flevyblog

Flevy Blog is an online business magazine covering Business Strategies, Business Theories, & Business Stories.
MANAGEMENT & LEADERSHIP STRATEGY, MARKETING, SALES OPERATIONS & SUPPLY CHAIN ORGANIZATION & CHANGE IT/MIS Other

How Do We Create Leadership Pull for Operational Excellence?

Editor's Note: Take a look at our featured best practice, Strategic Planning: Hoshin Kanri (Hoshin Planning) (153-slide PowerPoint presentation). [NOTE: Our Hoshin Kanri presentation has been trusted by an array of prestigious organizations, including industry leaders such as Apple, Boeing, Shell, Cummins, Johnson Controls, Telefónica, Discover, Stryker, Thales, Saint-Gobain, AGCO, [read more]

* * * *

Editor’s Note: This article is an excerpt from the full How to Create Leadership Pull for Operational Excellence whitepaper, available for free download from Flevy here.

* * * *

article2_mainSeveral times a year, over the last decade, in multiple Operational Excellence (OpEx) focused conference workshops, we have asked the same question. What’s the #1 obstacle to successful successfully deploying OpEx? The #1 answer has invariably remained “lack of top management commitment.”

At a superficial level, at least, this answer doesn’t seem to make sense. OpEx activity is in theory something that every business leader should actively want to support. OpEx promises to simultaneously improve quality and reduce costs – both of which are clear drivers for better business results. These are the same business results for which business leaders are directly rewarded and recognized. Additionally, there is significant, indisputable evidence that operational excellence programs have had a significant effect on the business results of not just tens, but hundreds of large private sector organizations [iSixSigma, 2011]. It seems obvious given this evidence and the direct link to what they get rewarded and recognized for that top management would naturally see OpEx as a priority.

The reality however is very different. Our research has shown that over 50% of operational excellence pilots fail [Docherty, A. 2006] and even highly successful programs suffer seismic shocks – we’ve seen top management in multiple companies inexplicably cancel OpEx programs generating hundreds of millions of dollars in savings – including, for example, BT’s Wholesale Division Lean Six Sigma (LSS) program (stopped in 2005) and the decision by Network Rail (the UK Rail Operator) to disband their Operational Excellence program in 2007.

The problem with the “push” model

Clearly we have to look deeper under the surface to understand what’s going on. Our simplistic assumption – that leaders will be motivated to support operational excellence – is based on the view that they will be motivated by the obvious link of OpEx benefits to the things they care about. The reality however, is that the link (particularly when OpEx is seen as a program) is often not that obvious, and in reality, motivation is based on more than just the belief that a link exists. A powerful model that helps us understand what drives motivation of individuals is Vroom’s Expectancy motivation model [Bandura, A. 1977]. This model suggests for us to be motivated to do something we must believe at least 3 things:

article2_fig1

  1. If we do something it will result in an outcome;
  2. That the outcome that will result is personally valuable to the individual i.e. there is a clear WIIFM (what’s in it for me) and;
  3. That doing that thing (over all other things) will get to the desired outcome (that we will get rewarded for) faster/more effectively than all other potential things we could do to get to the outcome.

This model helps us understand both why leaders frequently don’t throw their support and energy behind operational excellence and why this leads to the erosion of support for the concept and ultimately why OpEx programs fail.

Consider the following analysis which is based on the insights from Vroom’s motivation model (see diagram below). It links the ‘symptoms’ of lack of management commitment to OpEx programs to the consequences of these symptoms – effectively death of the program by “1000 knives” and “chains back” to the potential causes of this lack of commitment.

Causal Analysis of Drivers for Lack of Management buy-in for OpEx programs

Causal Analysis of Drivers for Lack of Management buy-in for OpEx programs

Fundamentally this model suggests that there are three pre-requisites that need to be in place for leaders to be motivated to support operational excellence activity:

  1. Leaders have got to believe that the operational excellence projects are directly aligned with their personal objectives i.e. that the project outcomes will directly contribute to achievements of the outcomes they get rewarded for;
  2. Leaders have got to believe that applying operational excellence tools and approaches will fundamentally deliver results more quickly/effectively than alternative approaches;
  3. Leaders have got to believe that the consequences of not delivering improvement activity are greater than the consequences of not delivering the business as usual activity.

With this insight it is clear why traditional “program driven” approaches to operational excellence often fail. Whilst, popular, the “deploy OpEx as a program” approach (as promoted by the initial adopters such as GE, Motorola and Honeywell and subsequently adopted by hundreds, if not thousands, of other companies) is based on some flawed assumptions. This approach, in which a corporate staff function – variously called Lean Six Sigma, Process Excellence, Business Excellence, or similar, is set-up to ‘push’ a training program in which high potential employees are taken out of the line roles and trained in waves to run improvement projects – can easily create a situation where leaders feel little or no ownership for the improvement projects. There are two principle reasons for this:

  1. The first is the consequence of the widely adopted ‘no project, no training’ rule. This rule which is based on the apparently sound premise that training people without a way of directly applying that training is pointless, has led in the vast majority of organizations to many dubious projects being selected due to the combination of pressure to pick something to work on, and the lack of an easy way for operational managers, who tend to focus naturally on the day to day, to understand which would be the very best problem for their nominee to solve in the context of the organization’s strategic goals. The consequence of this rule is in practice that there is typically a relatively poor alignment between the projects being initiated and the agenda of the top management – with the consequence that whilst the managers often recognize the project as something worth doing it doesn’t make their top 3-4 priorities – which ultimately govern what they spend their time and energy on;
  1. The second is the consequence of the perception that naturally results from the act of creating a central Program Office to drive the OpEx program i.e. a) That they (the operational line managers) don’t own the OpEx program (it’s “owned” by the head of the staff function that’s leading the program) and b) It is ultimately not their job to deliver the OpEx program benefits. This perception is reinforced by the fact that in most organizations operational managers are incentivized to deliver ‘run the business’ operational outcomes i.e. more outputs for less cost. These managers will understandably then prioritize those actions that they believe will lead to these operational outcomes at the cost of projects – particularly if they can’t see a direct link to the outcomes they are rewarded for and/or if they believe there is a way to pull an alternative lever that will get results more quickly even if it’s not sustainable;

This helps explain, for example, why apparently sane managers would often rather shoot the alligators than drain the swamp e.g. throw people at chasing debt (quicker result, potentially more successful in the short-term) rather than understand and fix the root causes of delay in customer payments (takes longer, uncertain on breadth of impact even if more sustainable).

Of course, there are tactics that organizations can adopt with the ‘push’ OpEx as a program model to help lessen the likelihood of picking projects that managers won’t care about. These tactics include creating a project hopper process and ensuring projects are systematically evaluated against meaningful evaluation criteria and increasing the consequences of not working on/supporting improvement projects by raising the visibility of the money ‘left on the table’ to top management as projects are delayed. My own experience, however, as an OpEx program deployment lead for a major telecommunications supplier, is that these tactics ultimately have limited success as they are trying to move OpEx up a manager’s agenda when all the other pressures they face are naturally forcing it down the same agenda.

Hoshin Planning as a Strategy to create pull

The good news is that there is a proven approach that you can use to turn this situation on its head – one which naturally leads to the situation where senior executives are the principal drivers of OpEx activity and where improvement efforts are more focused on the real objectives of the organization.

Download the full How to Create Leadership Pull for Operational Excellence whitepaper here.

138-slide PowerPoint presentation
Our Strategic Planning Process, based on Hoshin Policy Deployment, provides an organization with proven and effective methods to develop, communicate and align its strategic goals, objectives, and initiatives. The Strategic Planning - Hoshin Policy Deployment Training Module includes: 1. MS [read more]

Do You Want to Implement Business Best Practices?

You can download in-depth presentations on Hoshin and 100s of management topics from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.

For even more best practices available on Flevy, have a look at our top 100 lists:

These best practices are of the same as those leveraged by top-tier management consulting firms, like McKinsey, BCG, Bain, and Accenture. Improve the growth and efficiency of your organization by utilizing these best practice frameworks, templates, and tools. Most were developed by seasoned executives and consultants with over 20+ years of experience.

Readers of This Article Are Interested in These Resources


Excel workbook
Hoshin Kanri process is a powerful strategy deployment methodology for defining long-range key entity objectives. These are breakthrough objectives that extend 2-5 years with little change. In addition, the Hoshin Kanri process does not lose sight of the day-to-day business measures required to run [read more]


 
Excel workbook
 
 
167-slide PowerPoint presentation

About Paul Docherty

Paul Docherty started his career in Marconi, where he held a wide range of senior management roles covering manufacturing, IT, sales, product development, project management, Operational Excellence and corporate strategy as well as having P&L responsibility for the growth of a regional telecoms equipment business. In 2001, Paul founded i-nexus with the goal of building cloud-based software that could help organizations successfully manage the complexity involved in translating their vision into reality. This software is now the "de facto" standard for large enterprises when it comes to driving execution of their strategy. Paul holds an MEng. in Computer Systems and Software Engineering from the University of York and an MBA from the University of Warwick.

, ,



Complimentary Business Training Guides


Many companies develop robust strategies, but struggle with operationalizing their strategies into implementable steps. This presentation from flevy introduces 12 powerful business frameworks spanning both Strategy Development and Strategy Execution. [Learn more]

  This 48-page whitepaper, authored by consultancy Envisioning, provides the frameworks, tools, and insights needed to manage serious Change—under the backdrop of the business lifecycle. These lifecycle stages are each marked by distinct attributes, challenges, and behaviors. [Learn more]

We've developed a very comprehensive collection of Strategy & Transformation PowerPoint templates for you to use in your own business presentations, spanning topics from Growth Strategy to Brand Development to Innovation to Customer Experience to Strategic Management. [Learn more]

  We have compiled a collection of 10 Lean Six Sigma templates (Excel) and Operational Excellence guides (PowerPoint) by a multitude of LSS experts. These tools cover topics including 8 Disciplines (8D), 5 Why's, 7 Wastes, Value Stream Mapping (VSM), and DMAIC. [Learn more]
Recent Articles by Corporate Function

  

  

  

  

  

The Flevy Business Blog (https://flevy.com/blog) is a leading source of information on business strategies, business theories, and business stories. Most of our articles are authored by management consultants and industry executives with over 20 years of experience.

Flevy (https://flevy.com) is the marketplace for business best practices, such as management frameworks, presentation templates, and financial models. Our best practice documents are of the same caliber as those produced by top-tier consulting firms (like McKinsey, Bain, Accenture, BCG, and Deloitte) and used by Fortune 100 organizations. Learn more about Flevy here.
  


OUR CORE OFFERINGS
Flevy Marketplace: Top 100
· Strategy & Transformation
· Digital Transformation
· Operational Excellence
· Organization & Change
· Financial Models
· Consulting Frameworks
· PowerPoint Templates
FlevyPro (Subscription Service)
KPI Library
Streams (Functional Bundles)
Flevy Executive Learning (FEL)
PowerPoint Services

FREE Resources

About Flevy
Management Topics
Marcus (AI-Powered Consultant)
Partner Program
LinkedIn Influencer Marketing
FAQ / Terms / Privacy / Blog
Contact Us: support@flevy.com



CONNECT WITH US!
       
TOP 100 TRENDING TOPICS
Acquisition Strategy
Agile
Analytics
Artificial Intelligence
Balanced Scorecard
Best Practices
Big Data
Breakout Strategy
Business Continuity Planning
Business Plan Financial Model
Business Transformation
CMMI
COBIT
Change Management
Cloud
Communications Strategy
Company Financial Model
Competitive Advantage
Competitive Analysis
Consulting Frameworks
Continuous Improvement
Core Competencies
Corporate Culture
Cost Reduction Assessment
Customer Experience

BROWSE BY FUNCTION
Strategy, Transformation, & Innovation
Digital Transformation
Operational Excellence and LSS
Organization, Change, & HR
Management Consulting

Customer Journey
Customer Service
Cyber Security
Data Privacy
Decision Making
Digital Marketing Strategy
Digital Transformation
Digital Transformation Strategy
Due Diligence
ESG
Employee Engagement
Employee Training
Enterprise Architecture
Growth Strategy
HR Strategy
Hiring
Hoshin Kanri
ISO 27001
ITIL
Information Technology
Innovation Management
Integrated Financial Model
Kaizen
Kanban
Key Performance Indicators

ADDITIONAL RESOURCES
Business Strategy Frameworks
Case Studies
Consulting Training Guides
COVID-19 Trend Data
Digital Transformation
Financial Advising Services (FAS)

Knowledge Management
Leadership
Lean
Lean Manufacturing
Logistics
M&A (Mergers & Acquisitions)
Manufacturing
Market Research
Marketing Plan Development
Maturity Model
McKinsey PowerPoint
McKinsey Templates
Operational Excellence
Organizational Change
Organizational Design
Performance Management
Post-merger Integration
Pricing Strategy
Process Improvement
Process Maps
Procurement Strategy
Product Launch Strategy
Product Strategy
Project Management
Quality Management


Free Resources
KPI Library
Lean Management
Lean Six Sigma Training Guides
Marcus Insights
Operational Excellence

Real Estate
Remote Work
Restructuring
Risk Management
Robotic Process Automation
SWOT
SaaS
Sales
Scrum
Service Design
Six Sigma Project
Social Media Strategy
Strategic Planning
Strategic Thinking
Strategy Development
Supply Chain Analysis
Sustainability
Target Operating Model
Team Management
Total Productive Maintenance
Value Chain Analysis
Value Creation
Value Stream Mapping
Visual Workplace
Workplace Safety


Product Strategy
Small Business Owner
Startup Resources
Strategic Planning
Strategic Planning Process
Value Innovation Strategy


© 2012-2024 Copyright. Flevy LLC. All Rights Reserved.