say multiple points to really pass through, how you can really cut down and rework your organizational behavior so that you can be much more leaner, much more faster than doing that. Every single part of your organization can be basic supply chain transportation. Everything can have incremental improvement which can happen. Now let's talk about some of the goals which are very important. Goals are very important when you how do you set your operational excellence goals. One goal which is clearly is driven from your financial goal. What do you really want to really achieve financially in terms of your operational excellence in terms of better sourcing. It is very important. Second is how do you really bring more production or efficiency on your production side so that it costs effective. I see this in companies which are like say food businesses. We at French is in the work with a lot of FND businesses. And most of the times the organization is really working towards driving more sales, reaching to more customers. But they have very inefficient business models. And if I see the business model I said you don't need more customers. You're already doing well. What you need is a better food cost, better efficiencies on that side. And so sometimes you need to really understand, sometimes improving the margin in the business is more important the goal than just going and acquiring new customers. You can also set a lot of goals which are people centric goals. How do you really make your people, your team members more productive. How they become more efficient, more aligned to the organization and how you can really achieve better from the lesser team members. That's very, very important. So you need to really understand what are your larger goals when you start doing your operational excellence. And I will put this into three baskets. I would say one is a more what I call the quality assurance kind of how we can really build better quality. Second is how do we build what I call internal and external efficiencies. And third, how do we get a better consumer excellence. Which means that any kind of a consumer, we can reach to the customer, better packaging or any other experience which touches the customer, how we can really bring an incremental change in that. Now let's get into one very important, why it is so important, why it is so important for companies to really look at, you know, excellence to be brought into business, especially official excellence. Especially if you really look at, this has been talked more on the manufacturing side. A lot of times we really say that this is required in large industrial groups. But actually if you really see, this is more required today in a service-based businesses. So large service-based businesses need to improve their teamwork, their collaboration, that's very, very important. Especially if you are a company which has a lot of service points, how do you really collaborate with each other? So that's very, very important. Second, how do you empower your people to take last-minute decisions? And that's also very important. These days, you need to empower people to take those decisions on the end. I had worked in a project which was in Dubai about 12 years back, a large club. It was a nightclub, a big nightclub, about 20,000 square feet, probably the biggest in Dubai. And we worked on their operational standardization and a lot of other things we worked on that. So empowerment was given to people standing outside the gate. The security guy who can really refuse somebody he doesn't feel is right for the club and how he would take that decision to do that. It was empowerment was given to people serving at the bar because they, if you are, say, alone walking the club, you were the first one to come in and you saw no crowd and you want to go away. And this bartender knows that I want to retain this customer because he's come for a big evening and he wants to now leave because there was nobody in the club and he might not return because he might go somewhere else. He would have empowerment to offer you a free drink so that you are holding on for next 30 minutes or you are obliged to then order another drink because now he's been given you some time. So a lot of these smaller empowerment really made a big difference in where the business was run. So what is the operational excellence models? What are the models which one can really use that? I would say first define where are the four categories we really have to focus on. The four clear categories which I would say is how do we deploy our strategy? What is the areas which we need to really work on our strategy development? Second, how do we improve our performance management? How performance is managed and measured? That's very important. And how do we bring in high performance teams? Every single process is led by a process reader. And finally, how do we find excellence in every single process of the business? You also have to see that entire organizations is having some kind of a harmony together in improvement. It's not that one part could improve unless and you connect all the dots you will not find that improved. Now what is the ask we have? One is the ask is of a continuous incremental improvement in every single point of your organization. Say you are running any kind of a process in your company. And if that process is taking a little longer period, how can I reduce that period to build it more efficient? If it is giving a certain amount of output, can I improve that output to a negative? So, unless suddenly you create a mindset in your team members to continue to challenge that how they can do better. And most of the times answers will not come from you as a business owner. It will come from your team member who's at the last night. If you ask him how can this be done a little more better, that's important. Second part also is very important is that how do you really create consistency in whatever you do? It's not about doing one thing perfect at one particular time. It is doing the right thing right way every time. That's what is operational excellence. Operational excellence is really about achieving right thing right way every time. That's something which is actually about culture. And how do you really bring consistency to culture? And then you really have to really deploy a lot of processes, documentation to really continue to remind that you're not behaving or shifting from our perspective. Especially if you're a small business, it is very important that the initial days itself you start setting up the foundation. Start setting up the foundation because better the foundation you will set, but better in the coming years it will be doing that. I feel that the companies which start early stage startups ignore it and they focus too much on the scale. And as they go into certain level, like for example, I give this example all the time, it's oil rooms. If you look at oil rooms, what was the principle? From one side it was aggregating a lot of hotels, but essentially it was an which has to deliver a great experience to somebody who comes and stays at oil. Initial days they were just going out and acquiring a lot of hotels and just not worrying about how they would improve that. A lot of complaints and a lot of mistakes would really happen. And then I met the founder Ritesh Agarwal and I had a discussion with him and he said I want to shift the entire company's focus now on getting into a better customer experience then only they would stick to come back to oil rooms. But now if you really see, it was very difficult for him to really execute now in your many countries, you have independent hotels, how you really change and bringing that change was becoming extremely, extremely difficult. But if he would have actually thought that when he was started, rather than just been aggregating this principle and thought that I'm an hospitality company, the end of the day what matters is a great service to every single person who comes and stays with oil rooms. If that was the element, that was the only purpose the organization was chasing, then only the results would start coming. So you need to really understand that you have to be absolutely clear what is the larger purpose you're trying to chase. And one of the things which you, when you start implementing, you need to really be very clear about how you communicate to everyone, everyone in your vendors, your suppliers, everybody. I have a fortune to work with one of the large companies these days. I'm working with the largest group of the country, which is Reliance. And I see their functional structure. Every smallest element of their organization today is so well defined. They continue to chase that excellence. How they're even using, it's an industrial company. It's an industrial company. They don't normally work like other consumer companies. But they are so conscious about even the usage of the brand and how it is done. Even the smallest thing which would come to any particular desk would have to be scrutinized and seen that it fits into the larger philosophy of the company. And that's how these organizations become that large and structured. So how do you really clearly communicate? That's very, very important. So let's get into the seven points which I really would work on. And this would be my last part of it. And I can take some questions if you have. How do you really define the seven points which are important when you are seeking operational excellence? First, every single thing which you do in your organization, you need to seek perfection. Now, it's very difficult. It's very tiring. But that's something that you need to do. If you're not seeking perfection in everything you're doing, you'll not reach to the operational excellence goals. Second, embrace logical thinking. Very, very important logical thinking has to come in. I keep repeating this piece, which I'm a big believer of that, that everything is common sense. If you put common sense, it will bring common practice and change common problems. This is a sequence. Ask common sense questions. Everything. Why are we doing this? Can we do this better? These are very important. This brings in a huge amount of logical thinking in people that they start thinking in the right sense. And that brings in common practice and also takes your common purpose. Unless and until you start from questioning, everything should come to the why. Why are we doing this? Why can't we do this better? Why can't we reach to a customer even faster? Why do we have to have a customer waiting for three days to get this order? Why can't we get in two days or one day? Or whatever that answer is, if you continue to question everything which is done in your business, you'll find the incremental growth. Focus on process. Define every smallest thing which is happening in your organization. Define that process and also can be measured. If it cannot be measured, it cannot be improved. That's very, very important. The fourth is quality starts from the source, not from the last finish. This is another important aspect. So at the source, you really go out and see how the quality started. If you try to do at the when you have finishing the product or deleting the product and you see quality at that level, it doesn't work. It actually starts from the source. Fifth point is think systematically. Everything is a systematic process and how we develop that. Create consistency of your purpose unless and until you have a consistent thinking of larger purpose which you're driving. Otherwise, goals shift in the organization. I see that if you have our organization, say 50 people and all 50 have different kind of goals and if you ask them, they will tell different goals which they are chasing in the organization. If they are not collectively aligned to a single purpose, that would not really do that. And I see some of the great startups and early stage companies are very clear about that part of it. And finally, it's all about the value for the customer. If you are also chasing every single movement, that what kind of value improvement you can bring into your customers, that would be good. So I'll repeat these seven points. One, seek perfection. Seek perfection in whatever you do. Second, bring in logical thinking. Common sense brings common practice to common purpose. Focus on the process. Third, quality is always at the source. Fifth is think systematically. Create consistency of purpose. And finally, how do we drive more value for the customer? So this was something which I wanted to share. There are a lot of resources available where you can really go out and read and find out, read the lean management theory, read Kaizen, a lot of other processes are there. You can go out and seek that. So if you have any questions, Sonali, for me, then I can take a few minutes to the portion. Thank you so much, Gaurav sir, for another wonderful and to the point session. We do have quite a few questions lined up with us already. So I'll just take up the first one. The first question says taking care of operations while everyone in the company is working from home is rather difficult. Do you suggest any parameters or advice as to how to keep check on employees while they are working from home? Very good question. And this is something that I'm debating a lot these days. So what is happening is that the conventional style of working in offices were very instruction based. And you had very clearly supervisors, supervisors and supervisors, which means that every time somebody is being closely monitored and said like you would work. Now, there was another part of our organization which were more technology companies where productivity can still be analyzed because they have to be on the coding. So you know how many hours they were on lockdown and things of that nature. So if you really look at it, if you take the technology part of out and if you take conventional businesses, which are very supervisionally dependent kind of structures, working from home becomes a hugely challenging situation. How do you really get that piece? Because they have not even defined what is the outcome they want from every person and how do you want to measure that? So first and foremost, what I would advise is that before we even start pushing people to get their better productivity from work from home or any place where we distribute them, let's define what I call human throughput. What is the human throughput? You would expect them to do that. And then they have to buy into that. It has to be buying into that, that this is a throughput which is expected from me if I put these balance. And then you can go out and give the flexibility to an employee and say, okay, I want 40 hours from you and I want this productivity throughput. And I don't care when you start the day and when you end the day, but I need this part. So you see that would set accountability and that would start chasing a particular goal. The problem is if you just expect people to be working from home and they would be somebody picking phone. So if I had a say a telecom, productivity would mean that I need to achieve 1000 calls. Then that is very clearly defined and obviously they need to work in a certain hours where they would be able to get people picking up the calls and so on and so forth. So you can measure that part. So no problem is that a lot of times organizations don't have that ability to measure and what are they expecting from that? And it becomes extremely difficult from work to home environments and also feel it's also dependent especially in India from regions to regions because some regions are anyway very difficult for work from home like Mumbai. I have seen efficiencies would not come because there are small houses, people are in those places where it's environments don't give you that capabilities to really work especially when you have a junior teams and dancing. So some places there is also a big challenge. Sometimes we compare this with western countries where you have those environments where you can really be productive work from home. In India sometimes you don't get environments for a lot of our workforce where they can be productive really hard to do that. So I would say set some kind of an objectives before you can really start setting accountability. Absolutely sir. The next question I have is how can operational efficiency be achieved in service sectors like an education sector? You know so I'm becoming more and more believer that in service sectors the operational efficiencies are, excellence is more important, very very important. In production lines over the times it has really been defined and structured so you can understand the downtime, how much downtime you relate to that but when you are in a service sector understanding the downtime, understanding efficiencies becomes even more difficult even more difficult. My factory's machine is not working for five hours. I know my downtime in five hours. But when I'm having an environment where people are working in service sectors, how do I measure my downtime? So that becomes even more difficult. So implementing tighter processes, very clearly understanding and defining collaborative work and every single thing which happens in the organization if it can be measured and can be put to best practice. So this particular process was to be done in three hours. That's our best practice and continue to measure what we're doing and continue to challenge your teams to achieve the best and then see incremental improvement that how can you bring three hours to two and a half hours, two hours and so on so forth. So that would be first try to set what is an idle benchmark, try to achieve that and then try to see how we can incrementally, very small piece, continue to challenge and improve that part. Sure. The next question we have is how to deal with operational failure? Operational failure is very normal. This is this would happen to when the system is not defined or it's very random or it's left to the decision of the employee of a team member to really take that call on the side on that, that would create operational failures. So unless and until it's very well coordinated and very clearly defined, then only it would work. Otherwise, in a lot of processes we'll see a lot of operational failures. If you really see organizations like these larger organizations, they don't really create great products if you really see. I mean, especially I'll give this example of McDonald's. McDonald's doesn't make the best burger in the world. Actually, they've never tried to do that. They are always seeking great operational efficiencies, excellence, because whatever they do, they do it very efficiently. That's what their goal is. So they don't go out and claim anytime and say, we make the best burger in the world, but they really want to deliver you quick, hygienic, fast and very efficient. And you look at these companies, even in these times when this COVID is going on, the restaurants and everything, you see that they have actually maintained everything. Even the hygiene levels, you can trust a KFC or a McDonald's, but you will not trust maybe a roadside restaurant owner who's sitting himself. He's not able to make even basic hygiene, social distancing, and things like that. These companies thrive very strongly on their operational excellence. The product is fine. Product is just one part of it, which also would need some kind of improvement, they're contributing. But every single process in their system is very well defined. And that's something which I always feel that we don't need to focus too much on the product or service we offer. We really don't really focus on how it is systematically designed and processed behind. That would be very, very important aspect. Absolutely, sir. The next question I would like to take up is how to pay attention to details when the business is growing? When the business is growing? Yeah, so this is actually very important when your business is on a scale and this happens to a lot of startups. They don't really focus on this part. They don't focus on this part because business is coming very easy. I gave you the example of Oyo. Oyo was a classic example of somebody who's just going and grabbing more and more, hotels never had attention to details, never had attention to things. I mean, if you have really seen, I would have rarely find somebody who'd say, I love to stay at Oyo. So they lost the point because the fundamental is where on the other side, if you look at companies like Uber and Ola and lights of them, they were really able to achieve that part much better. They stood very clearly to their purpose. So you really have to see sometimes just scaling up and without going into larger purpose, why we were scaling up, what was the real reason and leaving the focus away from that part would create some kind of a disaster at a certain level. So even companies which are growing, they need to continue to focus on putting their operational excellence in place. Then the foundation would be right. Rather delay your scale journey, delay it for three, four months and set those systems and processes. Then it will be much easier for you to really go and scale. Right, sir. The next question I would like to take up is how to achieve operational excellence in the e-commerce sector. So operational excellence in e-commerce has to be given because e-commerce is actually a very complex structure because you're preparing from different nodal points, bringing to a certain centralized distribution point and then from there you have consumer interface which is through technology and last mile fulfillment which needs to be done. So unless and until you achieve operational excellence in all points and they are collaborative to each other, you will not be able to do that. For example, the demand forecasting to sourcing, if it is not self-synchronized, you'll never be a great player. So how do we go out and even forecast what is going to be next 10 days or 15 days or 30 days and work on that? And that's where a lot of things which I told about just in time inventories. So a lot of e-commerce independent companies have failed because they have either they are run out of place which would spoil the customer, customer would come and order and say out of stock. So you're not giving them the what experience you want to do that or sometimes you have something which is lying over in stock but you have no demand for the solution. So really speaking, I feel that e-commerce or direct to consumer businesses needs even more operational excellence to really go out and check that. The next question is a very good one. The question says, how do you balance measuring productivity and micromanagement? So this is a delicate balance which one has to do in terms of measuring productivity. As I said, every function in your organization has a certain mode of human throughput. What do you need to really do that? And then that needs to be first to be defined and that's where you need to pick up some of the role plays. Every business has some excellent leaders who are best at that. So they become role plays. They really set the kind of a benchmark and every other member has to really work towards achieving that benchmark because this is set by somebody who was a process leader and did that process and defined that process. So that's something which is very important. And then on that, the micromanagement can really come in. And I think there is a new rule to businesses which has to now come in. We have to give away our supervision way of looking at our organization. So everybody was having six level of hierarchy to supervise the person who was working at the bottom. If everything is very well-designed and it takes maybe a longer induction cycles, people should be brought to organizations and given two, three, four weeks to understand what is expected from them, which I think the larger companies do, but small mid-sized companies don't do. They want people to come and start performing from next day without even understanding what is expected from them. So their alignment doesn't work. And again, I will leave you with this thought which is very, very important. And this is something which always stays with me in anything which I do in consulting is this common sense. Everything has a common sense. Why are we doing this? What purpose it solves? And that really has to be part of the culture of the organization to continue to ask. And then because I in my organization face this all the time, people would say, because over the time in the last 20 years, things would have changed and the way people proceed has changed. And you still continue to do the same practice which has no meaning left now. So sometimes you need to really question why are we doing like this? Why are we not using something else? And that's what as an organization we did. We were purely a hardcore physical event company doing all exhibitions, forums, conferences. A lot of these were part of French as India. And then this is not happening. Then we have to question what we can do, how we can continue to engage our customers more than ever we did in the physical world. And we have to adapt a digital piece to it. And company was able to transform very quickly. But I really saw some people were not able to transform because they would not really be able to come in this. And I still have that pressure with a lot of my leaders not really able to set their consultations and things of that nature, which clearly with people, they are not still very comfortable. They need to do more practice and doing it. But some were really able to shift very, very fast. Right, sir. So I would just like to take up the last two questions now. One, the first question is how do you measure human efficiency whilst motivating them during working from home? We have already touched upon this in a previous question, but anything you would like to add to it? No, I think we've touched upon this in detail. So it's defining the larger first, what is expected from them. And then I think it's much easier to set the expectations from every single vendor. Right. And the last question is, as a small startup company, wherein cash flow is not consistent, how can we practice and achieve operational excellence? Yeah. So as I said, I mean, it's even more important when you have financial disability and things of that nature, because it's a foundational question. Unless and until you have operational excellence in your system, you'll always continue to have such problems. So I would like to question itself itself, why that problem exists in the business, because there is some kind of a disconnect or you're not very efficient or something which is happening in your business, which is creating this problem. So rather than just waiting to address the business to come healthier, then address the foundational problem, I would say first address the foundational problem and the business would become healthier. That's much easier sequence to achieve than the other way. Absolutely, sir. So with this, we'll just wrap up our Q&A session. Thank you so much, Gaurabh sir, for very patiently answering all the questions, like always. Anything you would like to say in the end? So thank you very much. Thanks for this patience hearing. And if anything you acquire from BusinessX, BusinessX is part of our franchise in their group, which focuses on helping companies to raise capital, also to help them to sell the business. If they want to exit the business, we work with them on their exit planning. And also in early stage growth strategy, we work on that. Franchising there as an organization helps people to get into franchising and take their businesses to new markets and also get them the qualified franchises on board. So thank you very much. Thanks for your time today. It is supposed to be a 30 minute repeat because of Q&A we took it another 10 minutes. So thank you very much and continue to come every Saturday 11 o'clock for this show. Thank you. Thank you so much, Gaurabh sir, for a wonderful session and thank you to all our attendees. We really hope you were able to add some value to your lights through this session. And we'll see you next Saturday at 11 a.m. with another session. Till then, if you need for all the people who are asking about the recording of the session, please get in touch with me and I'll be happy to share the recording with you. And if you have any other questions, any doubts or concerns, please once again, reach out to me and I'll be happy to help you. Thank you so much.