3
Driving Business Improvement
Purpose
To deploy a comprehensive Business Improvement approach utilizing a full suite of improvement methods to drive business results to Class A performance. The approach is deployed in support of behavior change and recognizes the hierarchy of process, the hierarchy of performance measurement, and their ownership.
Positioning
Business Improvement, aligned to business maturity, includes all recognized methodologies appropriately structured and deployed to drive sustainable performance improvement, drive behavior change, and secure world-class business performance. The approach enables the application of Continuous Improvement tools, Lean methodology, and Six Sigma and the utilization of an Agile capability to manage unforeseen business and short-term opportunities. Ownership of the methods has been established, enabled through education, and their use is guided by a clear understanding of the Strategic Plan.
The sequence of this chapter follows the maturity journey; early improvement techniques are addressed in the opening definitions building to more mature techniques later in the chapter.
Class A Business Improvement is the successful and sustainable improvement of process and business performance through their broad application throughout the organization. The elimination of failure and waste and the resulting process velocity across all business processes support cost-effective Agility.
Chapter Content
- Driven by Strategy
- Integration
- Insights
- Ownership and Involvement
- Continuous Improvement
- Velocity throughout Business Processes
- Responsiveness to Customer
- Process Variation
- Knowledge Capture and Management
- Asset Management
- Business Transformation and Innovation
- Behaviors and Competencies
- Performance Measurement
Driven by Strategy
1. The Strategic Plan Has Been Expanded to Include a Series of Driving and Supporting Roadmaps. These Roadmaps Direct the Improvement Activities, Their Interrelationship, Their Timing, and Their Expected Contribution to Business Excellence.
a. Programs and Projects
Programs and projects have been prioritized based on the Strategic Plan and roadmaps. These are used to develop and deploy required competencies, improvement tools, and techniques.
b. Ownership and Resource Assignment
Ownership of the Business Improvement Roadmap, programs, and projects has been defined, and resources have been assigned.
c. Review of Progress
The Leadership Team reviews progress against the Business Improvement Roadmap regularly. The review includes progress in terms of programs, projects, timing, resource requirements, budget, and benefits realization.
Integration
2. Business Improvement Activities are Coordinated Through Integrated Business Planning. Employees Can Relate Improvement Programs and Projects that They are Involved in to the Company's Vision, Mission, Strategic Plan, and Roadmaps.
a. Integration
All improvement plans are reviewed through Integrated Business Planning. All known resource requirements and expected benefits are included in the current Integrated Business Plan.
b. Communication on Progress
Visible performance measures are used to maintain awareness of Business Improvement activities and progress toward the Strategic Business Objectives.
c. Employee Understanding
Employees understand how their specific improvement programs and projects contribute to the vision, strategic business objectives, value proposition, competitive priorities, and roadmaps of the business. This clarifies their individual roles and contributions to the realization of the Strategic Plan and Business Improvement objectives.
Insights
3. Ongoing Competitor Analysis is Continuously Assessed to Ensure a Competitive Advantage is Maintained. Performance Levels are Established, and the Business is Focused on Attaining Sustainable Class A Levels of Performance.
a. Driving and Supporting Business Processes
The driving and supporting business processes have been determined and defined. Their relative contributions and relationships to overall business performance and the competitive priorities are understood. Process owners drive their performance to Class A levels.
b. Class A Performance
Class A performance has been researched and defined in terms of both business sector and business processes. This information has been used to set internal goals and define Key Performance Indicators.
c. Competitor Analysis
Formal analysis of competitor capability and performance levels is conducted regularly. This information is used to identify competitive opportunities, which are integrated into the Business Improvement priorities.
d. Strategic Business Objectives
The Strategic Plan and Strategic Business Objectives are deployed and owned.
4. Benchmarking is Carried out Across Business Processes. Process Owners Use this Knowledge to Drive Business Improvement.
a. Benchmarking
Benchmarking activities are routinely undertaken; process performances are benchmarked against best-known performers internally and from all sectors externally.
b. Sharing and Sustaining
There is a formal process for implementing, sharing, and sustaining best practices within the business. The knowledge obtained is stored and readily accessible.
c. External Business Critiques
External visits, assessments, and audits are used to identify and understand best practices to enhance existing Business Improvement plans.
d. Business Excellence and World-Class Performance
An understanding of Business Excellence and World-Class Performance is maintained via education, academic references or papers, and relevant associations. This knowledge is used to drive internal targets higher.
Ownership and Involvement
5. Ownership of and Accountability for Process, Data, Information, and Assets are Assigned to People and Teams for Maintenance and Improvement.
a. Improvement Agenda
There is widespread appreciation for Business Improvement, and employee teams can articulate the need for ongoing improvements.
b. Team Ownership Naturally Assumed
Teams take ownership of their working environment. They visually display clear expectations and present their shared and ongoing achievements.
c. Team Ownership
Team-based ownership of the working environment and improvement activities exists, and processes have been reorganized to enable colocation of the team.
6. Ownership and Accountability are Clear and Drive Business Improvement.
a. Business Improvement Ideas
Time is regularly allocated for teams to analyze future business requirements and develop ideas to ensure the success of strategic roadmaps.
b. Visibility of Program and Project Ownership
A comprehensive structure of improvement activities is in place, maintained, and communicated. This provides visibility of both ownership and the level of involvement in Business Improvement initiatives.
c. Team Ownership
Teams implement all appropriate Business Improvement initiatives to align with business goals and timescales.
Continuous Improvement
7. There is a Culture of Continuous Improvement.
a. Company-wide Involvement
All employees actively drive Business Improvement activities individually and as part of a team.
b. Strategic Alignment
All initiatives demonstrate a clear relationship and expected contribution to the Strategic and Business Plans.
c. Customer Value
The value anticipated by the customers is known throughout the organization, and Continuous Improvement is aligned to systematically deliver this understanding.
d. Teams
Teams are the organization's norm.
e. Empowerment
Teams understand their level of authority and know at what point to seek management involvement or authorization.
f. Visual Management
Visual management techniques are deployed at all levels in the organization.
8. An Improvement Framework Guides Business Improvement.
a. Structured Communication
Standard templates are used to capture and communicate Business Improvement projects throughout the organization along with the realized benefits.
b. Collaborative Partnerships
Partnerships have been formally established and are used to drive mutual Business Improvement projects and benefits. All Business Improvement initiatives are communicated through shared measures and are used to signal successful completion and ongoing maintenance of the new standards.
Velocity Throughout Business Processes
9. The Business Deploys Lean as a Means of Delivering Customer Value, Attaining Class A Levels of Process Velocity to Support Agility.
a. Value Chain
Consumer and customer value has been systematically communicated through the business and Supply Chain. Each Supply Chain Node can determine its delivery response in accordance with this understanding.
b. Value Stream Mapping
Value Stream Mapping is used to determine where waste can be eliminated to drive velocity improvements and reduce costs. Elimination of waste and velocity improvement of all core processes are measured and tracked to demonstrate improvement.
c. Velocity
Class A Velocity has been determined, and core process teams set improvement objectives accordingly.
d. Lean Deployment
Lean principles are shared throughout the organization, and this common knowledge is used to enable a cost-effective response to business needs, internally and externally, through the systematic reduction of the 11 types of waste such as the waste of overproduction, unnecessary motion, and of defects.
10. The Concept of Pull Has Been Understood and Appropriately Applied When Necessary in the Business.
a. Pull from Customer Demand
Pull from customer demand is a competitive advantage and is a means of contributing to the Value Proposition. This understanding has been effectively applied and the resultant benefits realized.
b. Kanban
Techniques such as Kanban are used to drive replenishment in processes where appropriate. Where Kanban is used, people can articulate calculation methods and understand that the Kanban quantity is itself waste and, hence, a further opportunity for improvement. Where Kanban is used, its rules are defined and all violations measured.
c. Planning
Planners understand and can articulate the approach and procedures for pull from customer demand and apply this understanding when needed.
Responsiveness to Customer
11. The Business Has a Competitive Advantage, from Rapid and Cost-Effective Responses to Customer Requirements, from Flexible and Agile Processes and Teams.
a. Agility
Planned and cost-effective Agility is enabled throughout the organization, delivering the promised responsiveness.
b. Systematic Agile Business Improvement
Systematically, improvement projects increase flexibility and the business's ability to effectively respond to change.
c. Supply Chain
Business Agility is also applied throughout the Supply Chain, extending the involvement to include customers and suppliers.
12. The Business Has the Agility to Reconfigure Its Organization and Processes. Through Modeling and Analytics, this Reconfiguration is Done to Stimulate Or Respond to Changes in the Marketplace to Secure Improved Competitive Advantage.
a. Modeling and Analytics
Scenarios and analytics are used to support a system-based modeling capability to identify further business and Supply Chain recommendations to be evaluated through Integrated Business Planning.
b. Business, Product, and Service Agility
Planned Agility enables a cost-effective response to unforeseen marketplace opportunities or changes to immediate customer needs with the supply of product or services but, at the same time, delivering published plans.
Process Variation
13. Formal Processes to Reduce Variation are Applied Throughout the Business Using Analytics and Optimization Tools that Drive Business Improvement Beyond What the Human Can Manage.
a. Measurement
Business and process-based measurements are in place. Measures are used to provide feedback on performance and to drive improvement through the reduction of variation.
b. Variation
Process variation is measured and is continuously being reduced. Statistical problem-solving techniques are deployed to reduce variation of activities toward Six Sigma levels of performance.
c. Statistical Process Control
Process control and consistency are fundamental to quality and performance improvement. Statistical process control is understood and used throughout the business to maintain control and prevent process failure.
d. Root-Cause Analysis
Root-Cause Analysis and associated tools and techniques are used extensively throughout the business. The causes of failure and deviation are routinely identified, and Root-Cause Analysis is used to determine and implement permanent corrective action.
Knowledge Capture and Management
14. Knowledge and Learning are Formally Captured and Integrated into Business Processes. The Evolving Knowledge Database Enables an Analytics Capability.
a. Knowledge Capture
A process exists to capture and disseminate knowledge. This process is owned and reviewed to ensure effectiveness. Knowledge is captured from both success and failure. All knowledge obtained is stored in the appropriate areas of the business's knowledge database.
b. Sharing Learning
Learning from Business Improvement activities is captured and naturally shared. This sharing and capturing of knowledge enable the development of an analytics capability.
c. Education
Employees are encouraged to attend relevant educational courses and external events. The importance of sharing and applying the learning from such activities is understood.
d. Knowledge Availability
To gain knowledge from customers, suppliers, consumers, competitors, the Internet, the media, TV, books, white papers, universities, and other bodies of knowledge is recognized as essential. However, the knowledge acquired must be common, shared, and applied through teams to ensure employees, at all levels, share the same understanding and use.
e. Benchmarking
Benchmarking, internally and externally, is routinely done to formally identify and share knowledge, capabilities, and applications.
15. Employees at All Levels Willingly Transfer Their Knowledge into Business Processes and System Databases, Enabling Analytics.
a. Knowledge Sharing and Capture
Knowledge is recognized as a competitive advantage, which is widely understood and accepted. People actively capture knowledge and transfer it into processes and systems.
b. Analytics and Business Data
The business and organization apply analytics to business data to describe, predict, and improve business performance. Areas within analytics include, for example: predictive analytics, prescriptive analytics, business decision making, inventory optimization, marketing optimization and marketing mix modeling, price, and promotion modeling.
Asset Management
16. There is a Formal Management Process in Place to Control and Protect All Business Equipment.
a. Equipment Ownership
Ownership of business equipment is clearly defined. The owners proactively assure the condition, performance, and improvement of their equipment.
b. Asset Control
All business equipment is subject to regular auditing to confirm existence, operational status, and inclusion in financial records.
c. Planned Maintenance
A Planned Maintenance Program with an 18- to 24-month horizon is in place for all productive equipment and plants, based on demonstrated, preventative, and predicted data. Adherence to the Planned Maintenance Program is measured and routinely reviewed. Planned Maintenance activity is related to equipment reliability on an ongoing basis. The relationship is used to determine future maintenance plans.
d. Business Systems
Performance of the Business Systems is monitored, and findings are routinely reviewed for action.
e. Total Productive Maintenance
Key equipment is subject to Total Productive Maintenance. All relevant employees are involved, and training programs exist to develop the associated skills and competencies. Overall equipment effectiveness is measured and improved.
f. Reliability-Centered Maintenance
“Mean time between failure” and “mean time to recover” are key business performance measures. Technical maintenance activities are prioritized using these measures. An associated improvement plan is in place, and Continuous Improvement in both areas can be demonstrated. The Maintenance Team, in accordance with the stated equipment reliability, manages inventory of critical spares.
Business Transformation and Innovation
17. Business Transformation Programs to Drive Step-Change Improvement are Proactively Identified Through Innovative Thinking and Execution.
a. Strategic Alignment of Innovation
The Leadership Team proactively identifies transformational opportunities that support the Strategic Plan of the business. The Leadership Team recognizes the importance of idea generation and resulting innovation and enables resources for this purpose.
b. Ideas and Innovation Analysis
A formal process ensures emphasis, and time is allocated to identification and evaluation of relevant transformational opportunities. Risk mitigation is used to protect those that may fail.
c. Evaluation Process
A formal process for evaluating, selecting, and prioritizing potential ideas and their impact on the Strategic Plan is in place.
d. Implementation and Progress
An implementation methodology is in place that drives successful implementation of Business Transformation. Progress is reviewed through Integrated Business Planning.
e. Third Parties
Third parties are used to critique improvement programs and provide an external contribution to business process idea generation and innovation.
f. Involvement
All areas of the business are encouraged to contribute to step-change improvement through innovative thinking.
Behaviors and Competencies
18. There is a Commitment to Business Excellence and a Passion for Sustainable Business Improvement.
a. Leadership for Continuous Improvement
The Leadership Team is fully supportive of Continuous Improvement activities.
b. Knowledge-Based Decisions
Decisions are based on the availability of knowledge derived from Business Scorecards, data warehouses, and modeling that uses analytics.
c. Ambition
Leadership continuously articulates an ambition to be the best within its chosen proposition. Milestones are used to stage the journey, and everyone understands the need for Business Excellence. Leadership is continuously seeking new opportunities to set higher targets and goals. Continuous Improvement and Business Transformation activities are routinely deployed throughout.
d. Learning Environment
Management seeks opportunities to learn new tools and techniques; ideas are reviewed and trialed. Learning from others is a strength.
e. Process Knowledge
Business process knowledge is essential. The teams, which may include suppliers and customers, work together to transfer knowledge and understanding for improvement.
f. Research and Experimentation
Resource investment for both external and internal research and experimentation activities is made available on an ongoing basis. Investment in research is aligned to competitive priorities and the Strategic Plan.
g. Rewards and Recognition
Individuals and teams are recognized for their contribution, and team success has become the focus.
h. Ownership and Accountability
Individuals and teams have the confidence to make decisions and are held accountable. Potential failure is mitigated through self-managed team ownership. Sponsorship is demonstrated by the Leadership Team.
i. Communication
Communication is a priority, is continuous, is reinforced, and is appropriate to the target audience to ensure company-wide understanding.
j. Decisiveness
In the face of uncertainty, decision making is accelerated because of clear lines of authority.
19. Competencies; Unique Skills, Talents, and Proficiencies Ensure Individual, Team, and Business Success.
a. Leadership
There is effective application of Change Management skills.
b. Facilitation and Deployment
There is clarity about Continuous Improvement tools and techniques, their application, and their value to the organization. This should include competency in problem solving, lean/systemic thinking, process thinking, analytical skills, and structured communicating.
Performance Measurement
20. A Balanced Measurement Hierarchy Defines the Link of Strategic Business Objectives to the Business Scorecard and Core Process Measures.
a. Structure
Measures are integrated, are consistent, and drive business performance to deliver the Vision, Mission, and Strategic Plan. Measures are reviewed for relevance, accuracy, tolerances, and targets as performance improves.
b. Balanced View
The Business Scorecard contains extracts from the Measurement Hierarchy that enable a balanced view of business performance.
c. Hierarchy
A Measurement Hierarchy is used to show the linkage of measures from the top to the bottom of the business. The hierarchy has been communicated and is widely understood throughout.
d. Key Performance Indicators Understood
Key Performance Indicators are clearly understood, as key defines it as an important measure, performance equals a formula to measure performance, and indicator defines the current performance against the target that the Key Performance Indicator is focused on achieving.
21. Process Measures are Included in the Business Scorecard to Drive Improvement of Core Business Processes and Supporting Activities.
a. Velocity Ratio
Velocity Ratio is used as a key measure for all core business processes. The company has a stated objective to increase core process velocity.
b. Agility
Process responsiveness is measured and improved for those processes or activities where process Agility is required as a competitive priority.
c. Process Improvement Activity
The number of improvement ideas being both generated and implemented is being continuously measured and is consistent with objectives.
22. Business Performance Measures are Included in the Business Scorecard to Drive Performance Improvement, Support Business Decisions, and Set Priorities.
a. Cost Benefits
The impact of improvements is reflected and monitored in terms of cost benefits. Optimizing value-added activities is providing simultaneous benefits from growth, productivity, cash, and margin.
b. Added Value
Added Value is being measured on an ongoing basis and shows an improving trend.
c. Improvement Efforts Deliver Results with Increasing Reliability
Measures such as plan attainment, assumptions accuracy, Demand Planning, product/service development, Supply Planning, and inventory optimization are actively used by the appropriate part(s) of the organization to drive improved results.