Accelerating change is the most significant attribute of our era— and managing that change is critical in defining competitive advantage. Regardless of industry, there are certain core organizational elements, such as metrics, authority/responsibility, and communication that determine the effect and ultimate success of the change. If these elements are not well defined, an organization will fail to achieve its objectives. Without integrating and aligning these core organizational elements it is difficult, if not impossible, for change to occur.
To deal with change, organizations must understand how organizational processes are created. Start-up organizations hire people with relevant experience or bring in consultants to create the business rules and processes that support them. Over time, organizational and policy changes, work performance problems, new technology, and regulatory issues cause the original processes to change. The impact of these changes on the processes is rarely assessed unless the changes cause a sudden, noticeable, negative impact somewhere within the organization. It does not take long before the processes get out of sync with organizational objectives, causing work performance to erode. At worst, work is not completed, opportunities are lost, and schedules are missed. Additionally, quality declines, customer satisfaction disappears, and workplace accidents, costs, and human resource issues increase.
Avoiding these potential impacts requires developing a set of business rules and processes that significantly improve performance. This is a continuous process consisting of three overlapping phases:
• Control phase—This phase has an entirely internal focus. It requires all processes to be accurately defined and followed. It is often the most difficult phase to complete the first time that you go through the cycle because it can be traumatic for all of the participants. As a manager, you cannot get angry or upset with what is discovered during the defining process. Anything that is unsafe or illegal must be immediately dealt with, and accountability established. But beyond that, employees/team members need to feel that they will not be held accountable for broken processes. The objective is to define, not place blame.
• Process optimization phase—In this phase, issues uncovered during the first phase are fixed, and improved processes are put in place and documented. Significant performance improvement will occur during this phase. It is important to recognize individual and team contributions that have achieved measurable success. Team recognition is especially critical because it sets the new minimum performance standard, which now must be met or improved; helps the organization get mentally prepared to take on the really hard issues that must be fixed; and establishes the behavior patterns necessary to move into the last phase, or the process reengineering phase.
• Process reengineering phase—During this phase, an organization must look at its customers, the market, emerging technology, the economy, and anything else that drives its business. This external focus will determine where the organization needs to go. This direction needs to be described as simply and succinctly as possible. At this point the people and/or teams who worked on setting this future course must collaborate with those who have worked the first two phases to determine a course of action. This is translated into specific objectives, which are pushed down into the organization. The organization then realigns itself to accomplish the tasks, and the processes, metrics, and organizational structures change as required to get the job done.
Improving performance is easier said than done—but it can be done. Successful execution of this approach requires an understanding of the issues that will surface. Initially, an organization wants to implement these processes. However, before long, serious issues start to surface, corrective actions begin to be realized, and people are pushed out of their comfort zones and resist change.
Additionally, senior managers in the organization may be threatened on two fronts: first, they may perceive the added visibility as a threat to their authority, and second, if they do not really know what they are doing they may feel that they are under siege. Everything will become a personal/emotional issue to them, and they must be forced to use the process. Total involvement is mandatory; everyone must do his/her job. If you are a manager, your role is to break down barriers, teach, mentor, and foster a collaborative environment without usurping anyone's authority/responsibility. Every day you have to put on your “game face” and go to work. Managers cannot get excited or sidetracked. There will be criteria established to support decision-making. Every decision made will be based on those criteria and open for evaluation. Most important, are managers willing to accept and support decisions that they personally do not like and/or agree with, provided that these decisions meet the established criteria? Managers must be open, honest, fair, and consistent when dealing with people. They are the steady hands that steer the course and they can never let up.
Now, if you still want to embark on this course, here is the template that will get you on your way. It all starts with the internal processes. For the organization to be focused and aligned, there are four elements that must be kept in balance. If any of these elements do not exist within the organization or are underemphasized, you will not attain the critical mass required within the organization to create significant change or to sustain high performance. Figure 2 illustrates these relationships.
The first element is the focus. Although it is necessary to have mission statements, strategic objectives, goals, value statements, etc., it is extremely difficult for organizations to imprint them on the workforce. As a result, these items must be abridged into focus elements. The focus elements must meet several criteria:
1. They must be known and understood by everyone.
2. Each element should be short enough to fit on a bumper sticker.
3. They should be measurable or at least have measurable parts.
4. Every person within the organization should be able to internalize the focus elements to the point where each individual has a personal definition of achievement as it relates to his or her job. That means everyone, not just the senior staff.
5. They should be tiered.
6. There should be no more than four of them in any one tier. I prefer three. The top tier should consist of the overarching values for the organization. Examples are: delight the customer and stockholders, take care of your people, be number one in our business, etc. If done properly these elements will help define or at least reinforce the authority of the teams and individuals within the organization. The next tier of elements will be specific to the parts of the next level of the organization, but will support the top tier of elements. This will continue until every individual within the organization has a personal focus. Focus elements should be specific and quantifiable for each individual in the organization.
For example, teams or individuals should have authority to do anything that improves one element without impacting the others. If performance in one high tier area is traded to improve performance in another, then concurrence must be obtained. The next tier of focus elements will be more specific. They will be fairly high level and support the first tier. These elements will be tailored to the major functional areas of the organization. So, although they relate to the first tier they will not be the same across the organization. A new tier of focus elements will be established for every level of the organization until you reach the smallest organizational element whose performance is measurable, which could be an individual. Although the focus of the highest-tier elements will not change much over time, change should frequently occur at the lower levels. The lowest tier of the focus elements should be internalized within the individual. All within the organization should know and understand what they personally have to accomplish to improve the performance of their specific work group and how that work group contributes to the overall performance of the organization. There should be complete alignment from the top tier of focus elements to each individual within the organization.
Now it is time to examine how authority and responsibility are assigned. There should be a position description for everyone within the organization. In it should be a functional description of work, responsibilities, and authority and how they will communicate. Also, special skills or knowledge requirements should be listed. This can be complicated because many people will serve on teams or committees or have responsibilities outside of their core functions. The emphasis must be on the functions that individuals perform as part of a team, not their position within the organization. This approach must be reinforced through a team-based recognition program. All specially formed teams should have a charter. The charter should outline the team's mission, the expected outcome, the team membership, who they report to, their authority and responsibility, how they will communicate their results, success measures, and a charter end date. Team members should be assigned in writing with a copy of their assignments attached to their position descriptions.
Next, let's examine how communications are managed within the organization. First, insist on a communications plan. It should outline who is responsible for communicating what kinds of information to whom in the organization. There should be an external and internal component to this plan. The external plan should describe a tiered approach to communicating with customers. That is, different layers or parts of your organization will touch corresponding parts of the customers’ organizations. There should be a feedback process whereby everyone who needs to know what is going on with the customer receives the result of each touch. In addition, there should be a communication process that interjects the “voice of the customer” into the internal decision process. External initiatives such as benchmarking should be included in this plan. The internal plan should discuss how major organizational elements communicate with each other. It should also describe how the different teams feed into the communication process.
The objective of this process is to ensure that everyone in the organization has to periodically discuss his or her performance in supporting the focus elements with peers and that the organization addresses issues raised during that presentation. The individual must receive feedback as to the disposition of the issues raised during the discussion. Organizations that work at a faster pace, like production, will do this far more frequently than ones that do not change quickly. However, organizations with serious issues will have frequent meetings until the issues are resolved. If you are a senior manager, the meetings that you choose to attend and how you act at them will determine what gets attention. This is a great opportunity to exert influence over the organization. But be very careful to send the correct message. Make the process work; do not work around it. Do not make decisions that are someone else's to make.
The final piece of the triangle is the metrics used to run the organization. In an effective metrics program, first, there must be a universal definition of terms across the entire organization. Second, the metrics must be available to everyone. In fact, every part of the organization that performs or is responsible for something measurable should have metrics describing its performance prominently displayed. Business-sensitive and classified information will have to be dealt with separately. Third, data will be integrated from the bottom up. Issues at the lowest levels should be visible at the top and vice versa. It should be quick and easy to follow an issue from the highest levels of the organization down to the lowest level that deals with it. Fourth, metrics will be used as the basis for all decisions. Lastly, they should be constantly reviewed for accuracy and reliability. The importance of metrics cannot be overstated. Peer pressure and the desire to be the best are the two elements that must be in place to sustain an improvement program. Neither of these elements can exist without good metrics.
Although not part of the triangle, another related item must be addressed before the internal processes will be under control. These are the organizations’ core processes, which are functional processes that exist throughout the organization and are critical to its success. They could have safety, regulatory, and/or work performance implications. Things like security inventory management, proposal development, and hazardous material handling are examples.
Core process management has three distinct components. First is knowledge management. An effective way to manage process knowledge is through the use of subject matter experts. Besides being the most knowledgeable, they are responsible for any internal instructions/procedures, making checklists and inspection criteria, and establishing individual training requirements and certification procedures. They work with the parts of the organization that use the process to determine their issues and to find any expert knowledge that would be of use elsewhere in the organization. They are responsible for bringing issues forward for resolution. They attend conferences, lead benchmarking teams, and receive advanced training in the subject. They take useful knowledge and inject it into the organization where needed. The position of subject matter expert should not be a full-time job, however. They should be interviewed, selected and appointed to serve for a specified term. At the completion of their term they can reapply for the position. That way they do not become beaucrats and only that which is necessary gets done. The second element is responsibility.
Every part of the organization that uses these processes should have someone assigned in writing to be responsible for ensuring that the procedures governing the processes are followed. The assignment will be part of the individuals’ position description and their annual evaluation. Finally, there will be some core processes whose importance or impacts are so great that they will require compliance inspections. The subject matter expert will not inspect for compliance. They are responsible for creating the checklist, but they should never do the inspection. They must retain the role of honest broker.
As the internal processes get focused and aligned, things will quickly come under control and the optimization phase will begin. It is now a high performance organization that performs at a level greater than the sum of its parts. The organization is getting ready to reengineer itself, but it needs to know were to go. How do you set and maintain a course that will keep it improving indefinitely?
Now is the time to start looking outward. Portions of the basic template must be modified to include external elements. The work teams will do environmental scans, benchmarking, market analysis and technology assessment as part of their charter. If it is a large organization, business and technology offices could be established. The metrics will now include the performance of the competition or performance targets were applicable. Strategic initiatives will be developed and placed into the focus elements. The customer will be integrated into the communication process. The organization will move further into the team-based environment. Once all of this is in place, how is it sustained?
Pride and peer pressure are the primary motors that sustain the organization. Compensation is important, it must be competitive, fair, and support the team approach. However, compensation alone will not sustain a high performance organization. Everyone has to know and understand the focus elements, see and use the performance metrics, periodically present their performance to their peers, get feed back on all recommendations, and be recognized for good performance. Aggressive internal and external recognition programs must be in place. All decisions must directly support the focus elements and the metrics. Personal issues must be kept out of the decision making process. Everything is done because it is the “right thing” to do as defined by the focus and supported by the metrics. This is all interesting, but does it work?
This approach has been utilized in a variety of organizations. It has been successfully implemented at an aviation depot (4,000 people), a repair facility (550 people), acquisition planning and budgeting staff (750 people), acquisition program element (150 people), and a business unit in a consulting firm (100 people). In every case the performance improvement has been dramatic.
As an example, the aviation depot reduced its annual operating costs by one third or $140 million over a three-year period. All of the aircraft overhaul programs reduced their turn around time by at least 50%. The component program tripled its workload while cutting the turn around time by more than one half. It won the California Quality Council Award in the large commercial manufacturing category, receiving the highest score ever given to a first time applicant. What makes this even more impressive was the fact that it was the first time that the depot was ever evaluated using the Baldrige criteria. What impressed the inspectors the most was the fact that the entire organization was totally focused and aligned.
To demonstrate how this worked, here is what transpired in one of the aircraft overhaul programs at the depot. At the start, it was taking 500 days at a cost of over $4.7M to overhaul an aircraft. The customer hated the depot and had put plans in place to pull all of the work out of there within four years. The depot team worked to get their processes under control. They defined the work processes, developed metrics, and established teams. This got the process under control. They then posted the metrics on the shop floor in front each aircraft for everyone to see. A core team was assigned to each aircraft. This team consisted of five people and was responsible for the aircraft from induction to release. Their names were prominently posted on the aircraft. Each team held daily briefings with the program manager, production control and material managers to resolve issues. The position of aircraft program officer was established. This person had to authorize any additional work and all material requisitions. It served as a check and balance to eliminate unnecessary work. This caused material costs to be reduced by one third. It had been more than a decade since an aircraft had been sold (certified as ready for release back to the operator) on the first test flight. After putting these processes in place, the next seven aircraft sold on the first test flight. Turn around time was now 225 days at a cost of $3.0M.
At this point, the aircraft program team did an environmental scan. They saw that the 117 existing aircraft were being replaced by 73 up-graded aircraft (some new and some modified). The tempo of operations for the aircraft was being increased by more than 10%. That meant that the aircraft could not be out of service for depot maintenance for more than 100 days every four years. The operators had a significant issue with tail inspections. Every 400 days they had to perform a major tail inspection, which took at least several weeks and an excess of 10,000 man-hours to perform. Since there are only four aircraft in a squadron, the tail inspection had a significant impact on operational readiness. The first of the up-graded aircraft were due for overhauls in about 18 months. The team realized that if they could find a way to resolve these issues, they would keep the program. If they were unable to do the work in 100 days the entire program would be taken from them.
Further study revealed that the only difference between the old and the up-graded aircraft were the electronics in the fuselage; the rest of the aircraft was identical. So, they planned to take the outer wing panels, pylon, tail and other components from eight of the older aircraft scheduled for storage in the desert and use them as a pool. These items would be worked prior to the aircraft's arrival and swapped out during the overhaul. That way the amount of time required to work the fuselage would determine the length of time the aircraft is in overhaul. They also designed a reworked tail that would go four years between inspections. They used computer modeling to determine that if they brought the components in six months prior to the aircraft, they could do all of the work with 137 people instead of the 203 people that presently work on the program. They then embarked on a very aggressive effort to create the engineering specifications work process specifications, and work break down specifications required to perform the work. Prototypes were inducted as the specifications were being developed. The entire effort was completed in less than 12 months. Normally, an effort of this type would take three years. The program meant or exceeded all expectations. Two years prior, the depot did 10 aircraft for $35M with an average turn around time of 250 days (there were some older ones that increased the numbers). The first year under the new system, they did 10 aircraft for $17.2M with an average turn around time of less than 100 days. The completed aircraft were far superior to anything ever produced.
In summary, this approach can be applied to any type of organization. It is not technology dependent, but rather technology enabled. It sits on top of whatever processes are in place and makes them better. By checking for focus, balance and alignment, issues and opportunities become apparent. Once identified, they are resolved. It is all about the organization attaining this state. Unfortunately, it cannot be bought as a package; it must be put in place. However, if this template is used properly, the organization will quickly improve. The performance will continue to improve as long as this approach is utilized.
Proceedings of the Project Management Institute Annual Seminars & Symposium
November 1–10, 2001 • Nashville, Tenn., USA