Operational Excellence: Creating value by building cross-functional teams

James Zupancic joined Standex, the US-headquartered global manufacturing group, last year as Head of Operational Excellence, taking responsibility for one of the company’s four pillars of value creation.

Interviewee: James Zupancic​ – Vice President, Operational Excellence, Standex

Tasked with leading an internal audit to ensure process improvement is happening throughout the New York Stock Exchange-listed business, Zupancic has put a culture of inclusion at the heart of his plans.

“A lot of manufacturing companies have historically focused on direct labour and production areas when it comes to operational excellence,” says Zupancic. “Something I learned early on in my career in finance is that you have to be doing process improvement across the whole business. It has always been obvious that you needed it in the factories, but now it’s much broader than that.”

He adds, “The overarching message is that we are going to look under every rock, and in every corner of our business, to make sure that every colleague is connected to continuous improvement processes and principles. I was very fortunate to join an organization where our CEO, David Dunbar, understands and had already laid the foundation for such a programme to thrive. His creation of Standex’s Value Creation System explicitly built Operational Excellence as one of only four pillars. This system is an essential building block to support Standex’s transition from a holding company to an operating company.”

Because the breadth of what he is seeking to achieve is so vast, across a company with 12 operating units and over 5,400 employees throughout the world, it has proved vital to foster a culture of inclusion and get everyone involved.

“The inclusion and diversity of all functions and people,” he says, “is how we create value by building cross-functional teams so there’s less lead time between requests for information or products and the delivery of those information of products. By mixing different functional experts, the results are better from every perspective for the customer. What’s more, bringing in different backgrounds and different types of thinkers; those other variables are just as important as different functional disciplines when it comes to creating great teams.”

He says that a strong culture of inclusion means a lot more than simply showing respect for others, though that’s critical. It also means colleagues are expected to challenge each other, and individuals should expect to be challenged, in a healthy professional way, if they say or do the wrong thing.

“If I’m in a meeting and I’m talking about something from a purely US perspective, rather than global, then I expect a colleague to call me out on that,” says Zupancic. “To be inclusive, you have to get away from any kind of local bias, or other innate bias, by getting people to challenge those things when they creep in.”

While investors and shareholders should not expect instant results, continuous improvement and the development of a culture of inclusion does have a long-term impact on financial results, he says.

Standex as a business has undergone something of a transformation over the past decade, moving from a holding company overseeing a variety of divergent businesses that didn’t necessarily work together strategically, to an operating company with five segments: food service equipment, engraving, engineering technologies, electronics and hydraulics.

“There were already great examples of operational excellence happening all across Standex prior to my arrival,” says Zupancic. “But we are now all looking across the business as a whole, leveraging all of the cultures and personalities – regardless of the end market – that we have across the company, and connecting the dots where process similarities exist. It’s a really exciting time to work here.”

He says the role of senior professionals working across operational excellence is to make sure that every member of the business understands their current position, their given set of skills, and what they can do to improve.

It is important to influence key internal stakeholders, from the chief executive through to the machine operator. Often the tools used relate to talent development. That may mean improving succession planning, thereby creating better leaders as well as bringing people through the organisation more quickly, or it may mean creating talent development programmes that move people around more.

“It really helps to cross-pollinate when you move people across regions and across functions,” says Zupancic. “Companies need to look at it as a capital investment, because at the end of the day it costs a lot of money. If you want to move people across the ocean, or across the country, you have to make that person feel really good about that move. That is very expensive, but companies that get good at it realise that their big positions are much more internally-filled, so longer term they have a team of people rowing the boat in the same direction, who have been doing it together for a while.”

He points out that a culture of inclusion also calls for some healthy tension created by bringing people in from outside to challenge internal perceptions, so external recruitment must also take place.

Measuring the success is not easy, and one size does not fit all. “People ask, ‘Where are the returns?’, ‘How do I know that this action ties to positive financial results?’,” says Zupancic. “I think it’s more about internal leading indicators. Sometimes that is employee turnover metrics, sometimes it might be the number of internal moves across businesses, which we see as indicative of creating a common culture. Other times customer quotation win rates or supplier performance are the seeds that yield the longer-term financial returns. I don’t think you can look only at financial metric such as sales, earnings, or cashflow, and I do think a culture of inclusion which creates good teams, who then create good leading metrics will lead to positive financial results in the long term. Nevertheless, we are working to create ways to tie our continuous improvement efforts to financial results so we can be smarter about making project selection and investment in the future.”

Zupancic is just 11 months in to his current role, but he already senses a big change, having found his colleagues extremely responsive. His advice to other business leaders looking to invest in a culture of inclusion? “The biggest failure that I’ve seen, in a variety of businesses that I’ve worked with, is people getting too hung up on templates or tools,” he says.

“Every minute you spend building a new process or tool that essentially is already in existence – albeit in another format – somewhere else in the business is a minute wasted. People get very passionate about personalizing to a business or region tools and processes; that is best avoided. If it’s not adding value for the customer, it’s not adding value for our business.” says Zupancic.

He advises leaders to create a fluid pipeline of projects to drive growth and control cost; even if that does seem focused in a dollar-intensive way in the short term. “In the long term, it’s about having an active programme of priorities to work on for improvement,” he says, “and making sure everyone is involved adding real value for our customers. Creating a healthy tension of big goals and then driving problem solving where we fall short is how we build people, first, and then the business.”

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