Leaders Lead!

Basic Business Cents

Leaders Lead!

March 19, 2009

The sketch below depicts three types of leaders. With which one do you most associate your own behavior?

Most people realize that today you cannot behave like the dictator sitting in the driver’s seat cracking the whip over the team. Unfortunately, many managers do not know how to manage when they can no longer manage by edicts and threats and so they move to the back of the wagon. They sit there in a fetal position, hoping the team is going in the right direction. That is also not an effective way to lead the team to the desired goal. Today’s leader is in front of the team, feet on the ground, providing direction.

Everyone is having fun today dissecting the auto industry to understand where they went wrong. One reason is the unfortunate pattern of alternating “car men” and “financial men” into the CEO position. Donald Peterson of Ford (Taurus), Bill Hoglund of General Motors (Saturn), and Lee Iococco of Chrysler (K Car and also the Mustang while he was at Ford) were “car men” and had great success. “Financial men” who followed tended to focus on short-term financial results and the fall into mediocrity followed. Myron Tribus of MIT once said, “Managing your company on financial figures alone is like trying to drive your car by looking in the rear-view mirror. The numbers reflect what has already happened and cannot be used to predict the future. Management is prediction. That requires feet on the ground, leading your team in the desired direction.

What is that direction? It is the role of the leader to provide the aim of the organization. Every organization must have a vision, and by extension a vision statement shared with all employees. A strong and clearly worded vision statement allows employees to make decisions consistent with the organization’s overall goals and objectives. Without this clear direction, the employees will do their best but they may not be pulling in the same direction.

A good vision statement must meet three criteria.

· It must be memorable. If the employees cannot recall it immediately, it probably is not of much use to guide their behavior.

· It must be inspirational. It should excite the employees to want to enlist in the crusade to achieve it.

· It must be compelling. It should move employees to action. Understanding the vision and being excited about it means nothing if action does not take place to get the desired results.

In order for the employees to buy-in to the vision, it must be communicated to them in a way to achieve true understanding. Japanese friends say that it takes more than one of the senses to communicate. Merely sending it out in printed format, putting up posters, or pontificating about it will not achieve the desired buy-in and commitment. The leader must publish it in written form and also explain it to all employees about it in a true dialog format.

Success in today’s challenging business world is increasingly based on the extent of the leadership, personal involvement, and visibility in developing, deploying, and maintaining an evironment for excellence. Leaders lead the way.

Operations Focus

 Basic Business Cents

A Community Performance Improvement Plan for Small Business

MONTH 10: OPERATIONS FOCUS

This category of the Malcolm Baldrige Criteria for Performance Excellence was at one time labeled Process Management, which I prefer. This section recognizes that all work within an organization is composed of a series of processes and these processes form a system for getting work done. A footnote in the Baldrige Criteria states, “Work systems refers to how the work of your organization is accomplished. Work systems involve your workforce, your key suppliers and partners, your contractors, your collaborators, and other components of the supply chain needed to produce and deliver your products and business and support processes. Your work systems coordinate the internal work processes and the external resources necessary for you to develop, produce, and deliver your products to your customers and to succeed in your marketplace.”

Performing the self-assessment on the Operations Focus category starts the month 10 training activity. It examines how the organization designs, manages, and improves its work systems and work processes to deliver customer value and achieve organizational success and sustainability. It will also measure the readiness for emergencies of your organization.

The areas addressed are:

·      Work Systems: How do you design, manage, and improve your work systems?

o   Work System Design

§  Design Concepts

§  Work System Requirements

o   Work System Management

§  Work System Implementation

§  Cost Control

o   Emergency Readiness

·      Work Processes: How do you design, manage, and improve your key work processes?

o   Work Process Design

§  Design Concepts

§  Work Process Requirements

o   Work Process Management

§  Key Work Process Implementation

§  Supply-Chain Management

§  Process Improvement

Following the self-assessment on this category, each of the participants will be asked to draw a system chart of how their organization works. This is not as easy as it might sound, as management does not always know how the work really gets done. They will have to talk to their people to see what they do in reality to confirm their theory of how it is done and how it should be done. Workers sometimes do something different than what they are instructed to do, not because they are negligent or lazy, but because the processes which have been provided to them do not work. They do what they have to do to get the job done.

Instruction and coaching will be provided on flow-charting and drawing a systems map. This will involve the identification of the 3-5 key processes of their organization and the activities that are part of the value stream and those that are the supporting and leadership processes. The key processes are drawn in a box and represent the value added that the organization provides. Inputs such as labor and material suppliers are drawn outside the left side of the box with arrows going to the box. Users of the output of the organization like customers and other stakeholders are drawn outside the box on the right. Management is shown outside the top of the box and supporting activities like accounting, personnel, legal, etc. are shown outside the box on the bottom. This is a useful way to depict that those activities on the top and bottom may be useful, but they are overhead. Only those activities contained inside the box are adding direct value.

As you might envision at this point, this chart is extremely useful in managing the organization.kay

Workforce Focus

 Basic Business Cents

A Community Performance Improvement Plan for Small Business

MONTH 9: WORKFORCE FOCUS

In month 9 of the 12-month journey to improvement performance of the organization, the focus changes from process capability to the workforce capability and capacity needs to build a workforce environment conducive to high performance. The self-scoring Baldrige criteria in this category examines how your organization engages, manages, and develops your workforce to utilize its full potential in alignment with your organization’s overall vision, mission, strategy and action plans. The key components of this category are:

·      Workforce Environment: How do you build an effective and supportive workforce environment?

o   Workforce Capability and Capacity

§  Capability and Capacity

§  New Workforce Members

§  Work Accomplishment

§  Workforce Change Management

o   Workforce Climate

§  Workplace Environment

§  Workforce Policies and Benefits

·      Workforce Engagement: How do you engage your workforce to achieve organizational and personal success?

o   Workforce Performance

§  Elements of Engagement

§  Organizational Culture

§  Performance Management

o   Assessment of Workforce Engagement

§  Assessment of Engagement

§  Correlation with Business Results

o   Workforce and Leader Development

§  Learning and Development System

§  Learning and Development Effectiveness

§  Career Progression

People are the most vital resources in virtually any business. Deming called them a treasure and not to be confused with a commodity. They are not assets to be bought and sold but treasures to be valued, nurtured, and protected at any cost; after all, you have made an investment in them to get them to this point. Growing and managing this resource is essential to quality improvement. 

Most efforts at quality improvement that are considered to have been a disappointment can be attributed to a failure to adequately address the human concerns. It is critical to examine the underlying culture and determine what behaviors and traditions tend to reinforce old ways of thinking and acting and are therefore no longer relevant. Output from Month One will be used to develop a set of Operating Principles to guide behavior throughout the organization.

Leaders or point people for each of the Operating Principles are selected within the organization.  Simple reporting forms are supplied for them to report on progress and obstacles each month to organization’s operations meetings, and a straight-forward survey form to measure performance behaving according to the principles. Each level of the organization is measured-executives, supervisors, direct reports, and peers.

These actions will emphasize the importance of instilling a culture of continual improvement within each organization that will cause the improvement activity to endure over time.

MEASUREMENT, ANALYSIS, AND KNOWLEDGE MANAGEMENT

Basic Business Cents

A Community Performance Improvement Plan for Small Business

MONTHS 4-8: MEASUREMENT, ANALYSIS, AND KNOWLEDGE MANAGEMENT

In months 4-8 of the community plan training for small business, the focus is on the selection of what data to collect, measurement methods, analysis, and corrective action to take. The first part of the training session for Month 4 is to again do a self-assessment of the Baldrige Criteria Award for this category. It includes:

· Measurement, Analysis, and Improvement of Organizational Performance: How do you measure, analyze and then improve organizational performance?

o Performance Measurement

§ Performance Measures

§ Comparative Data

§ Customer Data

§ Measurement Agility

o Performance Analyses and Review

o Performance Improvement

§ Best Practice Sharing

§ Future Performance

§ Continuous Improvement and Innovation

· Management of Information, Knowledge, and Information Technology: How do you manage your information, organizational knowledge, and information technology?

o Data, Information, and Knowledge Management

§ Properties

§ Data and Information Availability

§ Knowledge Management

o Management of Information Resources and Technology

§ Hardware and Software Properties

§ Emergency Availability

MONTH 4:

This is the first of five months dedicated to process improvement and innovation. After the assessment, training will be provided on the Plan-Do-Study-Act cycle and the Seven Basic Quality Tools. Included in this session will be instruction on:

• How to obtain data
• Pareto analyses
• Cause and effect diagrams
• Histograms
• Scatter diagrams
• Run charts
• Basic control charts
• A system called The Improvement Journal to use the basic tools in the proper sequence for process improvement.

MONTH 5:

Attendees are asked to bring a completed Improvement Journal to review and obtain feedback on how to improve the application of the basic tools.

The seven basic quality tools are based on data. In the real world of management, there are some problems where data cannot be obtained. A committee of top Japanese scientists was asked to develop tools to solve these problems where data is not available. They have proven very useful to save time and frustration by management around the world and result in better decisions. Although they total seven in number (seven is considered to be a lucky number in Japan), this session will focus on five:

• Brainstorming
• Affinity diagram
• Interrelationship diagraph
• Tree diagram
• Matrix diagram

MONTH 6:

Attendees will share an application of the Management Tools with the class and recommendations for improvement will be provided.

An introduction to the Toyota Production System, commonly called Lean Thinking will be provided. This is an excellent methodology to remove waste in the form of material, effort, movement, and redundancy in the work processes.

MONTH 7:

Attendees will share an application of Lean Thinking for feedback from the class and the instructor. This month will present phase one of an introduction to Six Sigma-Improvement through DMAIC

• Define

• Measure
• Analyze
• Improve
• Control

MONTH 8:

Attendees will share an application of improvement through a Six Sigma application for feedback. Instruction this month will be provided on innovation through Six Sigma through DMADV

• Define

• Measure
• Analyze
• Design
• Verify

This education and practical application of the process improvement tools arms the attendees and their organizations to continually improve their performance and thereby contribute to success and survival long term. Again that saying of Dr. Deming’s comes to mind, “Nowhere is it written that thou shall survive.” You have to arm yourselves with the best tools and technology and then work at it, now and forever.

Customers & Markets

Basic Business Cents

A Community Performance Improvement Plan for Small Business

MONTH THREE: CUSTOMERS AND MARKETS

“To survive, a company must win against competition in the world market. Needless to say, it must strengthen its cost competitiveness by perfecting its quality improvement efforts or downsizing and differentiating its existing products and services… It is obvious, however, that the path of continuous downsizing eventually would lead to a company with no employees… Therefore, to continue to survive and prosper, a company needs to develop new products and services, create new markets, secure employment, and upsize the organization.”

Dr. Noriaki Kano

“Attractive Quality Creation”

October 17, 1994

In this session we will focus on the numerator of the revenue/expense ratio and explore Market Creation. Dr. Noriaki Kano has been pioneering work in this area for two decades with his work on “Attractive Quality Creation.” He says we need to move beyond customer satisfaction to delighting customers. His methods of determining those features that create loyal customers will be studied. A simple survey technique to determine customer loyalty will also be presented.

By now it is apparent the sessions will start on a self-assessment of the category of the Baldrige criteria being covered. Category 3 is titled, Customer Focus. Attendees are asked to score their organization first on the section, “Voice of the Customer; How do you obtain information from your customers?” It includes detailed questions in the areas of:

· Customer Listening

o Current Customers

o Potential Customers

· Determination of Customer Satisfaction and Engagement

o Satisfaction and Engagement

o Satisfaction Relative to Competitors

o Disatisfaction

Part 2 will address “Customer Engagement; How do you engage customers to serve their needs and build relationships?” It includes questions in the areas of:

· Product Offerings and Customer Support

o Product Offerings

o Customer Support

o Customer Segmentation

o Customer Data Use

· Building Customer Relationships

o Relationship Management

o Complaint Management

When the scoring is completed on their organizations by the attendees and they have identified opportunities for improvement, training will be provided to help in those improvement activities.

The dynamic change in the world around us is exciting, bewildering, and frightening. In the past decades we have seen a productivity emphasis in the '70s, a quality emphasis in the '80s, a reengineering emphasis in the '90s, and Six Sigma and Lean Thinking in the past decade. What are the major thrusts for this decade? If we look at the focus of the last four decades, we are looking at emphasis primarily on improving cost effectiveness. Elements of these three major thrusts have resulted in restructuring, de-layering, and downsizing. We need to continue our efforts on cost effectiveness forever in order to become more productive, but we also need to work on areas to create a bigger demand for our services so that we can provide more jobs and have a resultant upsizing. To survive and prosper in the next decade it will be necessary to work continually on cost effectiveness but we need parallel efforts to achieve a unique advantage by creating pull for our services and upsizing the organization. Market Creation methods as developed by Noriaki Kano can lead to breakthroughs in new and better services and result in survival and prosperity for the future. The elements of Dr. Kano’s Attractive Quality Creation—“Must Be Quality, More is Better Quality, and Attractive Quality will be presented along with a means to identify the Attractive Quality features.

After these attractive quality features are identified and incorporated into the products and services, continual monitoring of customer satisfaction is required. However many customers are weary of lengthy satisfaction surveys and choose to ignore them.

Business Week had an article in their January 30, 2006 edition that was very interesting and timely. It was titled, “Would You Recommend Us? That simple query to customers is shaking up planning and executive pay.” It referred to an uncluttered approach that first appeared in a Harvard Business Review article. Basically, it is a very simple customer survey that asks, “On a scale of 0-10, how likely is it that you would recommend (insert your product, service, or organization) to your friends or colleagues?” This is followed by a question asking for reasons that prompted the rating and what could be done to provide a better experience. A scoring guide is provided; a 0 rating would mean not at all likely, 5 is neutral, and 10 would be extremely likely. The 9 or 10 responders are classified as Promoters, 7-8 responders are called Passively Satisfied, and 0-6 responders are labeled Detractors. The percent of Detractors are subtracted from the percent of Promoters to get a score that can be used to compare and track progress.

Deming used to say satisfying customers is not sufficient; satisfied customers will switch when something better comes along. He said we need loyal customers. Kano says roughly the same thing in his Attractive Quality Creation work when he talks about the need to have “delighted” customers. This survey appears to be a simple, effective way to measure loyal customers. q

MONTH TWO: WORK ON THE RIGHT THINGS

Basic Business Cents

A Community Performance Improvement Plan for Small Business

The second month of the Community Performance Improvement Plan provides the training for the participants to conduct a unique strategic planning event in their organizations. This copyrighted process has been used by some of the largest and best organizations in the world but is equally applicable to the smaller organizations involved in this community activity.

The participants will again start the session with a self-assessment of the Strategic Planning category of the Baldrige Award. Attendees will score their organizations by addressing a number of questions in the following areas:

· How do you develop your strategy?

o Strategy Development Process

o Strategic Objectives

· How do you implement your strategy?

o Action Plan Development and Deployment

o Performance Projections

The soul searching that goes on in answering the questions in the Baldrige criteria reveals issues to be addressed within each organization, whether they are opportunities or threats. These issues are shared between attendees from each organization but not with attendees from other organizations.

They will be introduced to the Strategy Management process where they will receive the necessary understanding to conduct the process within their own organizations. The Strategy Management process contains four equal parts:

1. Research
1. Customization—A generic manual will be presented to each attendee and a slide presentation to be used in presenting the process when initiating the activity in their respective organizations. They may wish to add their organizations name to the process and material and add questions known to be important in their industry.
2. Introduction and assignments—A kick-off meeting starts the planning activity with an explanation of the process and distribution of the research assignments in 21 areas.
3. Data collection-- Research assignments are to answer questions supplied in the manual (typically requires research to find data) and prepare a 10-minute presentation for the planning event. There is usually a month allowed for the research between the introduction and the event.

2. Plan
1. Presentation of research results—It is important that the presentations not be allowed to go no longer than 10 minutes with 5 minutes for clarifying questions so that all 21 categories can be covered in one day. All key people from the organization, including important stakeholders, should be invited to the planning event so they have ownership in the outcome.
2. Development of strategy to move from present state to the desired state—A unique process is used so all attendees have an equal input.
3. Development of the Strategy Management Profile—A one-page summary of the strategy with a Vision of the future state of the organization, its Mission, and Values, is developed for distribution to all employees and key stakeholders.

3. Action
1. Communication and distribution of the Strategy Management Profile—The Profile suitable for framing is typically accompanied by and oral presentation of the contents. Acceptance and understanding are improved noticeably by using more than one of the senses to communicate.
2. Deployment of the strategic actions to the organization—Action plans are deployed throughout the organization so that everyone has action to accomplish to achieve the plan.

4. Management
1. Regular review of the progress on the actions—Management’s interest and attention to the progress made on the Action Plans on a regular basis (at least once a month) is required to establish priority and get results.
2. Visits of the Top Executive to the strategic action workplace—Random visits to talk with employees in their workplace on their progress on their Action Plans is very helpful and enlightening. They may be encountering obstacles that would otherwise go unreported and management can take action to remove the obstacles.

With the training received in Month II of the Community Performance Improvement Plan, the attendees can return to their organizations and conduct the Strategy Management process at their own timetable without outside help. As they go forward they will know they are putting their improvement efforts on the right issues to help them attain their dream of the future of the organization.