Directly Linking Improvement to Strategy

Lean Nation,

Happy Holidays to everyone!  As the holiday season unfolds, I wish everyone a prosperous and safe holiday season, and happy New year!  If you have worked hard to eliminate non-value added activity from your processes,  hopefully 2013 was full of many great surprises of improved quality, shorter lead-times, and improved productivity for your organization.  If you have yet to get started on your improvement journey, great things await you in 2014!

In my travels this December,  ran into a situation I frequently see within organizations. Many organizations have some form of improvement capability.  They have trained personnel with some basic understanding of tools and the application of the tools.  Less frequently, they might also have engaged leadership with a desire to change culture and improve. Both of these ingredients are important to delivering sustainable results.   However most organizations are hand-cuffed because of one critical leadership flaw. That flaw would be lack of focus.

One of the biggest problems I see in many, many, many..... organizations is they try to accomplish way too much. Leadership has failed to separate the many good ideas and initiatives from the critical few.  The specific lean approach to developing and deploying strategic initiatives is known as Hoshin Kanri, also known as policy deployment or strategy deployment.   This process delivers the critical few breakthrough objectives and provides a framework for developing, refining, deploying, and managing the organization to the delivery of breakthrough objectives directly derived from the strategic plan.  

There are many places to research Hoshin Kanri and several outstanding books are written on the topic. So I am not going to talk about strategy deployment in this blog. Others do a better job of speaking about the process and its benefits.  

Should your organization wish to pursue the process of Hoshin Kanri route, however, be warned.  If you are not willing to totally unwind your current strategic planning process, along with the corresponding operational and financial review processes,  then I would not take on Hoshin Kanri.  If you do, you will be managing two systems and the new one loses every single time. There is no hybrid approach that works effectively.  Either follow Hoshin Kanri standard work or don't,  but being half in and half out will be ineffective 

Now back to my blog content.  Specifically, the organization I was working with had several hundred trained improvement specialists.  Almost all of these personnel were part- time improvement people holding other full time jobs, but none-the-less this group had more than enough capacity to move some big dots. As a general rule, this multi-site organization had leadership committed to resourcing projects.

The challenge was that the organization has over 150 key measures to deliver improvement on. No one could articulate what the measures were, which were important, how they were measured.  So each team targeted a different measure or measures and although pockets of improvement existed,  no meaningful outcomes were generated. Why? Because there was never enough critical mass on anyone single focus to move a big dot. The work was scattered and diffused.  Teams were fighting for the same resources like IT and supply chain. And managers and leaders were constantly bickering over which project was more important. All of these activities are 100% waste. 

This is a self inflicted leadership wound.  I believe the single most important thing leadership can do is determine the priorities and focus of the organization.  Asking people to focus on, improve, and report on 150 items is criminal. (By the way, the second most important think leadership can do is hire the right people to do the work).

So the question is how many priorities should there be?  A world class organization has a total of 3-7 top level priorities. A lean organization will typically have 5 areas of focus. These areas of focus are directly aligned to true north measures.  True north measures point to the top level outcomes that the organization aspires to obtain that would lead to breakthrough performance as viewed by their customers. As a refresher, the true north measures include dimensions of Quality, Delivery, Cost, and Growth and since nothing happens without people,  another dimension, Human Development is added to the list.

The task of taking an organization from 150 areas of focus to 7 would be daunting and likely impossible in the first attempt.  Getting from 150 to 20 in the first pass might be possible and takes the organization quite a bit closer to their goal of 5-7.

Great organizations excel and move big dots because leadership clearly articulates and resources the critical few breakthrough strategies, provides oversight for their execution and takes quick interventions when things go off track.  This is how you directly link team level improvement to strategy.

Lean Blessings,

Ron

Ron Bercaw

President and Sensei

Breakthrough Horizons Ltd

www.breakthroughhorizons.com

Shingo Award winning author

Creating Value - Where should we improve?

Lean Nation,

As part of our leadership series,  one of the questions we need to address is where to focus our improvement.  We have several choices to pick from.  We could focus on information flows;  scheduling, registration, order entry,  supply ordering, etc.  We could look at the value added activities.  Depending on the business you are in this could include design services,  manufacturing, clinical healthcare, distribution,  point of sale services, call center operations, etc.  We could also select from back shop processes including human resource management, finance and accounting activities, purchasing, organizational development, and customer service.  So where do we begin?

There are a few guidelines you can use to help you in your decision making.  First,  remember we always want to improve along a value stream.  As a refresher, a value stream is all the activities (good and bad) that deliver value to a customer.    When we improve along a value stream,  we will be improving both process/product and information flows. So choosing whether to begin with value added operations or information flows is a distinction we need not make.  we'll be improving both.

Now what about the distinction between value added operations versus back office operations.  Most organizations want o focus almost exclusively in the value added areas.  This is a great place to begin, and I encourage most organizations to begin in these areas.  So the question I believe we want to answer is when should we move into back office operations and is there a ratio of value added to back office improvement.

I prefer that we work within one back office value stream for every four value added streams.  Basically 80% value added operations to 20% back office.  You must get into the back office operations or you will start to slow the effectiveness of the value added improvement.  Examples include hiring the right people, having the right promotion criteria,  having effective employee relations and performance reviews, and ensuring accounting is value added to the rest of the operation.  I believe you can see how having poor back shop operations can negatively impact the your operation. Many organizations wait too long to start into the back office processes. 

To select the proper back office place to begin,  let that get pulled from your value stream improvement.  As you are improving your process/product and information flows,  you will discover which back office processes are impacting the improvement of your value added operations.  When you discover where to go, then go there.  Don't wait until you you get through all the value added areas or you will be too late.

Lean Blessings,

Ron

Ron Bercaw
President, Breakthrough Horizons
www.breakthroughhorizons.com