KEY TAKEAWAYS
- Operational Excellence (OPEX) focuses on continuously improving processes, eliminating losses and increasing productivity – without sacrificing quality or making large investments. OPEX helps companies to react flexibly to changes, reduce costs and increase customer satisfaction.
- Implementing OPEX requires a clear strategy, the definition of key figures and targets, the development of employee skills and the establishment of effective governance and management structures. Involving employees and dealing with resistance from third parties are also crucial for long-term success as part of change management.
The path to a sustainable company through successful transformation management
In the current economic landscape, companies are increasingly confronted with a variety of complex challenges. These include rising energy costs, unstable supply chains, increasing global competitive pressure and the acute shortage of skilled workers.
On the one hand, the latter makes it more difficult to find qualified personnel; on the other hand, the shortage of skilled workers also increases the pressure to deploy existing employees more effectively within the company. Consequently, the shortage of qualified specialists can be seen as a twofold challenge for companies.
The situation outlined above is forcing companies today to critically scrutinize their business models and make adjustments in order to ensure their future viability. The aim is a transformation that not only addresses short-term problems, but also aligns the company in such a way that it is resilient to external shocks in the long term.
Such transformation processes can enable companies to better anticipate risks, reduce costs by increasing efficiency and achieve a more stable and sustainable market position overall.
Transformation management generally describes the process by which companies make far-reaching changes to their strategy, structure and culture in order to prepare for future challenges and ensure sustainable success.
This includes reshaping the organization to respond to market changes, increase efficiency and promote innovation. Success requires a clear vision, strong leadership and the ability to mobilize all employees towards common goals.
EU-Taxonomy: A guide for sustainable economy
The EU Taxonomy Regulation aims to create a clear and consistent definition of what constitutes a sustainable economic activity. This regulation is crucial as it not only brings transparency and clarity to the realm of sustainable finance but also acts as a catalyst for redirecting capital flows toward more sustainable investments and business practices.
The overarching goal of the EU Taxonomy Regulation is to change the direction of the EU’s financial and economic systems. By clearly defining sustainable activities and incentivizing their promotion, the regulation seeks to direct investments into areas such as the circular economy, renewable energy, and biodiversity conservation.
A core feature of the EU taxonomy is the establishment of specific criteria that an economic activity must fulfill in order to be classified as sustainable. A key aspect of this is the assignment to a taxonomy activity defined by the EU. These activities are designed to make a clear and measurable contribution to achieving at least one of six environmental objectives. These objectives include:
- Climate change mitigation
- Climate change adaptation
- Sustainable use and protection of water and marine resources
- Transition to a circular economy
- Pollution prevention and control
- Protection and restoration of biodiversity and ecosystems.
Another key element of the taxonomy is the principle that sustainable economic activity must not significantly harm any of the other environmental objectives. This “do no significant harm” principle ensures that activities in one area are not at the expense of other environmental goals.
Additionally, the taxonomy requires activities to comply with minimum social safeguards, addressing issues such as labor rights, equal treatment, and decent working conditions. These safeguards ensure that sustainability efforts are not only ecological but also socially responsible.
CSRD: Transparent sustainability reporting
The introduction of the Corporate Sustainability Reporting Directive (CSRD) marks a significant shift in how companies in the European Union report on non-financial aspects. Effective January 5, 2023, the CSRD gradually replaces the Non-Financial Reporting Directive (NFRD) starting in 2024. This new directive greatly expands the scope of reporting obligations: while approximately 11,600 companies were covered under the NFRD, the CSRD will apply to around 50,000 EU companies.
The CSRD requires companies to provide a comprehensive account of their activities across key ESG areas (Environmental, Social, Governance), including environmental protection, human rights, social responsibility, and diversity. This represents a significant broadening of reporting requirements and aims to enhance transparency and accountability in sustainability matters.
A key feature of the CSRD is the introduction of the “double materiality” concept. Companies must report not only on how environmental changes impact their business activities but also on how their business activities affect the environment. This includes social and governance-related impacts. This holistic perspective encourages companies to evaluate and disclose both the external effects of their activities and the internal risks and opportunities arising from environmental and social factors.
The CSRD thus represents a crucial step toward a more sustainable and transparent economic system in the EU, obligating companies to provide detailed reports on their ESG-related activities and impacts.
CSRD vs. ESRS
Adding to the complexity, the European Sustainability Reporting Standards (ESRS) are also relevant. These standards, part of the CSRD, serve as guidelines that companies must follow when preparing their CSRD reports, ensuring uniformity and transparency in reporting.
How do the CSRD und EU Taxonomy interconnect?
The EU Taxonomy and the Corporate Sustainability Reporting Directive (CSRD) are two pivotal regulations that play a key role in promoting sustainable finance and corporate governance. They are closely linked and complement each other in their reporting obligations and objectives.
The EU Taxonomy provides a comprehensive classification system defining which economic activities can be considered sustainable. This system not only stands on its own but also forms the basis for reporting under the CSRD.
Under the CSRD, companies must disclose sustainability metrics related to their economic activities. This includes reporting the proportion of their activities that comply with the EU Taxonomy, covering revenue, investments, and operating expenditures. Consequently, taxonomy-based metrics become an integral part of the CSRD reporting process, ensuring that companies not only report their sustainability efforts but also measure them against clear and consistent standards.
The inclusion of EU Taxonomy metrics as part of CSRD reporting provides vital information for other regulations and actors in the financial sector. Financial institutions, which must meet specific requirements regarding sustainable investments, rely on detailed and reliable data.
These overlaps and connections between EU regulations illustrate how various initiatives work together to create a coherent and effective framework for promoting and measuring sustainability in the European economy and financial sector. They reflect the EU’s ambition to establish a comprehensive and sustainable financial landscape through integrated and mutually reinforcing regulations.
Strategic corporate goals can be achieved with operational excellence, as it ensures that daily processes run as efficiently and effectively as possible. This creates a solid basis for ensuring long-term success. Find out how Operational Excellence becomes Sustainable Excellence.
Towards sustainable transformation: managing and implementing OPEX in companies
Implementing Operational Excellence (OPEX) is a fundamental aspect of effective transformation management. Based on our experience, the ideal starting point for its implementation is improving specific production lines or processes.
To successfully achieve a transformation towards Operational Excellence, several factors come into play, including strategy, execution, and shaping corporate culture. Transformation affects all these areas and should be strategically addressed by management.
Effective transformation management requires a robust foundation in strategy development, close alignment between strategic goals and operational activities, and the establishment of clear metrics and objectives.
Successful transformation management requires a strong foundation in strategy development, a close link between strategic goals and operational activities and the definition of clear key figures and targets.
We usually start by supporting companies in the concrete development of their strategy. This is because the strategy forms the basis from which all further measures are derived.
We often see the problem that although the objectives are defined in the strategy, they are not sufficiently operationalized. It is therefore important to develop fields of action with which the overarching strategic goal can be achieved through successful transformation management.
Based on the previously developed strategy and the identified fields of action, milestones and key figures can then be defined that are necessary to achieve the strategic goal. In addition, specific losses are determined and made transparent in this phase and the measures are made measurable.
The next important step in an OPEX program is to establish effective governance and control structures that enable the consistent pursuit of objectives. In practice, we often find that companies lack precisely these structures, which can manifest itself, for example, in a lot of time being spent in meetings without concrete decisions or results being achieved. For a successful transformation, management in particular should be clear about who is responsible for which decisions.
Engaging employees in transformation processes
Another important factor for the success of transformation processes is to involve employees in the process. After all, they are the ones who have to implement the transformation. Dealing with possible resistance through proactive change management is also crucial. The right communication should promote acceptance on the part of employees.
Continuous training in project management and the documentation of processes in the form of standard operating procedures (SOPs) make it possible to secure knowledge within the company and ensure process quality. This means that processes can also be learned quickly by new employees and executed with the same level of quality.
In order to establish a culture of continuous improvement, the skills of employees must also be continuously developed. This makes companies less dependent on individual employees and makes it clear which skills are available and which the company may still be lacking.
Here we will also briefly outline some of the success factors of change management:
- clear vision and goals: Leaders must communicate their vision clearly and ensure that the planned objectives are specific, measurable, and achievable.
- Sufficient engagement: Visible support from leadership is critical for success. Leaders should model the desired changes, actively promote them, and inspire their employees.
- Effective communication: Open, transparent, and continuous communication reduces uncertainty and builds trust in the transformation process.
- Employee involvement: Actively engaging employees in the transformation process fosters understanding, acceptance, and commitment to the changes.
- Managing Resistance: Change management involves identifying and proactively addressing resistance. Providing support and resources is essential to overcoming obstacles.
- Regeluar monitoring: Tracking progress and collecting feedback enable necessary adjustments and foster continuous improvement.
Thus, companies that have established effective transformation management can successfully navigate changes and challenges. Ultimately, this enables the development of new business opportunities while identifying and managing risks in a timely and effective manner.
Conclusion
The implementation of Operational Excellence (OPEX) can help companies address current challenges such as high cost pressures, labor shortages, and adapting to regulatory requirements effectively. The key lies in building transformation competencies that enable continuous improvement and flexibility in responding to changes. This approach paves the way for a future-proof orientation of the company. By focusing on the gradual improvement of individual production lines or processes and developing a strategy that integrates all levels of the organization, potential conflicts between goals can be identified and resolved.
FAQ
What is the difference between transformation management and change management?
Transformation management focuses on fundamental changes in a company’s strategy, structure, and culture to prepare it for future challenges. It is a strategic, long-term process aimed at fundamentally reshaping the organization. In contrast, change management deals with the specific “how” of implementing organizational changes, including techniques and methods to support employees in adapting to those changes.
Why is Operational Excellence (OPEX) important for transformation management?
Operational Excellence is a key approach to increasing a company’s efficiency, agility, and competitiveness. It aims to continuously improve processes, eliminate waste, and enhance productivity without compromising quality. In the context of transformation management, OPEX provides the ability to quickly adapt to changing market conditions, reduce costs, and improve customer satisfaction. This creates a strong foundation for sustainable transformation and long-term business success.
What role do employees play in the implementation of OPEX as part of transformation management?
Employees play a central role in successfully implementing OPEX. Their active involvement and commitment are critical to driving optimization processes. By establishing a culture of continuous improvement that involves and empowers employees, companies can unlock innovation potential. This approach also boosts employee satisfaction and enhances the company’s attractiveness in the labor market.
How can resistance be effectively managed in the context of change or transformation management?
Resistance to change can be mitigated through clear communication of the vision and goals, as well as leadership by example from the management team. Actively involving employees in the change process and providing support and resources are essential for addressing concerns and fears early on. Regular monitoring and opportunities for feedback further build trust and allow for ongoing adjustments to the transformation process.
What are the success factors for effective change or transformation management?
Success factors include a clear vision and defined goals, management commitment, effective communication, employee involvement, resistance management and regular monitoring of progress. These factors help to ensure that the transformation is not only initiated, but also sustainably anchored in the company.
