Operational Excellence: Managing Change and Avoiding the Yo-Yo Effect
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This document discusses how operational excellence (OE) initiatives in complex organizations often follow a cyclical pattern of progress and setbacks, referred to as the "yo-yo effect". OE efforts may gain momentum at a business unit level but then be disrupted by corporate or business unit leadership losing focus. Alternatively, a corporate OE group may be established but then dismantled with claims of too much overhead. The presentation will explore themes around OE adoption, how to avoid common problems that undermine progress, and ways to sustain OE efforts long-term.
Operational Excellence: Managing Change and Avoiding the Yo-Yo Effect
- 1. Operational Excellence Managing Change and Avoiding the Yo-Yo Effect Jerry Timpson & Sean Wright ©2013 ASQ & Presentation Kaufman Global http://reliabilitycalendar.org/webina rs/
- 2. ASQ Reliability Division English Webinar Series One of the monthly webinars on topics of interest to reliability engineers. To view recorded webinar (available to ASQ Reliability Division members only) visit asq.org/reliability To sign up for the free and available to anyone live webinars visit reliabilitycalendar.org and select English Webinars to find links to register for upcoming events http://reliabilitycalendar.org/webina rs/
- 3. Operational Excellence Managing Change and Avoiding the Yo-Yo Effect INTERNAL COMPETITION AND PREFERENCES OFTEN DERAIL BEST INTENT TO S Y S T E M AT I C A L LY I M P R O V E P E R F O R M A N C E Tele: +1.317.818.2430 Web: www.KaufmanGlobal.com Email: info@KaufmanGlobal.com
- 4. Operational Excellence: Managing Change and Avoiding the Yo-Yo Effect Today’s Presenters Jerry Timpson — President and Principal Expertise: 30+ years; Operational productivity strategies, Lean enterprise transformation and implementation design, Office Kaizen, executive coaching Interests: The connection between organizational change and business results, leadership’s role in transformation and the application of operational improvement methods across broad geographies. Sean Wright — Executive Vice President and Principal Expertise: 30+ years; Lean enterprise transformation and implementation design, operational productivity strategies, technology solutions complementing Lean, Office Kaizen and value / supply chain, executive coaching Interests: The structure and implementation of enterprise continuous improvement systems, transformation in state government and hospitals and the use of communication as an major driver of change. © Kaufman Global 4
- 5. About Kaufman Global - Proven Implementation Partner Accelerate Performance Oil Services omitted for confidentiality • Hands-on implementation for operational excellence Plants / Office / Supply Chain • Collaboratively design and deliver improvement projects Business case, progress measures and delivered results • Enterprise-wide global engagements © Kaufman Global 5
- 6. Agenda • OE Overview • OE Evolution • Countermeasures Leadership System Definition Change Management • Parting Thoughts “Culture does not change because we desire to change • Q&A it. Culture changes when the organization is transformed — the culture reflects the realities of people working together every day.” ~ Frances Hesselbein © Kaufman Global 6
- 7. OE Overview We’re Here to Discuss • Themes that emerge as organizations pursue operational excellence (OE) • How to avoid select problems that occur in such pursuits • How to enhance odds of making OE a long-term, value-adding proposition © Kaufman Global 7
- 8. OE Overview Observations • Operational Excellence consolidates • Many OE brands often confuse the Problem-solving, Continuous answer to “what does good look like?” Improvement and Change Multitude of techniques Management, aligning them with Enterprise or not “business priorities” Functions, administrative and supply chain included or not, etc. • OE is pursued by many complex organizations recognizable by labels such as: (Entity) Production System (Entity) Performance System (Entity) Business Operating System (Entity) Lean (Entity) Six Sigma (Entity) Lean Sigma © Kaufman Global 8
- 9. OE Overview Where Does Operational Excellence Apply? • Where can OE work? Everywhere • Manufacturing Habitual launch point • Office and Administrative Mapping is leading opportunity • Supply Chain Procurement, logistics, inventory From mass production insights through today’s sophisticated and transportation ripe for change office process transformations, Operational Excellence enjoys a rich history – and hopeful promise for top performance • Engineering Commercialization, warranty, etc. If everyone is doing OE, why doesn’t the competitive landscape change much? It’s because only a very few do it well enough to differentiate themselves © Kaufman Global 9
- 10. OE Evolution Operational Excellence Takes Off! – Classic OE Journey Configurations Contrasted OE Journey Grass Roots Corporate Enabled • Flexible • Standards • Responsive • Best Practices Characteristics • Relevant • Broadened • By the Operating Unit (OU) for the • Best chance of solving shared Operating Unit; should be closest enterprise issues and attaching OE Focus to customer imperatives to the culture • Difficult to sustain; personality • Keeping it relevant to user issues dependent • Easily distracted by corporate’s Issues • Hard to spread outside the domain other strategic priorities • Easily distracted by Operating Unit • Often viewed as an untoward tax crises and financials by the Operating Units Both approaches have merit. Is there a blend that can serve all masters and can endure? © Kaufman Global 10
- 11. OE Evolution Three to Five-Year Cycle – How Complex Organization OE Can Play Out 1. Grass Roots OE Takes Off 2. Operating Unit Grows OE 3. Corporate “Rescues” OE • Someone takes risk with OE. It’s • Working but focus distracted by • HQ can enforce process “working”; results are “running the business”; other symmetry. System definition compelling somewhere in OU segments seem to have a lot and standards ensue; tracking Operating Unit (OU); looks easy; of “valid business reasons” to mechanisms become popular; everyone wants “slice of pie” defer from grabbing onto it select central resources doled OE is now on life support, 5. Operating Units Retake OE 4. Corporate “Absorbs” OE yet, there remains an • Resources redirected to • Forward progress resumed. OUs acute need to predictably operating units by CEO on some asked to be accountable for “business pretense” … to results yet resources / attention improve somewhere, so… enhance OU focus / relevance; have centralized; OU grumbling OE relegated to has-been pile and behind-scene tactics begin © Kaufman Global 11
- 12. OE Evolution Ouch! Unanticipated Outcomes • So, while everyone believed it had promise, maybe OE isn’t working Flavor of It’ll never • Yo-yo syndrome wastes energy and time the month! stick!! that could be better spent to gain results • Setbacks include: Supporters who drove initial change have become utterly discouraged Detractors who survived exposure have mutated and become more resistant Why not spend a little energy up front on getting it right from the start © Kaufman Global 12
- 13. OE Evolution Where Did We Get Off Course? – Three Areas to Consider Three primary reasons Operational Excellence goes off track and where energy can be brought to bear to make a significant difference in it’s results and long-term viability: Cause of Low OE Performance Description Primary function of Leadership is to genuinely display 1. Leaders don’t understand their role personal enrollment and drive organizational engagement Roles and accountabilities, standards, tool suite, flexibility, 2. The system isn’t well defined personal performance linkage, etc. If the above two elements are not defined and 3. Change isn’t actively managed measurable, then change cannot be actively managed © Kaufman Global 13
- 14. Countermeasures – Leadership Traditional Organization Planning Running the Business Sales / + Improving the Business Operations Most energy is spent on running Marketing the business and reacting to problems Leadership Team Engineering Admin. If we improve the business, maybe running it will be easier? © Kaufman Global 14
- 15. Countermeasures – Leadership A New Model: Structured Engagement — Executive Steering Committee (ESC) Planning Running Sales / and Improving Operations Marketing ESC Special Project the Business Engagement, Visual Systems, Metrics, Communication A subset of the local Leadership Team Engineering Leadership Team Improving The ESC: • Prioritizes Special Project the Business • Decides • Directs Admin. Leadership: • Establishes structure • Engages themselves and their organization • Manages change © Kaufman Global 15
- 16. Countermeasures – System Definition Balance and Structure Corporate and Operating Units Roles Operating Unit Corporate • Change Management • Change Management Engagement Mandated Engagement Structure and Communication Protocols Measurement of OE Visual Systems Communication – Strategy and Plan Coaching Linkage to Performance System • Narrow Targets: Improve their • Broader View: Fix enterprise (cross- business – near term functional) problems – longer term • Resources • Standards Vocabulary • Training – Frontline Tools / Training Materials Prepare Internal Consultant Resources • Routine Progress Roll-up KPIs / Metrics Dashboard Definition One other thing… if unsure, collaborate! A cross-functional team to address system definition concerns may take longer, but it’s worth it © Kaufman Global 16
- 17. Countermeasures – Change Management Actively Manage Change — It’s Not “Soft Stuff” Establish framework Create and sustain buy-in • Roles are defined; actions and • Seek involvement – always performance can be measured • Make coaching real – seeking help • OE system is defined, resulting in is a strength, not a weakness “OE standard work” • Surface and work with resistance • Communicating according to a measurable plan and protocols Try new NEVER! Try new Hmm?! things! things? © Kaufman Global 17
- 18. Parting Thoughts Related Trappings • Call “It” Something – Carefully consider the name (hint: DIRTFooT isn’t a great choice) • Measure Results – Often takes more that a single metric to avoid myopic view • Don’t Discriminate – Factory, Office, Engineering, etc. … OE is for everyone • Communicate, Communicate, Communicate – Strategy | Plan | Protocols | Measures • Be Relevant – Push decisions down to the lowest practical level • Make it Stick – Link to Human Resources and the Personnel Performance System • Succession Development – Use OE to cultivate future top leaders • Re-use What Works – Develop networks for sharing best demonstrated practices © Kaufman Global 18
- 19. Thank You! May we have your questions? © Kaufman Global 19
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- 22. Operational Excellence Managing Change and Avoiding the Yo-Yo Effect Complex organizations competing in today’s markets by corporate leadership complaining about “too little recognize that operational excellence (OE) is a vital attention to growth” and “not enough focus on piece of their path to success. Business units within stakeholders and profits.” OE is then unceremoniously those organizations often determine to sponsor a dismantled, labeled as another passing fad, and, central “operational excellence” function whose removed from the organizational agenda without mission is to propel OE inculcation… broadening, having fully achieved its intent. In the end, the yo-yo deepening and speeding results. Sometime later, that has traveled full cycle. The lifecycle of each of these function’s notable progress is discredited by the same approaches to accelerating internal change and business segments that sponsored it complaining business performance share striking similarities as about “too much corporate overhead” and “not they encounter similar problems, barriers, enough focus on my problems.” OE is then achievements, successes, dramas… and in many cases, unceremoniously dismantled, labeled as another eventual demise. passing fad, and, removed from the organizational agenda without having fully achieved its intent. In this presentation, you’ll learn about common themes that emerge as complex organizations Still, the opposite can also occur. A corporate-level embrace formal internal change structures, what can OE group might never be established, and with that, be done to avoid some of the more frequent and no Continuous Improvement standard work. Multiple thorny problems, and, how to improve the odds of duplicative OE approaches blossom (then die) within maximizing ongoing vitality and results of your in- the business units. OE progress is de-valued house OE system.