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Managing Change Must Be a Core Competency

April 3rd, 2013 1 comment

President Woodrow Wilson

From American history we can learn about driving and managing change. Between the key milestones of the Civil War and the New Deal, Woodrow Wilson’s Progressive Movement provides an interesting study. Wilson, President from ’13 to ’21, formed the Federal Reserve and FTC. He lead efforts to reform anti-trust, workers rights and women’s suffrage. And, he controlled America’s entry into World War I as well as leading the formation of the League of Nations that preceded the United Nations. All in all, it’s fair to say he dealt with change.

And when all was said and done, his lesson to us was “if you want to make enemies, try to change something”. At every level, from American society and global politics to our everyday lives, his warning should ring in our ears.

In business, the question becomes how then do you navigate change to minimize Wilson’s warning of creating enemies? One thing is for sure…currently, it isn’t done well. In 1995 popular change management author John Kotter released a study claiming only 30% of initiatives were successful. Over ten years later in 2008, McKinsey’s follow up study claimed the success rate hadn’t changed one bit. Change fails when you’ve created so many enemies that they kill the change. In other words, the responsibility for success and for failure is with those initiating the change. And it’s clear that while change is constant, we aren’t good at managing it.

What is sad is that we keep recognizing we need to be good at this, we keep recognizing we aren’t and we keep trying to solve it the same way. The “answers” to which we keep looking say we should (i) create a compelling story, (ii) establish role models for successful change, (iii) build systems to reinforce the change and, finally, (iv) establish the skills required for change. It all seems so rational. The only problem is that people aren’t very rational so when the effort meets employees and managers, their respective attitude and behavior don’t change.

These basic assumptions don’t work for a host of reasons. As an example, what seems compelling to managers isn’t always compelling to a workforce. And who we choose as role models isn’t as influential as broad peer to peer (i.e. social) networking. In addition, we to often rely on money as a motivator when it really isn’t that impactful. Finally, we can teach tools more effectively than attitudes toward change.

We’ve certainly had our experiences, both good and bad, with driving change both internally and with clients. From those experiences and our studies, we have adapted a change model we find effective for our area of expertise. Here are a few of its unique elements;

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  1. Give people time to digest the change. Often leadership has spent significant time discussing the desired change and its causes. Leadership is no longer wedded to the status quo and is committed to what is ahead. It is unreasonable to expect everyone else affected by the change to need any less. Pushing change just triggers the organization pushing back.
  2. Segment the audience when communicating. Treat the communication like a product or service launch where each segment has a tailored communiqué that addresses their unique position in the organization and how they are affected by the change.
  3. When developing role models, reverse engineer internal successes. What I mean by that is that any successful project has elements of whatever roadmap you’ve chosen. The fact the events took place through unconscious competence is meaningless. What is important is that they took place in your organization and can be used as examples you own.
  4. Treat crisis change different than steady state change. When making a steady state change, spend as much time on the process as the idea of the change. Develop separate roadmaps for crises and steady state. Don’t oversimplify the roadmaps. Ensure there is time for gradual understanding to minimize stress response and push back as well as to avoid lingering mistrust. Don’t try to create crisis where there isn’t.
  5. Provide coaching to key change spots. This may be one-on-one to executives or in mass to groups. It may use internal or external resources. You won’t correctly anticipate all the key spots but thinking about them will prepare you to respond quickly to the one’s you miss and the preparation acts as preventive maintenance. Coaching has a proven impact to help people focus. Add coaching to training and people learn more. Coaches accelerate the acceptance of change and help avoid potential long lasting problems.

Woodrow Wilson was right – if you want to make enemies, try to change something. But if you handle the change correctly, you can minimize the resistance and develop new allies along the way. And to do that, don’t repeat the same mistakes from failed changes. Look to the successful ones for elements that produced better results. Develop successful roadmaps for change based upon your

experiences. And we would be happy to share our successful roadmaps with you as well. If you’d like to discuss these ideas about change, feel free to contact me.

What is Change Management? The Rule of Three

March 6th, 2013 Comments off

Celebration

Great art can inspire change and drive us to action.  It can make you dream of something better or make you aware of your dissatisfaction with the status quo. The former makes your feelings soar.  The latter can bring pain.  Which do you believe drives us to action?  While I’d like to believe we act on visions of what could be, I think we’re more driven to immediate action by the feelings stirred in the dark painting.

When I reflect on that idea I remember reading how the opposite of satisfaction isn’t dissatisfaction but the lack of satisfaction.  Just because we’re not satisfied, we may not be willing to change right now.  We may in the long run. But maybe not right now.  Meanwhile, when we’re dissatisfied, we act.   Not being satisfied won’t drive new behavior simply because change is scary and painful.  So it’s not until the pain of staying the same becomes greater than the pain of changing that we change.

I thought a lot about this lately because I had three consecutive discussions with new prospective clients about the subject of change.  In each case, the party with whom I was speaking wanted to talk about driving operational excellence. But what we were really discussing was change.  The three conversations were all very different organizations yet they had very common denominators.  So here were the three scenarios;

  1. A state university pushed to change by technology and funding pressure was described as being very resistant to change driven from outside its culture.  Yet they lack an acceptable and successful internal change model so they remain wrestling with how to proceed.
  2. A heavily regulated division of a large insurance company described itself as having little process discipline and is considering BPM software to lock down processes.
  3. A successful manufacturer that implemented Six Sigma using an outside party five to ten years ago saw few meaningful results and quit.  Now they look to restart but recognize how hard it will be to get everyone to buy in a second time.

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In each case, I strongly advised against three things;

  1. Don’t emphasize form over substance.   You don’t have to sell a big change model, adopt a new software application or role out a headline OpEx initiative.  You just have to move some things forward and make some gains to win hearts and minds.  They’ll take it from there.
  2. Don’t superimpose an external set of rules such as a software program.  Everyone organization has successes internally.  Focus on those. Build on them.
  3. Recognize what may seem like dysfunctional behavior to you is probably quite normal.  Someone whose profession is to improve is often puzzled by those that don’t embrace it.    The problem is the subject never said they were dissatisfied.  While they may agree things could be better, they aren’t motivated to change.   That isn’t irrational.  We seek self actualization in the long run but in the short run we change when we are unhappy.

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So what can we do at those three organizations to avoid the pitfalls and drive some much needed change?  We recommended the following actions;

  1. Celebrate your own successes.  But reverse engineer them so the success is replicable.  And improvement may have occurred through hard work but there were probably some unconscious best practices that can used as examples for the rest of the organization.  Advertise the success and highlight the best practices that can be replicated.
  2. Find who is dissatisfied and wants to change.  Don’t try to convince people to change with arguments of a better life.  Instead, find who is dissatisfied and willing to go through the pain of the change.  If you find someone with pain that isn’t acting, help them become aware of the level of pain.  If they begin to show signs of a willingness to change, start working with them.  If not, come back to them.  If it’s real long term, chronic pain, they’ll be ready one day.
  3. Let the organization pull what it needs rather than a centralized group pushing what they think is needed.  This isn’t to say a centralized group doesn’t know what is needed.  It very well may in which case it should make it available. But you dictate change.  You are better off giving them the ability to drive the change they see as needed.

The bottom line is that very different businesses have very common needs when it comes to change.  The core elements of change are universal.  I’ve tried to identify a couple of key “don’t do’s” and an equal number of “do’s.  Hopefully, these will help you avoid some potholes and accelerate success.  If you’d like to discuss, please contact me.

Leadership Steps in Creating a Customer-Driven Process Enterprise

February 13th, 2013 2 comments

Everyone in an organization has a responsibility and something to contribute to Process Management.  Executives, Process Owners and Process Team Members all have a role to play to create a Customer-Driven Process Enterprise.  But leadership’s role is the most impactful in truly achieving the end state.

Leaders need to have a map in their mind and understand their vital role.  They should know the foundation they can lay, the steps along the way and how to identify when they have arrived.  But first and foremost, they must understand what they can do as individuals and buy into those actions.

Download BPM Overview PresentationOur BPM Overview Presentation.

So what personal role must leadership take to create a customer-driven process enterprise?  We believe those steps are as follows:

  • Demonstrate commitment.
    • Stake your own reputation to the transition
    • Commit to the goals in public
    • Adjust reward and recognition programs
  • Commit the required resources
    • Fund in full the up-front investments to get started
    • Dedicate excellent people to the effort
  • Demand participation and engagement
    • Stay personally engaged throughout the process
  • Be passionate about change
    • Talk about it to everybody and get them emotionally engaged

If a leader can’t buy into those steps, don’t go any farther. But if they see the risk worth the reward, they should first focus on building a foundation in the organization which ensures success.  So here are the prerequisites for transitioning to a customer driven process enterprise.

  • Bring all initiatives together under the umbrella of business process management
  • Communicate the seriousness of the need for a customer-driven process enterprise
  • Determine an implementation plan for becoming a customer-driven process enterprise

With a foundation in place, how do you get from point A to point B?  Here are the phases of the process and what you have to do at each step along the way –

  • Stage 1 – Establish.  Set a Vision, Mission and the elements of a balanced scorecard.
  • Stage 2 – Deploy. Identify Key Business Processes and their Process Metrics.
  • Stage 3 – Implement. Provide Process Owners and Team Members the support to establish a management system which measures actual results, gaps to the desired state and actions by which to improve.
  • Stage 4 – Review.  Evaluate and tie performance evaluation and rewards to how the management system operates.

Download BPM Scorecards executive briefDownload our new executive brief discussing scorecards as part of BPM.

Often, you work so hard at something that it is difficult to know when you’ve realized your goal.  Keep in mind the goal isn’t simply achieving the numbers established for process metrics.  The goal is a cultural shift that orients the company to the customer using processes.  So how do you know when you’ve arrived.  When all is said and done, you’ll know you are there when you see the following –

  • More focus on processes than on functions
  • Employees know and accept process goals
  • Everybody understands how the processes are performing
  • Processes are measured objectively and frequently

So if you are a leader in an organization, or working closely with one, think about whether you exhibit those last four bullet points today.  And if your organization doesn’t, ask whether you need to before one of your competitors does.  If the answers tell you to start changing, feel free to contact me to begin your efforts.  In the meantime, if you want more information, see the complimentary downloads featured in this article.  Upon download, we’ll follow up to offer a complimentary copy of our two day course “Establishing the Strategic Vision” which gets into much deeper reviews of all my points above.

Lean Management System – The Key to Sustainability

January 24th, 2013 2 comments

Lean Management System is the Key

Lean has wonderful elements.  Two important ones about which we have written on many occasions are that lean projects can be implemented quickly and the tools can be disseminated broadly within your employee population. The result is that you can get traction and a payback the organization can see and measure.  Every level of management and line personnel love those properties.

But like any sort of change initiative, it is still difficult to get true cultural change.  In other words, just because it can be more easily understood and applied more easily than say Six Sigma and the payback is shorter, doesn’t mean its guaranteed to be successful.  Implementation and sustainability are quite different. So how can it be done?

Well let’s first define how sustainability appears.  A lean culture of continuous improvement is characterized by:

  • Daily Application – Ability to apply the tools to improve operational performance on a daily basis
  • Proper Application – Knowledge of where to apply the tools, or a process for continuously refocusing on problems and opportunities.
  • Demonstrated Successes – Extensive knowledge of, and success with, the tools.

To achieve this, organizations need a change model.  It should be a structured process for achieving the discipline and focus needed for any successful change. This process is a Lean Management System, which doesn’t guarantee lean success, but build the foundation skills.

A lean management system is focused on work groups of five to ten people. It provides an integrated set of planning, measurement and problem solving tools to help the work group:

  • Focus on daily performance measurement and improvement
  • Improve effectiveness of supervisory communication
  • Solicit and evaluate employee improvement ideas
  • Assess lean status and define improvement objectives

A Lean Management System is meant to build the new “habits” necessary to develop a culture of continuous improvement with four key elements:

  1. Primary Visual Display (PVD) serves as a central communication point for a work group. The work group members themselves maintain performance metrics, schedules and improvement actions.
  2. Huddles of ten minutes in length which serve as a meeting place to review performance to date, communicate critical next steps, plan progress and solicit solutions to problems.
  3. Performance Metrics which are essential to instill the discipline necessary for standard work and other lean practices to be sustained.
  4. Kaizen Events structured to systematically collect and evaluate employee improvement.  Kaizen events provide a process to capture the ideas, evaluate them and ultimately implement them for operational improvement.

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A Lean Management System seeks to build new work habits.  And, like any new habit-building program, it must be practiced diligently until the new processes gradually become “business as usual.”  Day-to-day, hands-on coaching of work groups and team leaders is essential to ensure acceptance. Initially this is accomplished through process compliance, but ultimately through knowledgeable use of the tools.  And finally, through a deep enough understanding that you achieve process innovation.

A lean management system is focused on improving work group performance.  It is part of a broad-based lean deployment, not a substitute for value stream mapping, kaizen events and other methods to identify and implement lean improvements. Think of a lean management system as the glue that will hold lean improvements in place and gradually broaden the application of lean tools within your organization.
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A lean management system must be linked to higher-level operational management activities within an organization to ensure seamless communication of expectations, feedback on results and review of improvement ideas. As teams and organizations gain experience with a lean management system, work groups become more empowered and the freedom to act increases dramatically. A lean management system will help bind lean changes to the process and build lean thinking into the culture at the intact work group level. A lean management system is the missing link to a achieving a lean culture.  A lean management system is the missing link to a achieving a lean culture.  If you wish to discuss this post, feel free to contact me.

Dr. King’s Words For Operational Excellence

January 20th, 2013 2 comments

Martin Luther King was a religious and political leader.  This is neither a religious nor political blog.  But work and morality are inextricably linked.  Consider Shakerism’s belief in efficiency and hard work. Think how Shaker furniture personifies their morality.  Their work methods were their ethics.  How you think about work is a moral issue.  What you produce is a reflection of your morals.  So arguably Operational Excellence, which is a system by which you work, reflects a set of ethics by which to express your morals about work.
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So with that framework in mind, on this day of celebration of his civil rights accomplishments, let us look at how Martin Luther King’s words address our work.

Excellence

“He should sweep streets so well that all the host of heaven and earth will pause to say, ‘Here lives a great street-sweeper who did his job well’.”

“All labor that uplifts humanity has dignity and importance and should be undertaken with painstaking excellence”

“Whatever you life’s work is, do it well.  A man should do his job so well that the living, the dead and the unborn could do it no better.”

“Whatever effects one directly, affects all indirectly. I can never be what I ought to be until you are what you ought to be. This is the interrelated structure of reality.”

Change & Improvement

“Change does not roll in on the wheels of inevitability, but comes through continuous struggle.”

“The time is always right to do what is right.”

“Nothing in the world is more dangerous than sincere ignorance and conscientious stupidity.”

“All progress is precarious, and the solution of one problem brings us face to face with another problem.”

Align Activities to Goals

Leadership

“A genuine leader is not a searcher for consensus but a molder of consensus.”

“I am not interested in power for power’s sake, but I’m interested in power that is moral, that is right and that is good.”

Education & Thought

“The function of education is to teach one to think intensively and to think critically.”

“Rarely do we find men who willingly engage in hard thinking. There is an almost universal quest for easy answers and half-baked solutions. Nothing pains some people more than to have to think.”

There is morality in our work. There are ethics in how we accomplish it.  There is value in looking to how men and women the likes of Martin Luther King speak to morality and ethics including how their words reflect upon our work.  Please let me know your thoughts by contacting me.

Drive Results by Managing Outcomes through Networked Teams

January 8th, 2013 Comments off

The field of Operational Excellence, including Six Sigma Qualtec, has often laid out the case that you drive improvement by properly chartering projects aimed at performance gaps. The performance gaps are chosen by looking at enterprise level value streams’ ability to meet critical requirements laid out by various voices important to the organization. The challenge is often to overcome functional silos. Cross functional teams are formed to overcome that challenge. To progress, the conflict which must be resolved is often resolving the white space between functional responsibilities.

But there is a third axis. What if instead of trying to reconcile the differences between value streams and functional areas, the real challenge was to marshal the energies of existing networks of personnel.

The concept of organizational networks has grown by leaps and bounds. It has happened for a variety of reasons. Our general understanding, and probably more importantly our level of comfort, with our lives being dependent on networks has probably been one of the most important reasons. On a personal level, we manage a networked life with Facebook. Professionally, we do the same with LinkedIn. Organizationally, we’ve increasingly dealt with the concept as we outsource more shared services, expand and contract supply chains, use more contractors and manage activities with cloud based solutions. We live and manage networks.

How then does the concept of networks impact our ability to improve processes? Well, they are as important to understand as value streams, processes and functional areas. And in many ways, it is networks that get projects and initiatives successfully completed as much, if not more so, than functional areas. The challenge therefore isn’t to build a project team cross-functionally but to do so with the right support of critical networks.

A basic view of BPM and a three step approach to implementation.

Networks aren’t invisible as much as they aren’t tracked. They can be identified with organizational network analysis. I suggest you look at the work done by Rob Cross, a faculty member the McIntire School of Commerce at the University of Virginia to see the basic elements of identifying networks in your organization.

Once you understand your networks and they touch critical improvement projects, we suggest managing desired outcomes by holding elements of the network accountable for milestones. Naming and using cross-functional teams can still be effective if the people chosen from the various functional areas are well connected within the critical networks.

I may be tossing out some ideas that might seem to muddy the waters. Do we really need to introduce one more axis into how we successfully execute projects? We know these networks exist. We know processes produce outcomes and people reside in functional areas. We know to

fix problems we must execute projects within processes that cut across functions. And to execute the projects we must have cross functional teams. But to ignore that networks get things done simply because they are messy or not shown on an organizational chart isn’t a good way to go. We need to tap into the networks to get projects done. Ensure team members are well networked and then manage the outcomes of the network through those individuals. Recognize and leverage how things get done.

If you wish to discuss these points, feel free to contact me.

Why Change Fails in Performance Improvement…

January 3rd, 2013 5 comments

Be the Change

Whether it is a new year, the passing of another birthday or a lecture from your doctor at your annual physical, you have made yourself a new set of promises to change.  You check the many yellow sticky pad slips around your desk and see many of the same items on prior lists.  Why didn’t they happen last time and why will they happen this time? Frankly, having a list and the motivation isn’t enough.  You need a path.

Organizations aren’t that different.  Change is difficult and it’s nearly impossible without a proven way to change.  And most companies don’t have it.  In fact, in a 2006 McKinsey study of companies which had embarked on major initiatives over the prior ten years ranging from Operational Excellence to acquisitions, McKinsey found the majority proved to have a negative return on investment.  McKinsey pointed to the following top three deficiencies in companies that failed to successfully drive a positive ROI on an initiative;

  1. Lack of Commitment and Follow Through by Top Executives
  2. Defective Project Management Skills Among Middle Managers
  3. Lack of Training and Confusion Among Frontline Employees

Before accepting these conclusions, I took a look further back in available literature for similar studies.  Part of my reason was to validate the McKinsey findings but part was also to see if there had been a change in causes.  My search yielded a 1996 study by Coopers & Lybrand, now PricewaterhouseCoopers, which cited the following top three causes of failure and evidence of success;

 

Needless to say, the Coopers’ study, done ten years earlier, seems to point to the same causes – committed leadership and skilled, involved middle managers and frontline employees.  Presumably commitment means a willingness to take on the politics of functional boundaries.  The saddest part of my finding these studies is that the failings from the time period leading up to the Coopers’ study don’t seem to have caused any sort of change in behavior over the next ten years – but  that is an issue to discuss at another time.

The interesting point in the McKinsey study is that success is defined and the reason for failure is refined.  And that starts to lead the thinking for a solution.  Specifically, the McKinsey study defines success as a positive ROI.  Frankly, this is a pretty low hurdle since it doesn’t get into any weighted cost of capital hurdle rates.  Imagine college with a simple pass/fail. But I have to admit that if 80% of the students were failing, starting with a P/F system is a step forward.

Obviously, an ROI calculation is mathematical so while you can argue things like whether soft costs should be included and how they should be valued, you at least have a framework for discussion.  You can begin to theorize whether the implementation costs are too high, the results too low or the time to achieve too long.  And depending on the cause, you can begin to implement some solutions.

At this point, I admit I’m leaving actual research and relying on some common sense and experience for the final part of the discussion where we look to a solution.  First, I posit that the decision to move forward and the execution of a project are often two separate events.  If an initiative fails to meet anticipated gains, the error is often in the original assumptions supporting the decision.  That is quite different from the costs and time where some of the most significant problems arise in the execution.

What does this mean?  Well assuming Operational Excellence program are producing negative returns like other corporate initiatives, how do we construct Change Management models that better address causes of failure such as the lack of a committed leadership and skilled, involved managers and front-line personnel? And keep in mind, the commitment, skills and involvement we are discussing here aren’t process improvement skills (i.e. belt training).  We are talking about change skills.  Interestingly, Deming spoke of the importance of these issues well before today’s Operational Excellence programs.

If you wish to discuss Change Management models that address the aforementioned challenges, feel free to contact me.

The Rising Cost of Higher Education – Operational Excellence to the Rescue?

November 13th, 2012 3 comments

Rising cost of higher educationWith a child approaching college age, I’ve taken a great personal interest in the direction of higher education.  As evidenced by the national debate that has even leaked into presidential politics, it is a tremendous issue on the scale of healthcare and job creation.  The greatest point of debate is the sustainability of the rising cost of education which has grown far faster than inflation and disposable income.  And along with the rising cost comes a discussion of how it is being financed as student loans become the greatest category of consumer loans. A discussion about costs and funding naturally leads to trying to gain an understanding of why the costs rise so quickly and if the quality of education is improving along with the level of investment.

With growing awareness and understanding, I recently had an interesting e-mail exchange with a new blog subscriber.  This person had some very interesting views from the inside of higher education as they are a high ranking official in the administration of a regional mid-sized university.  She shared some of those views with me in the following e-mail.  I found them so topical and in concert with the value our profession attempts to bring to our host organizations that I asked and received permission to share them with you.  So below are excerpts of a high ranking administrator’s views of what is driving the cost of higher education and whether it is resulting in better results.

“I’ve been mulling over a response to your last email.

You commented that higher education is more mission driven than the business world. From the outside, it may appear that higher ed is very mission driven, but in day-to-day operations, expectations from many other sources often intrude.

We do have a calling, but we must also answer to our own faculty, campus committees, boards of regents, state legislatures, the federal government, and our accreditors regarding HOW we should fulfill our mission.  It’s both frustrating and challenging to try to navigate the sometimes conflicting and seldom funded expectations of these varying bodies. So, yes, stakeholder expectations have to be managed before forward movement can be sustained. We are a bit like a loaded freight train leaving the station: forward movement is jerky and sustainable momentum comes slowly.

The main customer in higher ed is the student. In the last decade, institutions tried to respond to wishes of the customer in non-academic areas (e.g., climbing walls, bistro dining, private rooms in residence halls). By the time many of these can be implemented, those students are gone and others with different expectations have matriculated.

Institutions are starting to move back to basics that serve customer needs better (e.g., ways to get students to graduation in less time and at a lower cost). Our governor, along with governors from other states, has been pushing to ensure a fixed and affordable cost for a degree. We are implementing that at our organization as are many other colleges in our state.  

So, we have a balancing act when we respond to the customer that a corn flake producer does not (or maybe does not). I do hope corn flake producers think about nutrition while thinking about taste and texture. Higher ed has to think about what happens after the student graduates. Can the student get and keep a desirable job? Do we produce graduates whom firms want to hire? Our secondary customer is anyone who hires our graduates. Sometimes what students want (less homework, say) conflicts with what the student, and ultimately his/her employer, needs. I’m not sure corn flake makers deal with whatever would translate to being a similar issue.

From my viewpoint on the outside of the commercial world, they look a lot more organized and forward thinking than higher ed often seems. I realize I’ve painted higher ed with very broad strokes, and some institutions have found solutions to the major issues and are rolling forward fairly smoothly. Higher ed has made really good progress, but I still think, as a whole, higher ed lags behind the “real world.”

I have been reading a lot about organizational excellence, Six Sigma, Kaizan, 5 whys, Deming, etc. I look forward to reading your pieces on Voice of the Customer.

Good luck with being a parent of almost-grown children. I admire all of you so much. It has to be especially tough right now.”

There are so many places where our knowledge and skills can assist the transitions that are coming.  Healthcare, Innovation (the engine of job creation) and Higher Education are three strong societal needs where the answers to the problems can be enhanced by our operational excellence practices.  There is definitely the opportunity to do well while doing good.  And there are great potential partners inside of the enterprises and organizations that are in these areas who recognize the need for change and want to be agents of change to fulfill personal missions and also do well while doing good.  These observations that are from the inside out in higher ed are just one example.

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this short .ppt that talks about the sources of excess costs that might be attacked with operational excellence programs …

If you’d like to discuss any of the above, feel free to contact me directly. And, while the author of the e-mail wished to be anonymous, if you’d like to speak to them, contact me and I’ll try to put you in touch.

The Face of Operational Excellence – 2020 and Beyond …

October 23rd, 2012 Comments off

Recently I wrote about the history of Operational Excellence.  Now let’s turn around and talk about its future.  Where are we going?  What will it look like in the year 2020 and beyond?

First, as I noted in my last article, there are certain elements, such as the construction of the original control charts, which have been the same for nearly one hundred years.   The foundations of Operational Excellence, expanded upon by Deming and refined by today’s companies to consistently drive productivity gains and market share growth, are timeless.  We will continue to express goals in the form of scorecards.  Enterprise level value streams will continue to exist as they are simply the expression of an organization’s value creation process.  And improvement methodologies with roots dating back to the 1920’s will continue to be applied to performance gaps identified by customers and stakeholders.

So what will be new?  First, the evolution of many of the deployment philosophies will race ahead. As the pace of change in business accelerates, so too will the pace of change in change models.  We have written extensively about Alignment, Pull Don’t Push, Go Broad Before Deep and Pay As You Go.  These philosophies yield a very different deployment model than what evolved from the late ‘80’s to about midway through our first decade of the new century.  We deconstructed a very heavy change model we helped to create.  And we think it will go further as a modular and quick iterative workstyle will race ahead. To allow it to happen, we will “chunk” problem solving methodologies to how they are used and develop new ways of making them faster and lighter.

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Another force that will accelerate the application of Operational Excellence activities will be technology as enterprise software collects hordes of data, business process management software uses that data for alignment, dashboard reporting of aligned metrics is constructed to lower level processes where projects can be scoped and everyone has mobile access to the reporting and to rich media libraries of improvement methodologies in consumable “chunks” addressing specific performance gaps.  Everything we do over extensive periods of time, will be real time.

Operational Excellence has become a fundamental aspect of every company’s management systems.  But it diminishes its usefulness by being slow and cumbersome.  What everyone has come to call the “New Normal” doesn’t have the patience for that sort of speed, or lack thereof.  It will come because many, many good professionals will work at pushing it forward bit by bit, just as it happened in the past.  And, like so many other professions and businesses, it will happen on the back of technology.

If you’d like to discuss, feel free to contact me at jlopezona@ssqi.com.

Lean, Six Sigma and Formal Process Improvement … Yesterday and Today

October 16th, 2012 3 comments

History of Process ImprovementA confession – I’m a history geek.  I read history books, watch the history channel and am fascinated by arcane entries on Wikipedia.  History provides understanding.  If you ever wonder why something is like it is, find its origins.  Sometimes, what is commonly accepted clearly no longer merits application.  And likewise, the confusing which is about to be discarded suddenly makes so much common sense that it is retained.  And so I think it is worthy to pause and look back on our profession and examine our origins.

Without going back to the Stone Age, I’ll start the discussion by citing Carl Frederick Gauss (1777 – 1855) who introduced the concept of the normal curve.  Aha….if you look hard enough, you realize you don’t always get the same outcome from an action.  And in fact, there are patterns to the distribution.  It was only a matter of time before someone asked “Why?”

Fast forward to the Roaring 1920’s, a decade marked by urbanization and strong industrial growth in the United States.  Phones were offered in every home and cables had to be laid underground in growing cities.  Western Electric, an engine of innovation not unlike today’s Silicon Valley based technology companies, wrestled with the Young Ma Bell’s reliability.  And Walter Shewhart measured performance using the concepts of distribution of results like with a normal curve.  Shewhart postulated that three sigma from the mean was where a process required correction and demonstrated that “tampering” with a process in reaction to non-conformance actually increased variation thus degrading quality.  Gauss’ normal curve is tipped on its side and an SPC control chart is born.

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a short Powerpoint overview of the History of Six Sigma …

It is during World War Two and Post-War Japan’s reconstruction that we see today’s modern thoughts about quality management, later to be framed more broadly as Operational Excellence, take shape.  America’s still primarily agrarian economy is reshaped to supply the war in a very centralized fashion allowing for broad distribution of best practices. Then the ideas are transported to an ailing Japan in what becomes a huge laboratory for their application.

Deming rises to the top of the mountain in this period as he combines Shewhart’s Statistical Process Control with ideas about Transformational Change formed as he saw two economies repositioned.  He forms his System of Profound Knowledge asserting that managers must have (i) an appreciation of a system, (ii) an understanding of variation, (iii) the theory of knowledge and (iv) knowledge of psychology or human nature.  He has linked the numbers with the individuals and the organization and it is all sewn together in his book “Out of Crisis” which could serve as any OpEx leader’s handbook.

It is in the ‘70’s that Motorola, a company at the very leading edge of a seemingly invincible industrial America, recognizes it has a quality problem and begins its search for improvement adopting Deming’s postulate that a focus on quality decreases cost while increasing customer satisfaction while a focus on cost leads to decreased quality and eventually increased costs and decreased customer satisfaction.

As Galvin focuses Motorola, Bill Smith comes forward with his Latent Defect Theory connecting variation to defects and waste.  Eliminate the variation and you’ll increase quality, decrease costs and increase customer satisfaction.  It is at Motorola that the problem solving methodology of M-A-I-C  (later expanded to DMAIC) is assembled to address variation. Six Sigma, or zero defects, becomes the mantra.  When Motorola is bestowed with the Baldridge Award, corporate America takes note and seeks to replicate the success.

It is from the late ‘80’s through the mid-‘90’s that elements of a deployment strategy for Six Sigma form.  At Unisys, the term Black Belt is coined denoting an expert specialist in Six Sigma. At Motorola’s Six Sigma Institute, a part of Motorola’s trend setting corporate university, a knowledge transfer system is developed to broadly disseminate the practice.  At ABB, the terms Champions and Green Belt are added to denote the different levels of knowledge required for different roles and populations.  And at Allied Signal, the efforts pivot to improving processes with specific business goals in mind giving rise to criteria for project selection. The capstone is added at GE when Welch drives the program to new heights demonstrating what a Top Down approach can produce.  And he adds the kicker of immense publicity.

Much has happened since the mid-‘90’s.  Lean has been incorporated to create LSS.  The ideas have spread from manufacturing to services (although one could argue services were always part of Deming’s work as well).  Application has gone around the world.  And the term Operational Excellence has taken shape to emphasize the business goal versus simply the project or process goal.

But wherever we are today, the elements established by Gauss, Shewhart and Deming, brought together by Motorola and popularized by modern companies lead by GE are still the same.   Reading Deming today is as pertinent as fifty years ago.  Putting together the numbers, individuals and the organization to improve processes, products and services to lower costs and improve customer satisfaction remain appropriate goals and the elements that developed to do so remain relevant.

Whatever criticism exists, this history should demonstrate how well founded each of the contributions were at their time and how the conditions that gave rise to them still exist today so as to validate their continued application.  If we understand from where they came, we will do a better job of properly applying them today.    If you would like to discuss any of this, please feel free to contact me.