Archive

Posts Tagged ‘operational excellence’

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.

Download WP about 10 Essential Do’s & Don’t’s to Driving Change with OpEx

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.

War

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.

Strategy, Execution and Operational Excellence

February 17th, 2013 2 comments

Hmm…something’s wrong

What is a strategy?  Where do you separate strategy from execution?  What value does Operational Excellence offer?  Why does any of this matter?

Quite simply, strategy is a decision about who you wish to serve, how you wish to serve them so as to deliver value and what capabilities are needed to succeed.   Answering these questions provides the guidelines by which to allocate resources.

On the other hand, execution takes your strategic decisions and converts them into a vision, mission and operational plans.  If you’re a regular reader of our blog, you’ll know we connect operational plans from each functional area to improvement projects by using core value streams.  Identified performance gaps in the value streams are the building blocks of an Operational Excellence effort.

Why are these distinctions important?  Describing vision, mission, operational plans and operational excellence activities as strategies confuses the journey with the destination.   That mistake ensures you’ll never arrive anywhere.   It also strips away the value of helping a client choose the means by which to execute a strategy.  Putting the cart ahead of the horse, yields both a useless cart and useless horse.

I tell prospects, clients and partners; we’re here to help execute on strategies but we assume those strategies are in place.  One of our value propositions to our clients is that we will develop a governance map from a top level scorecard at the highest point to the deepest sub-processes at which improvement opportunities reside.  There we specify business improvement cases and projects.  However, we expect the client to choose and weight the criteria by which to prioritize the projects for execution so we can allocate resources such as budget and personnel.

It is the choosing and weighting of criteria for project ranking that tells me if a company has a clear strategy.  As previously stated, a strategy specifies what customers a company wishes to serve, how it wishes to serve them to deliver value and what capabilities are needed.  These decisions provide the guidelines by which to allocate resources.  When a company has a very difficult time ranking and rating projects, much less being consistent over time, it is clear they don’t have a clear strategy that is understood by everyone.

Systematically Driving Value with OpEx

When a company doesn’t have a clear strategy, improvement initiatives run into common problems.  The company develops a long list of projects but they are all equally critical.  People work on many projects spending a little time on each and never getting any of them done.

If you’d like to discuss, feel free to contact me

Productivity – The Coming Golden Age of Continuous Improvement

February 10th, 2013 Comments off

A Drive for Productivity

Last week I wrote a post entitled Value Creation for Private Investors that went largely ignored as it was one of my lowest viewed posts of the new year for a Monday when most of you tune in.  The idea about which I wrote was a revelation to me but it was still nascent at the time and thus very undeveloped and weakly presented. But it gnawed at me and so it kept turning in my head.  And now it pops out again this week hopefully a bit more developed.  The idea is the transition we are making from creating the illusion of wealth with financial engineering to needing to truly drive wealth with productivity gains which will make for a golden age in Operations and Operational Excellence.

As a nation, we will flourish based upon our ability to drive productivity.  You see wealth, as measured by GDP, during the majority of our lifetimes has been driven by population growth.  But as our population growth slows, wealth will only be created by increased productivity.  This transition has been hidden from us for some time by the illusion of wealth creation brought about by high capital liquidity and inappropriately priced risk which eventually lead to the bursting of a financial bubble.  But with risk being more appropriately priced, the illusion is gone and we are now faced with long term slow growth and the only way to stoke it is with increased productivity.

To drive the growth in productivity, I wish to cite a recent blog post by GE’s Jeffrey Immelt a portion of which read as follows;

There are four new drivers of productivity, and success in each depends on the technology and talent we develop. The first is how the sheer volume and increased access to shale gas in regions around the globe is changing the energy debate and the balance of energy power. It would require real infrastructure and pipeline integration between Canada, Mexico and the U.S., but North America could achieve energy independence within 10 years. The second driver for dramatically increased productivity is applying the lessons of social media to the industrial world and building what we call the Industrial Internet. By owning and connecting the analytical layers around industrial products – and using real time data to extract real timeknowledge – we can improve asset performance and drive efficiency. The third driver is speed and simplification because the only way to serve our customers better and compete in a complex world is by working faster and smarter. The last productivity driver, and related to the other three, is the evolution of advanced manufacturing. Manufacturing excellence, forgotten for too long, is once again a competitive advantage.

Drive Value with OpEx

Now when you look at this argument about from where we will get the productivity growth, a problem jumps out.  Namely, we have to generate non-population related productivity gains with a population that isn’t geared to Immelt’s productivity drivers.  Our younger citizens certainly are better aligned and skilled but as population growth slows, they will be the minority.

So guess what — the knowledge of how to improve services, products and processes is really valuable.  Now I’m not talking about how to write a project charter or write up a SIPOC.  I’m talking about revolutionizing energy with process innovation in the extraction of natural gas, the development of the cloud so we can jettison underutilized servers from expensive IT budgets and citizen publishing of information so knowledge flows freely and into every nook and cranny of the population instantaneously.  Imagine – those have all happened in the last five years.  Those are the types of improvements that transform an economy.  But there is plenty of room between a project to save an AP process two days and reinventing the extraction of fossil fuels.  And every time a new industry is targeted, all the operating processes below the top level change will also be looking to improve.

Can you imagine where these big seismic changes will happen next?  How about redesigning education so everyone has access to knowledge inexpensively?  Or health care where we can all see an insanely low level of simple IT tools that if applied would eliminate gobs of waste.  Or all levels of government where we have constantly rising costs with little measureable gains in services.  These trends will continue.  They must continue or we, as a nation, will slowly lose our global relative wealth.  And I just don’t think Americans are ready for that.  But the changes will be disruptive.

In the race to drive wealth through productivity gains, we will see the greatest impact in processes and services simply because they are the largest percentages of the economy.  I’ve already named drilling services, the cloud, newspapers & magazine publishing, health care and education as service companies which either have gone through or are poised to go through significant redesign. What of the process side?

Systematically Driving Value with OpEx

Well I think we are going to see work get reinvented.  My former colleague at Qualtec, Mitch Lawrie, is working on software to focus management on results versus activities and my recent blog on the subject drew significant attention from many of you.  We have worked with several clients in financial services, telecom and transportation which are redesigning long accepted processes to drive greater than 50% reductions in key process cycle times by making them leaner, reducing complexity and capturing information better as well as analyzing it for knowledge.

To return to my original post, my “aha” moment was that I was at a private equity conference where investors of all sizes where lamenting they could no longer make easy money.  That easy money was driven by a combination of capital liquidity, high tolerance for risk and poor quantification of that risk.  It was a recipe for a bubble.  If you bought an asset, held it and sold it before the bubble burst, you made money.  If it was levered, you made a lot of it. The funny thing is that private corporate investors weren’t the only players at the casino. We were all there with real estate and stock portfolios.

But that is gone now.  And as we look into a new environment, we realize we are facing the longer term challenge of slowing population growth and an aging population that isn’t skilled at what is needed to drive the sort of productivity gains needed to maintain historic wealth creation.  To create wealth as a country, we now have to earn it the hard way.  And since there are only so many hours available in the work force, it means we have to work smarter.

And a clearer definition of that “aha” moment brings me to the message in this post.  We figure out ways to work smarter – whether it is a fifth level sub-process or an entire industry.  The result is that we are entering a golden age for people focused and skilled at how to work smarter.   We have the opportunity to make great contributions to our economy.  I urge you all to THINK BIG.  If you’d like to discuss, feel free to contact me.

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.

Download lean, six sigma, BPM, VOC content

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.