How High, How Far and How Fast —Assess Your Organization

Putting best practices into place is substantially more difficult than just talking about them. The reason for this can be tracked back to the readiness of the organization to change into a high performing entity. While many individuals within the organization may be ready to make the change, it will not be sustained and may not even happen at all without the organizational unit being ready for the change.

In an article written by MIT System Dynamics Professor John Sterman and Nelson Repenning, published in the California Management Review in 2001 ("Nobody Ever Gets Credit for Fixing Problems that Never Happened"), the authors discuss the impact that the structure of a system has on the behaviors within that system. The actions of individuals within a system cannot overcome the fundamental nature of that system. As stated by Sterman and Repenning:

The attribution of a problem to the characteristics - and character flaws - of individuals in a system rather than to the system in which they find themselves is so pervasive that psychologists call it the "fundamental attribution error"

How do you assess your organization's readiness for change?

In the early 1990's, a System Dynamics computer model was created to make sense of extensive benchmark data that had been gathered by DuPont. While providing key insights for the group who developed the model, it was a completely ineffective tool for sharing those insights with others in the organization. The desire to share these insights widely across the organization led to the development of the first and second versions of The Manufacturing Game®.

Over the last twelve years, as a result of the broad experience gained working in a variety of industries, we have made significant enhancements to the original model.

By capturing the lessons from these experiences, we have made both the model and the workshop more robust. The model has recently been modified so that it can be used to help companies determine their readiness to change. An assessment can help a company determine which Stable Domain is achievable by their organization. While most people would like to achieve the Precision Domain or consider themselves to be pushing toward World Class, they might discover that their organization is only ready to go to the Planned Domain and that they will need to have other initiatives and change the mind set of their people to achieve higher domains.

Find key leverage points through an assessment.

There are various key leverage points within the best practices that are unique for each organization. Examining data from a specific site such as performance differences in practices, existing management policies and change initiatives effecting the site will help to identify those key leverage points. This examination can provide insights about where to find the best opportunities to gain leverage for lasting change.

Although there are many leverage points, the key is in deciding which can have the highest value for a given organization with their current state. By making this determination up front, the trial and error approach to change can be avoided.

A good assessment predicts the impact that the various practices and strategies will have on the level of performance of your organization. It will provide information needed to determine not only what level of performance your organization can achieve, but also, how far and how fast your organization can accomplish that change.

A good assessment will clearly and concretely identify your site's high leverage points and also predict which Stable Domain is achievable by your organization. The insights gained from an assessment will provide the information necessary to develop a very concrete plan of action that takes advantage of high leverage points and eliminates low leverage activities.

The level of ownership felt by employees is a key factor in achieving the performance of the best practice companies. Our definition of ownership is "people's willingness to initiate and participate in proactive improvements". All of the technical tools to increase reliability alone do not help the reliability of the plant.

It is the use of these tools by the employees that achieves the results. If no one has the will to use the tools on a daily basis, reliability will decrease. Preventive Maintenance and Predictive Maintenance are great tools, but these and other Best Practices assume, as pointed out by W. Edwards Deming, that work systems are uniform and under control. We have found that the defect elimination culture creates that type of control in the minds of the employees if a systems approach is taken.

The use of cross-functional teams seems to create the total systems perspective needed.

Ownership involves three elements: responsibility, authority, and accountability. Defect elimination Action Teams are a great way to instill this important factor into an organization.

"Company culture" and "culture change" have become tainted words in today's vocabulary. Often because the terms have been used to force change that did not have an apparent business focus.

A definition of "culture" found in the dictionary is: Culture is the intangible set of beliefs, behaviors, and assumptions that guide people's day-to-day activities. With this definition in mind, it is easy to understand that if the level of employee ownership is low, the day-to-day activities of these employees can be unfocused, uninspired and nonproductive.

Use metrics to monitor progress.

As a company begins implementing the identified key leverage points to improve organizational performance it is just as important to consider the metrics that will be used to gauge progress. Without some measurable framework to note the improvements being made, it would be easy to lose heart, and let the improvement effort die.

We have found that the framework of Goals, Means and Consequences is valuable in evaluating the use of metrics to monitor progress in achieving the sought after best practices along with a higher domain. In general organizations get confused about which metric to drive. As your journey in the improvement effort is undertaken, it is important that the metrics used change as you begin to make progress. In the beginning of an improvement process, it is important to clearly state the goals. People must see these goals and understand them in order to also see the value of the means and create the right expectation for the consequence variables.

The figure below depicts the relationship of the three categories. In the Precision Domain, the level of attention to detail can only be motivated

by service to a noble goal. The means metric is used to adjust the process to achieve the goals. These metrics need to change as the organization approaches different domains. For example, a priority system is very important in the Reactive Domain because the failures are random, and it is important to choose the best leverage jobs to work on when the work peaks.

It also provides a way to keep track of the backlog of things that need to be done when the workload wanes. Some idea of the goal measurement for reactive maintenance, such as uptime of equipment, helps focus the effort, as long as you are in the Reactive or Planned Domain as an organization. A better metric for evaluating the Precision Domain is the number of work orders, because that correlates with the number of defects being generated.

Another important factor is the form of the metrics. It is better to measure the rate of the work instead of the static portion such as the stock of backlog. The improvement will be detected in the trend of a flow much faster than the change in the backlog.

The backlog integrates the history of the flow but not the trend. Backlogs are useful in determining the need for more resources but do not depict the dynamics of the organization. An organization that is the poorest in its industry can be at the top in a couple of years if they get on a 10% learning curve.

In summary, it is important to keep in mind the value of assessing your organization to discover the high leverage point best practices. Understand that the system or organization is the focus of the change. You must establish a set of metrics understood by the employees to determine the progress that is being made. With these elements in mind, your site is in a position to move to a higher domain, and in the process, become the organization it is capable of being.