What is Operational Excellence?

Organizational leaders at all levels are often required to strive for "Operational Excellence." At a high level, Operational Excellence is a long-term commitment to working smarter and reducing costs by streamlining services.

Operational Excellence is also sometimes used across different industries to mean areas where organizations can strive for increased efficiency. Typically, organizations would focus their business in one of three areas:

1. Product Leadership
2. Customer Intimacy
3. Operational Excellence

The key word here is focus. While companies certainly need to be good enough in the other areas, successful organizations focus on one. Let's look at a few examples of well-known companies for inspiration:

Google

Aside from being a well-known search engine, Google is also an advertising company. I've sometimes heard it phrased the other way around, that Google is an advertising company that also provides an exceptional search engine. In addition, Google has built up a number of other products, usually based on their leading edge as a search engine. Gmail was extremely innovative as a new way to deliver email, and changed the email game by encouraging users never to delete emails. If you need to reference an older email, simply search for it. Google Workspaces also includes the extremely popular Google Docs and Google Drive, and other web services such as YouTube. Google's focus is to provide products that continuously define the state of the art, which is a classic example of Product Leadership.

Harley-Davidson

Simply put, Harley-Davidson sells motorcycles. As a vehicle, the motorcycle isn't very complicated, and there's not much value-add to be found in a motorbike. So Harley-Davidson instead focuses on selling the customer a total package, an experience, not just a simple motorcycle. The front page of the Harley-Davidson website shows the 2025 Road Glide RR motorcycle, with the bold slogan, "Factory-raced, street legal" to add emphasis to selling an experience that's tailored to the buyer. Elsewhere on their website, Harley-Davidson defines their product as "The only way to truly understand is to ride one. No compromise. No cages." Their focus is on Customer Intimacy.

Amazon

Jeff Bezos started the Amazon company as a mail-order book business. Later, they expanded to DVDs, video games, and other goods. Today, customers can purchase a variety of products from Amazon, instantly, at very low prices. Their providing reliable products at competitive prices, delivered with minimal difficulty, is a classic example of their focus on Operational Excellence.

Walmart

Sam Walton's business innovation was to sell a variety of products at the lowest possible cost, passing any savings directly to the customer. As Walton grew the company, he experimented with ways to deliver his products at the lowest prices, to "buy low, stack it high, and sell cheap," to attract and maintain his customers. Walmart's previous slogan "Always the low price ... Always" embodied their commitment to savings. Today, Walmart continues to focus on delivering a variety of products at the lowest possible price. People don't shop at Walmart because of personalized service; they shop there for the low prices. Walmart's focus on always providing the lowest price makes them another example of Operational Excellence.