Continuous Improvement Program Basics and Alternatives

1. There is no single “right” way … Continuous Improvement Program Basics and Alternatives

2. Deployment Alternatives Support Improvement (Pull Model) Drive Improvement (Push Model) Respond to Efforts (Bottom Up Model) Process Owners & Members are the drivers of change & deployment is highly responsive to needs DO provides a centralized supporting function to assist project teams with practices & processes DO provides centralized training, resourcing and procurement support to BU project teams DO supports benefits reporting and knowledge management DO coordinates enterprise functions such as communications • Leadership is the Primary Instrument of Change; DO is highly advisory • Ownership of standards, processes and reporting • Delivery accountability remains with business unit personnel • DO coordinates enterprise functions such as communications • Management systems measure process metrics • Deployment Ofc (“DO) sets foundation up-front and the deployment is highly prescriptive • DO assumes ownership over execution of business unit projects • DO has central management of resources; project staff are loaned out to business units • DO manages external staff procurement where and when required • DO implements std policies and procedures • DO measures knowledge transfer & deployment

3. Basic Elements of All Deployments Executive Brief: Driving Value Through Operational Excellence All CI Programs Function at Three Levels • Strategic. The organization converts its strategy into operational goals. This is normally done using Scorecards • Governance. The organization governs its improvement efforts (see “Type of Deployment”). A primary function is project selection. • Implementation. At this level, the organization drives projects & knowledge transfer. This is the project management and problem solving level.

4. Strategic Performance must be measured and managed, regardless of deployment model Executive Brief: Using Scorecards as part of BPM

5. Governance The role of your “Deployment Office” (DO) in Governance varies based on deployment type Drive Effort (Push Model) Support Improvement (Pull Model) DO Facilitates the Creation of Business Cases Project Schedule Issue Tracking & Reporting CI Tools and Support Integrated Project Reporting Project Repository Project Consulting & Mentoring CI Training & Certification CI standards, methodology & processes • DO Develops Business Cases • Project Approval • Project Prioritization • Project Management • Contract Management • Resource Management • Cost & Schedule Control Range of CI Governance Elements Depending on Type of Deployment Executive Brief: Driving Value Through Operational Excellence Article: Operational Governance – What is it Anyway?

6. Implementation The role of your “Deployment Office” (DO) in implementation varies based on deployment type Drive Effort (Push Model) Support Effort (Pull Model) Highly Responsive Accountability remains with business unit DO provides centralized support to assist project teams DO provides centralized training to business units DO supports benefits reporting and knowledge management DO coordinates enterprise functions such as communications • Highly Prescriptive • DO assumes ownership over execution of business unit projects • DO sets policies and procedures • DO drives benefit assurance and knowledge management • DO coordinates enterprise functions such as communications Range of CI Implementation Elements Depending on Type of Deployment

7. Infrastructure Elements of All Deployments Article: 10 Elements of CI Infrastructure Organizational Infrastructure • Any enterprise initiative, including a Continuous Improvement Program, must consider how it interacts with enterprise level functions such as communications, finance and HR • There are specific CI attributes to all these enterprise issues

8. Driven top-down, PUSHED into the organization Traditional push model

9. Push Model Overview History – Attributed to GE as followers emulated perception of a top down model. Failed to consider GE’s readiness for organizational change and focus on “A” side Focuses on the knowledge to be transferred. Assumes that by providing the organization the capability, it will solve problems as encountered. Measurement of success is in terms of number of belts trained/certified, number of projects completed, “documented” project savings and ROI on training dollars Implementation prescribes population to receive grades of training, # of projects per belt and required savings per project. Targets building capability and then requiring output. Strengths – Easily understood project plans. Scales quickly. The Army is taught to march and then made to march. Challenge – Takes on its own life, irrespective of company needs. Can be rejected by business outright or thru weak compliance.

10. Change Structure is Highly Prescriptive Is responsible for coordinating a business roadmap to achieve improvement. Selects projects, executes control, and alleviates roadblocks for projects in his or her area of responsibility. Champions Is mentor, trainer, and coach of Black Belts and others in the organization. Brings the broad organization up to the required competency level. MBB Is a leader of teams executing projects. Introduces the methodology and tools to team members and the broader organization. LSS Black Belts 1 to 2 % Delivers successful small, focused departmental projects using the success strategy. LSS Green Belts 5 to 10 % Participates on the project teams. Supports the goals of the project, typically in the context of existing responsibilities. Is expected to control processes post improvement implementation as part of job. LSS Yellow Belts & Other Team Members 25 to 50 %

11. Basic Elements - Five Work Streams Workstream #1 Prepared to Direct Activities Initiative Planning & Startup Assessment, HR, Finance, & Communications) Workstream #2 Executive Training Exec’s prepared to lead program Workstream #3 Reaping Program Benefits Employee Training (BTT, Lean, YB, GB, BB, MBB and DFSS Workstream #4 Prepared to train future waves TTT for all materials and the Alignment Workshop Workstream #5 Acct Mgmt, Exec Coaching, Eval & Certification, Project Tracking Attain Self Sufficiency

12. Push Model – Advantages & Challenges Highly prescriptive Easily scalable and builds capability quickly Measures success in terms of deployment factors (projects completed, “realizable” savings per project, # belts trained & certified, etc.) May be perceived as another initiative and not as a fundamental change in the way things are done Big investment in training up-front, more training centric. Project returns (ROI) are slower. Risk of burn out before any results can be realized Can take a life of its own, becoming a cost center Best at responsive, top down organizations with supportive and actively engaged top leadership

13. Supported top-down, PULLED and consumed by organization in a right-fit manner SSQ’s Pull model

14. Pull Model – Business Need & Result Driven • Identify Scorecard KPI’s focused on VOC & VOB • Align the business processes and establish measurement systems to uncover critical performance gaps based on those KPI’s (BPMS & CTCR) • Establish process control systems and capabilities that stabilize processes and sustain improvements (BPMS) • Charter projects for performance gaps which align with key business needs and have clear ROI (Governance) • Drive improvements to close the gaps thru application of proven tools such as BTT, LSS & DFSS (Implementation) • Projects get executed creating new projects • Training is matched to the projects emerging from alignment workshops. As processes stabilize and data integrity grow, belts’ capabilities are “laddered” to meet project complexity. Article: Let Your Business Define Your Improvement Program

15. Deployment Organization Executive Team Steering Committee Business Unit Leadership Shared Svcs (HR, Fin, IT) Process Owners CI Leadership ProcessTeam Member Mat’l Dev & Maintenance Governance Business Unit Support Trainers & Support Projects Training & Support Project Execution

16. Basic Elements - Five Work Streams Workstream #1 Prepared to Direct Activities Initiative Planning & Startup RADD, Policy Deployment, HR, Finance, Communications) Workstream #2 Executive Training Exec’s prepared to lead program Workstream #3 Reaping Program Benefits Employee Training (BTT, Lean, YB, GB, BB, MBB and DFSS Workstream #4 Prepared to train future waves TTT for all materials and the Alignment Workshop Workstream #5 Acct Mgmt, Exec Coaching, Eval & Certification, Project Tracking Attain Self Sufficiency

17. Training is a Function of… Let Your Business Define Your Improvement Program Projects Process Stability Availability of Metrics Use the identification of projects and natural cascading effect of projects, which produce opportunities along the way to resolution, to drive training

18. Additional Supporting Articles Article: BPM and Lean – For Many Service Oriented Organizations, Enough to Get Big Improvement Results Article: Lean Paves the Road for Six Sigma…especially in Service Organizations Article:Lean or Six Sigma – That is the Question … Article: Getting Results with Lean is not just about Lean Tools

19. Decision Variables Which Model is Right for your organization?

20. To help designCI programs, SSQ utilizes a proprietary Organizational Deployment Readiness model that looks at 5 different dimensions of readiness: Many CI deployments, over time, falter, stall or fail The business process improvement methodologies have been proven to work, so what’s the reason for sub-performing CO programs? Many times, deployment failures can be traced to a mismatch between the Organizations Readiness for change and which methodologies are being deployed In our experience there are 5 main “Dimensions of Readiness” that impact CI program design: Organizational Readiness Objectivity Change Tools Process Leadership See Appendix B for Detail of Model Article: Let Your Business Define Your Improvement Program

21. Which Model is Right? PUll Process Maturity Objectivity Leadership (Support) Tools Change Push Pull See Appendix B for Detail of Model Push Model requires mature processes, ready & knowledgeable organization, and driven & supportive leadership. If not present, the Push Model’s effectiveness is weakened as you require the Pull Model’s greater focus on strategic linkage and program governance. Pull Model will work at either end of the spectrum but always requires significant investment in governance which can be somewhat avoided when the circumstances allow for the Push Model.

22. Six Sigma Qualtec (SSQ) www.ssqi.com blog.ssqi.com Contact: John Lopez-Ona Tel: 609-356-1450 Email: jlopez-ona@ssqi.com