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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, Facebook, Boeing, Shell, Goodyear, Cummins, Johnson Controls, Hanes, Telefónica, Chubb, Discover, Stryker, Thales, Saint-Gobain, AGCO, to name just a [read more]
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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.
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Several 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.
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:
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.
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:
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:
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.
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.
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