What Is OpEx?

by Jamie Flinchbaugh on 05-21-24

OpEx, a common shortening of the term Operational Excellence, has gotten plenty of traction in both program names and job titles. But what does it mean?

The quick answer is…it means whatever you want it to mean.

Let’s first look at the origins of OpEx. There are two primary driving factors that led people to using the term. The first reason is that they wanted a less lingo-y (yup, made that word up) term than lean. This is very fair. Lean was never the best word, and so deciding to use different language is a very valid reason. One of my early experiences was in the creation and deployment of the Chrysler Operating System. We rarely used the term lean.

The other reason is less valid. The goal was often to expand beyond lean, but almost every instance was simply a misunderstanding of what lean really meant. This was similar to the birth of Lean Six Sigma, where some ignorant authors thought that lean was just about waste elimination and efficiency, and so if they wanted something broader, they had to move past lean. This is a shame, as they likely spent more time distorting lean than understanding it.

So now that we know where it came from, what does OpEx mean today? I see three primary variants.

First, OpEx is all the things you would likely see in a more comprehensive lean strategy, just under a different name. OpEx is gemba walks and daily huddles and problem solving and kaizen events and metrics and…ok, so in this instance we didn’t need the OpEx title but if you prefer the wording, then go for it.

Second is adding things on top of lean such as digital transformation or data analytics. Now those things are not born from lean, but they aren’t anti-lean and they could also be done in a lean way. It’s amazing, for example, how many digital transformation projects start without a clear problem statement. It is gaps like this that inspire companies to put a range of transformative efforts under one name, and perhaps more to the point, under one leader.

The third version can be that we’re going to scale back on things like capability building, coaching, employee engagement, and culture, and focus almost exclusively on proven, trackable performance metrics. Some leaders will see those other aspects as an indulgence, and rather than take them out of lean, changing the name gives free reign to make it whatever you want it to be.

And that’s the main message. OpEx isn’t good or bad, it can be whatever you need it to be.

What are the consequences of that?

First, be careful when trying to hire. If you are hiring for an OpEx job, or hire someone with a OpEx background, you better ask lots of questions to make sure you’re talking about the same thing. Of course, this can also be said of lean. I’ve met plenty of lean professionals who think it’s nothing more than doing kaizen events.

Second, ask yourself if your language choice of OpEx is helping you or hurting you. If it’s helping you, it is likely because the organization hates jargon and this phrase feels more accessible. If it’s hurting you, it is likely because it is either too vague or not very inspirational.

Third, be patient with people who don’t “get it.” There’s nothing to get since there’s no clear meaning. So engage and have the conversation and explain yourself. It’s not shorthand if people don’t know how to translate it.

This piece is not meant to criticize anyone’s adoption of the phrase. If it works for you, then that’s fantastic. Make your choices, but hopefully this piece helps inform those choices just a bit.