We all hear a lot about corporate governance.  It’s a term that refers broadly to the rules, processes, or laws by which businesses are operated, regulated and controlled.  If you search on Financial, Legal or IT Governance you find a tremendous amount written on the subject.   Since we deal with Operation Excellence, I searched on Operational Governance to see how people were thinking about the organizational structures that drive and support Operational Excellence and business performance improvement.  I was surprised by how so much of the search results dealt with IT and BPM software, and not really what I was looking for.  I can’t help but take this as being a blind spot in how we run our companies.

Through our clients, we see various activities involved in running the business.  We see our clients define their customer, their customer’s needs, how to serve those needs and how to do it better than their competition.  These are their strategic decisions.  When they want to do better, we see our clients define initiatives for improvement.  Within Operations, these initiatives are called Operational Excellence, Continuous Improvement, Six Sigma, Lean Sigma, Quality and many other names.  These are operating activities and they have improved greatly over the last twenty years.

Between the strategic and operational level is where we see the least definition and the greatest variation in practices.  Sometimes we see no activities here at all!  We see improvement projects that bubble up from the bottom and aren’t filtered through any sort of decision matrix.  Other times we see all sorts of pieces including scorecards, dashboard, value streams, process maps, KPI and control charts but they are simply individual activities, reports and discussions.

 a short Powerpoint presentation that walks through an operational excellence roadmap, with notes included.

Bringing this middle ground between the strategic decisions and the day to day performance and improvement activities is where we believe companies have the greatest potential for their next leg of performance growth.  These are management activities that center on operating decisions supported by continuous improvement.

Operational Governance is what we call these activities and when done right you see all the goals being addressed with improvement activities and all the improvement activities tied to goals.  People don’t just know what they are doing, but why they are doing it.  It is effective Operational Governance that turns strategy into results.  For more on Operational Governance see our web site.  And if you’d like to discuss the how to establish an effective Operational Governance system, feel free to contact me.

In our design course we present an argument that over 70% of a product’s total cost is captured within its design process.  Based on that assumption, we go on to argue the most impactful activity a company can make to lower the cost of new products is to improve its design process. While we don’t cite similar statistics for a service, we believe the basic principals are the same.

Within Service Design, we believe there are two activities that we have observed service companies don’t aggressively pursue and which, if improved, could dramatically improve its cycle times, costs and perceived customer service quality.  Specifically, intensive mapping and tollgating are two basic design process and design principles that service companies would be well served to improve.

Tollgates should serve as business reviews and not technical reviews.  Tollgate business reviews should include cross-functional teams that are named based upon the business risk of the project.  Some new service offerings should include the CEO and others shouldn’t require such attention.  Tollgate reviews should include discussions about project risk, customer requirements, financial objectives and schedule/timeline.

Certainly, when constructing customer requirements for the service, there should be some form of VOC, such as a quantitative or qualitative survey, and conversion to CTQs using some form of decision matrix or tool such as a QFD.  But customer input shouldn’t stop after setting initial customer requirements.

Customers should be part of the tollgate process.  They should be treated as a stakeholder just like everyone that is part of the cross-functional team.  Of course, design incorporates a lot of proprietary information that is part of an entity’s business model and which a company certainly doesn’t want to disclose to its customers as it risks the very essence of their value proposition.  This is especially true for B2B service companies.

a short .ppt dealing with tollgate reviews in the service design process …

The key to incorporating the customer in the tollgate process and still maintaining a protective shield on your value proposition is to know when and on what to include the client.  A valuable tool to identify those points is a service blueprint that details all the “on stage” points of customer interaction.  These are the customer input points.  It is here that they form their perception of service quality.

Service companies still have very ad hoc service design processes.  Process mapping and tollgate reviews are two simple tools that can put some initial structure into service design.  Service Blueprinting, a form of process mapping, is a great tool to understand how to extend tollgate reviews to include customer feedback during design.  The stronger the design process, the shorter the lead times, lower the costs and higher the perceived customer experience.  If you would like to discuss any of these concepts or how to implement them, contact me.

Organizations that choose one-off solutions to react to regulatory and compliance requirements on a case-by-case basis, as they are impacted by them, will spend 10x as much as those who choose to design and implement business processes that have measurement, visibility, and proper controls built into them from the start ….

I believe it was Gartner that made this assertion some years back, and it has proven to be true for many.  Organizations with a solid process infrastructure already have much of what they need deal with compliance requirements. The fundamental tenets of good process management include measurement, visibility, predictability, consistency, and repeatability, and business practices implemented with these elements in place can easily be transferred into specific controls that can be measured and reported on a regular basis.    Organizations that do not have a good process infrastructure in place may find themselves expending huge resources to redesign bad processes and systems when new requirements come down the line, as they always do.  Ouch.

our short executive brief that discusses the importance of process management in meeting compliance challenges

If your company is like most, you face growing regulatory and compliance demands that absorb time, money, and other valuable resources and, ultimately, sap your competitiveness. However painful, this is reality and faced with these realities, you want to find a way to meet compliance requirements that is objective, reliable, and efficient. Merely managing the issue by opinion can be very dangerous and expensive. Opinions, not matter how smart the “opiner”, have a tendency to not match reality. A better answer is to drive compliance to an objective, measurable specification.  Management by fear can be even more expensive, inducing you to greatly overspend on compliance and to shy away from reasonably acceptable risks that could mean far better business results.

And, let’s be clear, policies and procedures are not controls. A policy merely states an intention to do something; a control ensures that it is done, done repeatedly, and done up to standard. Moreover, policies have to be read, understood, and remembered, all of which opens many possible routes to failure.

Bottom line — work is accomplished through processes – and in no other way.  To reliably achieve compliance you must be able to improve those work processes or design new ones. In other words, the way in which you meet a requirement must be embedded in the work itself, not merely displayed on a policy document. In order to sustain compliance, you must be able to establish measurements and controls within those processes. Certainly, you may have policies that apply, but the way in which you build, operate, and control work processes constitutes how we meet a requirement.

Contact me if you’d like to discuss how basic process management and improvement approaches might help with your compliance challenges.

We’ve been working with a number of customers of late that are trying to improve service delivery processes, and move into the differentiating realm of service innovation.  In these very large enterprises, it’s always a challenge to get organizations to change behavior.  Immediately, voices start rising, touting the need for change management.

This is another of those terms that can have a lot of different meanings to a lot of different people.  Wikipedia defines change management as a structured approach to transitioning individuals, teams, and organizations from a current state to a desired future state. If you google “change management”, you really enter the swamp.   Even if we narrow change management to the business / process improvement world that we at SSQ live in, there is still a lot of confusion.  How do you sort it all out?

our BPM Overview presentation

In the CI world, companies want and need to markedly improve their value-generating processes (value stream), but the question becomes how do you get people to embrace the changes that come as part of improving?  How do we get them to embrace the overall effort to improve processes, and theoretically improve service delivery?  Do we really have to indoctrinate them into some new philosophy of change?

Personally, I don’t think so.  I think that many times change management becomes a problem because people don’t have a clear picture of 3 simple (not really) things:

1. where they are now,
2. where they need to be
3. why they need to get there.

Most organizations have plenty of smart people (I know … there are exceptions!)  .  The fundamental trick to change management really boils down to getting all those smart people pulling in the same direction.   If you can get clarity around the 3 simple things above, you might be surprised to see that change management is not the big issue you thought it was.

I’ve used the term simple to describe these three things above, but getting there can be anything but.  With our engagements, we spend significant time on the front ending trying to get these answers, and I can assure you that it can be challenging.  But, we get there, and I firmly believe our success rates with business improvement efforts are better because of it.

There are other ways I’m sure, but we use a structured approach that attacks the problem by:

1. Understanding, for both the customer (voice of the customer) and the business (voice of the business), what constitutes high-performance and turning that into clearly defined metrics (efficiency and effectiveness).  We are looking for gaps in these indicators, between current state and where we need to be.
2. Understanding the top-level value stream from a process perspective (not function), the things that have to happen to deliver your services or products, and create customer and business value
3. Identifying metrics at the process level (VOP), and making sure they are aligned with top level VOB and VOC (#1).  Like #1, we are looking for the gaps.
4. Defining an objective prioritization scheme based on voice of the customer and voice of the business.
5. Identifying improvement ideas from the gaps, and evaluating and prioritizing those ideas objectively based on #4.  A prioritized project pipeline.
6. Turning high-value project ideas (business cases) into tightly scoped improvement projects that are clearly aligned with very visible objectives (#1)

Of course, this is over simplified. There’s a lot of work happening between the spaces, but think about it and ask … Is change management really as simple as being able to see clearly? As always, I welcome your thoughts on this.  Comment or contact me directly if you prefer.

I talk to companies every day about how they can best roll out business performance and process improvement programs.  Now, just to level-set, we aren’t zealots here pushing any one-size-fits-all model for programs. We do have some key principles that we adhere to when designing programs though. One of these is that it’s likely not feasible to have a program that builds infrastructure and trains for many months, before ever delivering any quantifiable return. That is simply not the world most of our clients live in these days.   Our philosophy is that it is always advantageous for the program to deliver near-immediate, visible, and quantifiable impact.

When looking at an enterprise, more often than not, we find that basic process management/improvement and Lean (i.e. Lean Enterprise, Lean Process, Lean Manufacturing, Lean Product or any of the other labels floating around out there) can solve a lot of high impact business problems, without incurring high training and infrastructure costs, and are the right place to start.

Lean Process Improvement efforts can yield big results fast, without big investment or big risk …

However, I get a lot of questions dealing with how an organization can get started with basic process management and Lean Enterprise, and how to fit in to an overall, enterprise wide process improvement / CI program strategy.    This is a good question in that, in the past, it was almost always preached that Process Improvement deployments (Six Sigma, Lean, etc) had to be top-down.  Start with executives to get support, develop champions, select projects, train black belts, build a 3-year plan, etc, and grow from there.  The challenge with this approach is that it requires a hefty up-front investment and it takes a long time before results are seen.  Read ….. high cost .. high risk!

our new Lean QuickStart powerpoint presentation.

In today’s business climate, this is simply not palatable for a lot of organizations.  For them, an approach that is much less top-down, and much more focused on near term, bottom line results may be far more attractive.  So, here is an approach sequence that I’ve seen effective over and over

1. Work with business leaders to identify pilot areas of the enterprise
2. Identify specific focus areas and business cases in that area(s)
3. Refine those down to a set of well-defined project charters, segmented by the nature of the problem (defect, cost, cycle time, etc), scale, and perceived complexity.
4. Select a set of low-hanging-fruit projects that can likely be solved in a relatively short amount of time and with basic lean and quality toolsets
5. Run 1 or more workshops with specific project teams, with specific well-defined projects that can be executed in 2-5 weeks.
6. Track real savings and ROI on projects, and publicize/promote heavily internally
7. After one or more workshops, train champions /sponsors and develop a formal project selection and prioritization methodology (see my recent post on this).  Refine continuously.
8. Continue with more workshops, to a broader segment of the enterprise

Processes are cleaned up, waste and complexity removed, measurement systems are put in place, and real bottom-line results are realized.  Results drive interest and commitment, so it becomes easier to get the broader organization engaged.  For enterprises that have done little formal process improvement work (or a lot for that matter), there will most assuredly be many Lean projects to be executed, yielding fast and consistent results. And, soon enough, larger and more complex problems that require higher level capability (e.g. six sigma) will show themselves.  Then, and only then, do you bridge up to and invest in the next level of capability …. Pay-as-you-go.

These efforts can easily and painlessly run in parallel with and, indeed, support and pay for the broader activities that are required to make the overall process improvement effort successful long-term, namely identifying CTQ measures for voice of the customer (VOC) and voice of the business (VOB), characterizing value streams and establishing process indicators and metrics, building a mechanism to constantly identify high value improvement opportunities (i.e. project pipeline), and constantly defining and executing improvement projects.

Contact me if talk about whether this model could work for your enterprise.

We have many discussions with organizations where Lean, Six Sigma, and other performance improvement efforts have outright failed, or maybe have just started to lose their impact.  In an earlier article, we talked about the importance of alignment and how important it is to have clear line of sight to the performance gaps that matter the most.  But, in some cases, scorecards and dashboards are there, with well-defined KPIs pointing to high-value targets, yet improvement efforts still yield less than desired results. Why?

Of course there can be many reasons, but lack of discipline around project definition, or project charters, is something we see consistently in these problem situations.  Poorly defined projects are without a doubt a recipe for disaster.  You may be focusing on exactly the right problem, but, if the project’s problem statement and objectives are not well-defined, your chances of success in making an impact fall dramatically. So what are the key elements of a good project definition and charter?  Here are 5 big things I think should be present in all improvement project charters / project definitions:

1. A clear Problem Statement that defines the business problem in specific and quantifiable terms.  Done well, it will answer the following questions clearly and concisely:
   • What is the primary metric, or needle, that I’m trying to move?
   • What is the primary metrics current, or baseline, value?
   • How did I measure the primary metric’s baseline value, and over what period?
   • From the business’ perspective, what is the target value for the primary metric?
   • What is the gap between current performance and needed performance levels for the primary metric?
   • What is the value (in $’s if at all possible) of closing that gap?
   • What areas of risk do I need to pay attention to as I try to move the primary metric? These will become your secondary metrics. For example, if you’re trying to reduce costs in some customer facing area of the business, you need to pay attention to such things as attrition rates, customer satisfaction scores, etc.

 

2. A clear Objective Statement for the project.  It is unlikely that a single project can close the entire gap for the business problem defined in #1.  It is more likely (and usually preferable) that a project focuses on a sub-process, or segment of the overall value stream, and it targeting only a portion of the overall gap.

 

3. A clear understanding of the Start and Stop points for the project.  Related to #2, be very clear on exactly which segment of the value stream (subprocess) the project will be restricted to.  This is about scope, and avoiding the ever-present scope creep.  It may need to be adjusted as the project progresses (and/or evolves), but make an effort to define start and stop points up front.

 

4. A clear definition of the Team that needs to be involved in the project.  Team members may be actively working on the project analysis, or they may just be subject matter experts that are called upon to gather information and feedback.  They may work in the process/sub-process being analyzed, or they may be customers of or suppliers to that process.  Take time to think through who really needs to be involved, and engage them early.

 

5. Explanations of how things like are computed and derived.  For the gap values in problem and objective statements, how were those values derived?  There will always be questions of value, and it’s better to have explanations right in the project definition. The same goes for primary metric baseline values?  How were derived?  Show the data that was used, identify any assumptions that were made, identify any anomalies in the data, etc.

Project definition (project chartering), done well, takes time and effort, but I can assure you that your project outcomes will suffer if shortcuts are taken here.  I do realize that there is a lot of ground covered with these 5 elements, and that there is a lot of detail and nuance in each.  In an upcoming post, I plan to present an example and walk through each of the elements in some detail.

a short presentation on project identification and definition ….

Feel free to contact me if you would like to discuss project chartering and project definition for your organization and its improvement efforts.

Verizon Wireless “Can you hear me now?” commercials hit home because in our increasingly mobile connected lives we live that moment so many times. Verizon’s implicit message is that not only will you be heard on their network but that they hear you.  We all want to be heard and we are frustrated when ignored.

We live that moment when we question whether we are being heard in many other ways including as consumers and business customers.    How often do we feel as if we are asking the people from whom we buy goods and services both personally and professionally “Can you hear me now?”  How often do we feel as if we are ignored, misunderstood or altogether treated like a dropped call!  What do we do when we feel that way?  I know what I do.  I move to another network.  I move to one that will listen to me.

Let’s now reverse the question.  As a product or service provider, ow well do we listen?  Are we so busy with what we wish to accomplish that we are forget our goal in business, which is to meet client or customer requirements.  I recently heard an individual involved in a performance improvement program discussing the need for Voice of the Customer, VOC, as he explained his management scorecard and projects.  When asked if he’d reviewed either with a major customer, he replied that they’d given him a scorecard but he’d neither used it or presented his because his system was still immature.  I took a double-take.  He’d been handed the VOC he sought but failed to realize it as such as he was focused on his ability to execute.  Tell me – would a hunter increase the amount of venison he had for the winter if he could shoot straight but couldn’t find his quarry?  I think he’d have a cold, hungry winter. Good VOC helps your business see the target.

a short training module that discusses Critical to Customer Requirements

If you want to judge the ability to execute, we have lots of qualitative observations and quantitative measures with which to make an assessment.  Do you have the same so as to assess your ability to listen?   Do you know whether or not you are really listening to the voice of the customer?  We feel that just as there is a maturity model for the ability to execute improvement, there is a maturity model for the ability to listen.  If you’d like to hear more and discuss how you listen to your customer, please contact me.  We always like to listen to you.

Over the past 20 years of experience, we’ve learned the key to sustaining performance improvement gains rests on process management.  This role is entrusted to a broad group of employees who are often the process owners and, when not the process owners, are still the most affected by large scale improvements.  Providing them the proper skills forms a critical component of a robust quality management system.

Some have dubbed this person and the required skills Yellow Belt but that term hasn’t done the role justice.  Yellow Belts are often thought of as data collectors or Black Belt assistants.  But a Yellow Belt’s ability to control and manage processes using metrics and data as well as solve problems using basic quality tools gives them far more impact.  Their power doesn’t come from their place in a tiered pecking order of Master Black Belt, Black Belt and Green Belt but in their numbers, demographics, foundational skills and role.

our executive brief that discusses how Yellow Belts play a crucial role in sustaining process improvement efforts

Yellow Belt training introduces the majority of individual contributors to the concepts of process improvement and management and their position in their organizations make a direct connection to improvement efforts.  Yellow Belt training can be fit to how people will be expected to operate.  If positioned to assist Black Belts, they have little need for project selection or analytical tools.  However, if Yellow Belts are expected to sustain gains long after Black Belts have left, a more complete set of tools is required.

Many organizations have active Operational Excellence programs that consistently execute projects through to implementation successfully.  But to make it stick, drive it wide and take care of low hanging fruit, they should look at process management which forms the core of Yellow Belt capability.  If you’d like to see the core concepts covered in Yellow Belt training, contact us or go to our website’s Yellow Belt webpage where you can download complimentary Yellow Belt training materials.

The last few years have witnessed big changes in the business climate, and continuous improvement (CI) efforts have certainly seen their share of change.   I talk with companies every day and, without a doubt, there has been a fundamental shift in thought on how to best make meaningful process improvement happen.

Prior to 2008, there was significant interest and buy-in for large-scale, top-down initiatives. There was a willingness to set aside large budgets and free up significant resources for the CI initiative.   Training increasingly large segments of the workforce was front and center.  Detailed, multi-year plans were put in place.   The CI initiative was heavily promoted, internally and externally, and employees were strongly urged to participate.

But, did those big initiatives deliver results?   Undoubtedly some did.  But, many more, when you really check the numbers, did not.  There are many distinct causes why they didn’t work, and I won’t try to dive into that here.    But, with the meltdown in the business climate, many leaders took a look in the rear view mirror and didn’t like what they saw …. big dollars and resources consumed with little evidence of concrete results.

Now, does this mean that CI and process improvement is useless and should be abandoned?  Of course not.  Businesses live and die today based on the strength and adaptiveness of their processes, as compared to their competitors.  Does it mean that the tools and methodologies used (Lean, Six Sigma, BPM, etc) are not good and should be replaced with something new?   I think not.  The tools and methodologies can certainly be improved and expanded (and are), but they are proven to work.

So what’s happened?  I believe that, for a lot of companies, there was too much focus on the initiative and not nearly enough focus on results. And based on conversations I have with business leaders every day, I think many have drawn the same conclusion.

So, when smart people see the error in their ways, it typically leads to change.  The change that I’ve seen happen for CI is a move back to the basics, and a focus on bottomline, business results.  It may return, but for now I see very little interest in big change initiatives whose results are measured over the very long term, if ever truly measured.  I see a much more tactical view of CI, focusing on solving specific business problems quickly,  as opposed to general quality improvement.  CI programs are more likely to be looked at from a bottom-up or grass-roots perspective.

Smart leaders are now letting the specific needs of their business drive what the CI program looks like, what methodologies and tools are applied, how results get measured, what technology platforms are deployed, etc.  To borrow from Lean, the business is pulling CI capability, as opposed to it being pushed into the business.  In the real world, what does this mean?

a short executive brief that provides a good overview of the basics of lean

Well, I can only give you my perspective from talking with leaders at companies of all sizes and in many different domains, but what I see is a clear move back to the basics of business and process improvement.  Basic quality and process tools as employed in Business Process Management (BPM), Lean, and basic quality tools (Yellow Belt) are getting a second look.

Why?  Because, for many businesses, the basics will help solve 95% of the real business problems, get results fast, and they can be introduced into the organization for a very low cost and very low risk.  The basics also build a solid foundation on which advanced capabilities like Six Sigma and DFSS can be effectively built and deployed to deliver even more dramatic business results, with much less risk.

So, what do you think?  Is this just a reaction to circumstances and will large-scale, top down change initiatives return.   OR,   is this the new normal for companies when it comes to business and process improvement? Feel free to  Contact me if you’d like to discuss.

So, what does Business Process Management (BPM) mean to you if your organization has already gone headstrong into lean,  six sigma or other improvement efforts?    What does it mean to you if the efforts have really produced some good results?  Think you don’t need it and should move on?   You may want to think again ….

I constantly talk with people and hear some variation of ….

“We got a lot of great results from our program (Lean, Six Sigma, Quality, CI, etc) for the first couple years, everyone was excited and motivated, but now the program seems to be running out of steam.  Results and participation are falling, interest in waning, and we can’t figure out why”.

There are, of course, many potential causes for this, but one of them seems to be pretty consistent.  There is no real project pipeline and project prioritization approach. What happens?  People don’t really know what to work on so they don’t do anything or, maybe worse, they start working on squeaky wheel projects that have little or no impact on the business, and may even have a negative impact.  If this happens, I can assure you that it is a recipe for disaster for any business improvement program.

Download our whitepaper that discusses using BPM and scorecards to align improvement efforts

If you build that BPM framework, you will have a clear view of what really matters to the business and metrics to gauge your success in improving those things.  A pipeline of business cases and projects can be built based on measurable performance gaps and those projects will, by definition, have clear line of sight to things that really matter.  A clear prioritization scheme then keeps things practical and real.

If you have a clear list of projects that are absolutely aligned with the things that matter most to the business and you have a way to prioritize improvement efforts, do you think an improvement program is likely to fizzle?   I think not.

So, give BPM a second look, even if you’re well into an improvement program.  It doesn’t have to be a complicated, drawn out task.  If you’re just getting started, you can and should build it in stages, while you’re picking up some of those low hanging fruit projects.   If you have a mature effort, you can still build it in manageable stages by prioritizing the different areas of the business.  In the medium to long run, it might be the difference between your improvement program being a flavor of the month initiative and a long-term, strategic value-add component of the way you do business.

Contact me if you’d like to discuss BPM and your organization in more detail.