Current issues of positioning organisational improvement management

2. Current issues of positioning organisational improvement management

3. Lean Six Sigma Business Excellence Institute Focus on Consulting services, training & certification services aimed at building strategy and capability within organisations to become high performing organisations. Organisational Excellence Business Excellence Framework Organisational Improvement Lean Sigma Methodology Partnership with UTS and other tertiary institutions.

4. Act Plan Study Do Business Improvement Framework Key Principles Three Questions Roadmap of Phases UDTI + DMAIC help organise activities PDSA Learning Cyles

5. 1 2 Value Add Non-ValueAdd 2 20 Looking through Lean Eyes : Seeing Value Streams A Manufacturing Example

6. How does BPI fit into the strategy of the organisation

7. Strategic Link

8. Strategic Link to Organsational Performance

9. Involvement in the marketplace Industry cover from IT/Telco, Banking & Finance, Insurance, Medical/Health, Defence, Manufacturing – including Food, Local Government, Airport Corporations etc. Program Development (Business Excellence & BPI) Capability development: training, certification, coaching & mentoring Access to many organisations and witness many attempts and approaches

10. Background & Recent developments Time away Nov 2006 – May 2009 Noticed an increase in “farming down” organisational improvement to Operational level, specifically to middle management.

11. p.28 Of course, the journey of improvement can be ..... Simple to Complex Just Do It Rapid Event Kaizen Medium Informal to Formal Complex

12. Improve a process in a an organisation Reengineer a national system Improve a family’s shopping Design a new product Improve service at a restaurant Transform an organisation Improve a subsystem Improve one’s golf game formality, documentation, tools, time, least formal and complex most formal and complex less required more required group interaction, measurement, etc. TameWicked Most Wicked Range of Project Complexity Low hanging fat rabbits

13. Simple to Complex It is generally accepted that there should be perhaps a different approach to the improvement initiative, depending on complexity / level of risk/ money involved, in terms of: Project set up Use of methodology Use of tools General approach Communication Change Management

14. Where & When? - Context & Reasons for lack of direct senior leadership involvement? “Dealing with operational and “back room” processes Organisational Improvement, and afferent Lean Six Sigma applications are seen as tactical and operational, nothing to do with strategy… Examples (3 out of the many encountered…) Large Environmental Services organisation (clients include Rio Tinto, BHP, Bluescope Steel, etc) – clients asking for “efficiency improvements”!!!. Translation into English: lower price Large Insurance Company – makes enough profit but forced into a culture of improvement by parent company in the US of A Large Investment & Superannuation Organisation – wishes to “become more efficient” (reduce cost of operations, in normal, non-weasel, parlance)

15. What do they do: On the ground Improvement works is carried out by employing various consulting organisations for: Program and Project design, Carrying out the work Little opportunity for learning Generic approach noticed: Document & describe As Is Process – output some level of process map, maybe with some overlaid issues, outcomes. List of Issues & Problems Analysis – if there is any - typically VSM Solution – Developed To Be process(es), generally handed over to the organisation for implementation

16. How do they do it? – Process used Brief received from client company from management: Client Senior Management (this is about the ONLY time Senior Management gets involved...) Interview stakeholders (managers & operators) inside client organisation Develop As Is process, list of issues, perhaps VSM - and present report to client’s management (some kind of toll-gate...) Develop To Be process(es) map, sometimes associated documentation, like training (when the solution was out-sourcing...). Hand over To Be process to client organisation OVERALL: Senior management of client organisation is only involved in the entry and exit discussions.

17. What do I see? – Some observed issues Processes addressed are not simple. Some are moderate in complexity, while some are downright complex. Often whole systems (inter-related processes) which operate across the organisation (different functional groups, stakeholders, culture...) No measure of any effect. No seeming interest in measuring outcome. No base-line measurement used, sometimes not even described. Evidently no effect was measured, at least not while consultants were present. The assumption seemed to be that the change in the process was an improvement, in and of itself... - Anecdotal view of client representative was generally accepted as true No obvious root cause analysis – solutions seem to appear directly from the As Is list of issues, and rising into the To Be, without any underlying analysis or rationale being revealed No Change Management – people who would have to change the way they work were not involved beyond the initial “as is” interview. Consultant seems to be the expert on content (not just on method/process) and the GOFER. Consultant does everything.

18. What’s going on? - Accompanying features Approach to consulting seemed comoditized – for example the way the interviews were carried out were very similar for senior management and operators on the line. Some, but not all, of the senior managers felt that “my intelligence was insulted” (obviously some of the others had nothing...to complain about...) Solutions seemed uniform and pre-determined: Automatising and Out-sourcing. Issues about automatizing and outsorcing processes that have NOT been improved are obvious... One client company lost 3 million dollars in a month after outsourcing a logistics process All processes that consultants came across in what they called “back room” processes (adminstrative, again translating for you just in case...) were destined for this fate As a result many mistakes and waste items were automatised and out-sourced... Staff attitude – in two of the three examples, staff become immediately suspicious and labelled the consultants “the slash and burn brigade”. Some of them fed the consultants some (apparently) “outrageous lies” – e.g. in terms of volumes of transactions, complexity of processes, etc.

19. What’s going on? - Accompanying features 5. Seeming absence of Senior Leadership Involvement This seemed to be the biggest issue expressed from all key stakeholders. Once the project/initiative was commissioned, Senior Leadership did not get involved again: it was left to the consultants and to Operations Senior management are rarely challenged by either external consultants or their middle managers

20. How does it all end up? Case 1 Insurance Company - external consultant company employed): solution handed back to the client for implementation. Implemented only partially, general feel: some minor gains, but generally a waste of time and money. Who got blamed: “this Six Sigma stuff is no good...” Case 2: Investment Company: tries to develop internal capability (Process Improvement Specialists “Ninjas”!!). The have expert power, but no line management power. Senior Management is “letting them lose”. Some “have no idea what they are doing”, “cause more damage”, in the end middle management avoids them, they find pet projects. After two years, new management gets rid of them. Who gets the blame: Improvement Methodology must have been useless!

21. How does it all end up? Case 3: Medium size bank: Business Loans Division Director has vision and “skin in the game”. Develops internal capability (5 LSS Green Belts), for specific projects. Achieve 12.5 Million savings in 6 months. Restructure brings all to a halt, director goes, everythign is forgotten. Case 4. Large Food Manufacturer: trains 12 GBs under the hope of “sowing the seed”. Very few projects, low ROI.

22. How does it all end up? Case 5. Environmental Services organisation: start out by intending to do lots of Lean Rapid Improvement projects. Seek outside help. Realise that everyone gets busy with projects, but no one watches what is going on in the overall organisational system. Lots of sub-optimization and conflict, despite some achievements. They decide to approach Improvement as part of Org Strategy. Set up only projects which can be linked to clear outcomes for KPIs and in line with org strategy. Set up monitoring system at Senior Level. Train 20 GB’s who carry out well planned projects. 22 million savings, plus increase in market share in 12 months.

23. Why do improvement efforts fail? • Lack of a clear roadmap for improvement • Weak support and encouragement from managers • Vague, drifting, or non-strategic charters • Lack of pre-existing measures • Failure to quickly confront resistance to change • Difficulty in data collection, access to information • Team members having other priorities (“real work”) • Team dynamics issues • Lost momentum because of infrequent meetings • Slow implementation, replication in the organization Content from “Quality as a Business Strategy” (API, 1998)

24. Why ? • Leadership is key to an organization’s improvement and breakthrough success. • Improvement Projects and Programs carried out in isolation from a compatible and supportive Leadership Practice results in high failure rates and disappointment ! • Specific Leadership activities give direction to, support and sustain an organization's improvement campaign. • Collectively these activities constitute an Effective Management Practice that need to be developed, nurtured and sustained.

25. What’s on my mind? - Conclusions “The road to hell is paved with good intentions” (Saint Bernard de Clairvaux) Handling Organisational Improvement at Operational, rather than at senior leadership strategic level???

26. ...conclusions... Organisational Improvement (LSS, Lean, CI, PI, PE, Donald Duck), needs to be driven at a strategic level. This will mean: Senior management understand their business strategy well (which markets they are playing, in, what specifically do their customers want from them etc – M.Porter: What is Strategy? They will chose improvement project which are in line with the strategy They will measure and understand where the gaps are, what is missing, and chose appropriate projects They will develop and mentor the capability to run these projects They will monitor these projects and offer support and leadership They will reward successful completion

27. The Role of Leadership 1 4 Planning Purpose System for Obtaining Info 3 • Strategy (M.Porter) • Governance • Strategic objectives • Improvement efforts • Resources Black Belts Green Belts Managing Individual & Team Improvement Efforts 2 Systems View of the Organization Improvement Plans Family of Measures/ Scorecards 5 Financial Customer Enablers Operations Employee Training…Recognition… Communication

28. What will they avoid? Suboptimization (best case scenario of Leadership non involvement is suboptimization...) Engaging their organisation in a lot of effort for little or no gain, or even worse, doing damage... AvoidTool driven approach to improvement. “we have this tool, this is what we will use”. “ we have this solution, this will have to work”. When the only tool you have is a hammer, everything looks like a nail. Avoid blaming the tools (LSS, or SS, or LEAN or Donald Duck...) Avoid failure and employee cynicism and disengagement Avoid being overtaken in the marketplace

29. What do you think? Insights, opinions, questions. What to do, if anything...