Competition is fierce, especially during these challenging economic times, and companies have to improve performance of their processes.
Most companies adopt, or attempt to adopt, methods such as Lean Manufacturing, Six Sigma, Total Quality Management, Total Productive Maintenance, and a host of others. Unfortunately, studies show a poor record of success of sustaining reliable operations. Often, serious backsliding occurs. Or, if the implementation appears successful, a deeper look reveals that employees don’t always follow standard work, supervisors don’t know how to reinforce standard routines, and managers seem to prefer to move onto the next initiative. The forces against sustaining process improvements are strong and relentless. The result is cost and quality well below process potential.
This article describes the Work-Harder Syndrome, the root cause of backsliding. It then introduces the Pathway to Operational Excellence and the Business System; which together can create quantum-leap improvement in key operating parameters, assure quality and productivity daily, enhance the capabilities of front-line supervision and associates, and build a culture of operational excellence.
The Importance of Process Improvement
All industries are under intense financial pressure right now. Press releases frequently announce red ink, bankruptcies, and industry consolidation. Which companies will survive? Will the survivors’ return on shareholders’ equity actually exceed the return from a money market fund?
Today, perhaps more than ever, companies must improve safety, reduce total cost, meet shorter delivery cycles, and meet more stringent quality requirements. Even the more-competitive companies must improve. As Will Rogers said, “Even if you are on the right track, you’ll eventually get run over if you sit there.”
In today’s economic environment, companies adopt various approaches to balance the books. One approach is to downsize via slashing headcount, divesting non-strategic assets and closing plants. A second approach hopes to achieve cost and competitiveness improvement via merging or acquiring. A third approach is to become more competitive by improving the efficiency and effectiveness of the company’s processes.
While each approach has its place, the one that most improves a company’s ability to compete is the third – improving the company’s processes. Why is this? First, a company that operates its processes most efficiently has a clear advantage. For example, Southwest Airlines has simplified its processes for maintenance, spare parts management, training, and gate turnaround, allowing it to earn money while its competitors lose billions of dollars. Second, a company that has well-managed and understood processes can transfer its production and maintenance knowledge quickly to companies that it might acquire. For example, Alcoa applies its Business System to companies that it acquires to quickly improve their performance. Third, the downsizing approach is, at best, an effort to retrench. It buys time, and may even stop the red ink, but it doesn’t fundamentally strengthen the company.
The Challenge
Management of operating, maintenance, and office processes to achieve world-class levels of excellence is the best way for companies to compete. Recognizing this, many companies embark on various process improvement initiatives. They adopt methods such as Business Process Re-engineering, Total Quality Management (TQM), Small Group Activities, Total Productive Maintenance (TPM), Lean Manufacturing, Six Sigma, Open Book Management, Enterprise Resource Planning, Computerized Maintenance Management Systems, and a host of others.
As previously mentioned, there is a poor record of success. An Arthur D. Little survey indicated that only one-third of managers felt that their programs had any competitive impact. A McKinsey study found that two-thirds of corporate improvement programs grind to a halt because they failed to produce the hoped-for results. Research at MIT by Nelson P. Repenning and John D. Sterman discovered that despite spending nearly $100 billion during 1997 on implementing these types of methods, and notwithstanding dramatic success in a few companies, efforts to implement such methods generally failed to produce significant results.1, 2
It seems that research now proves what people in many, maybe most, companies have experienced. Each new method that comes around will soon pass – it’s just the flavor of the month. Many employees think that if they just keep their heads down and do what they’ve been doing, they’ll be all right – this too will pass.
There are problems with this type of thinking. First, if companies keep doing what they’ve been doing, they’ll get what they’ve been getting – and that is insufficient in this competitive environment. Second, it is wrong. Although it is true that many companies fail to achieve expected results, a number of careful studies now demonstrate that companies making a serious commitment to the disciplines and methods associated with what we call Sustained Reliable Operations, outperform their competitors.2, 3
Companies have at their disposal a host of methods that will improve performance. However, performance doesn’t improve. What is happening? Repenning and Sterman conclude that the ability to learn about these methods is not a barrier. There are a number of books, articles, and consultants available to help companies understand any of these methods. People in companies know what to do; they just can’t get it done. Or, if they can get it done, they can’t get it to last. The challenge is implementing these methods to create lasting improvement.
The Root of the Challenge – The Work Harder Syndrome
Why are methods to improve performance so difficult to implement; and why, if implemented, are the results so difficult to sustain? Solve this problem and unlock the key to sustainable competitive advantage.
Performance of a process depends on two factors: time spent working and the capability of the process to do that work. Process output can be improved by dedicating additional effort to work or to improvement — work harder or work smarter. Working harder produces immediate results; however, learning to work smarter produces the more sustainable improvement in output, and increases the capability of that process to produce higher output into the future. Working smarter requires time to study the process, understand problems, and implement changes. Studies show that achieving results on improving a relatively simple process, such as the yield of machines in a job shop, is on the order of a few months, while improving complex processes such as product development can take several years.4
Working harder to achieve the same improvement in output requires cutting back on planned maintenance, training, and other activities. Working harder actually causes capability to slowly deteriorate. Given competitive pressures and the need for quick results, pressure to work harder is immense, leaving little or no time to invest in working smarter.
How Successful Companies Beat the Challenge
As we noted above, the forces working against successful process improvement are strong and relentless. Still, some companies have produced dramatic results. How?
To combat these forces, successful companies must have equally strong countermeasures. Our study indicates that successful companies have a system. Let’s consider two companies that are voted among the most highly admired in business:
• GE’s Annual Report states that GE’s Operating System is its learning culture – in
essence the operating software of the company. Although GE is famous for Six
Sigma, what most people don’t realize is that the rest of the operating system was
a key ingredient for the success of Six Sigma at GE is.
• Toyota’s well-known Toyota Production System is the benchmark for
manufacturing operations. It includes tools such as Kanban and Single Minute
Exchange of Dies, but also includes less-noticed elements that engage employees
and turn them into problem-solvers who continually improve process performance.5
• Baldrige National Quality Award winners outperform the S&P 500 threefold. To
win, each of the companies had to demonstrate an interlocking set of processes
from understanding customer needs to engaging employees to operating practices.
In short, they had a system.
These companies organize and integrate various tools and methods into their own system. The tools and methods that make up these systems interact in a harmonious, orderly way.
A Recipe for Success
In this section, we describe key ingredients for establishing and operating a successful system, and apply them to a selected process. These ingredients help to break the forces resisting change. The first ingredient is a clear pathway to achieve excellence; the second is a system for managing and operating the business.
Pathway to Excellence
Companies need a roadmap to guide their managers and associates during the implementation of a methodology. Our experience suggests that following four key stages for implementing a major process improvement initiative.
Define the Opportunity — This stage defines the gap between current performance and industry benchmarks and company potential. Quantifying this gap provides the motivation for change. Benchmarking is a key method for defining the gap; however, comparisons to criteria such as Baldrige, Shingo, and others also provide useful insight.
Develop Leadership and Set Priorities — This stage starts with educating leadership on the approach and benefits of the methodology, be it TPM, Lean, Six Sigma, or something else. Then, leaders can determine the best plan for implementation and set goals for results. As the rollout begins, the leaders must take an active role in the application of the methodology and build their depth of knowledge. Eventually, all employees must achieve competency with the methodology. Employee competency is often overlooked, or cut short, due to the work-harder syndrome.
Mobilize the Organization and Create the Infrastructure for Change — This stage provides the horsepower to implement the change. The most effective approach is to assign employees full time to an improvement office. Ideally, these employees will represent a cross section of the organization. A full-time assignment assures that they will not be pulled into the urgent requirements of daily operations. Members of the improvement office become highly skilled with the technical aspects of the methodology and become skilled facilitators of change. They develop material to communicate and educate all employees and provide hands-on resources for implementing productivity improvements.
Implement the Methodologies and Sustain Results — Education and infrastructure are meaningless without results. An excellent approach to implementation is to select an initial application area. An initial application area is a critical process for the business that will serve as a model of the methodology’s application. The application must be thorough, not half way.
During this phase, apply the appropriate tools of Lean, Six Sigma, Maintenance and Reliability Systems (TPM), the Quality System, and exploit technology. Also during this phase, make the cultural changes necessary to sustain improved process performance. Later in this article, we describe Goal Deployment and Daily Management, systems that are important success factors during this phase.
Strive for Excellence — Many hurdles occur along this pathway. The root of these hurdles is the work-harder syndrome. Companies don’t have time to clearly define the opportunity, resulting in weak goals, little drive, and no “what’s in it for me.” Leaders don’t have time to develop their knowledge and skills, resulting in uncertain leadership. Companies don’t invest in an improvement office, resulting in too little energy available for improvement. Organizations within the companies do the minimum possible during the implementation (just enough to appear “on board” and to stay out of trouble), resulting in inadequate standardization and education on the improved procedures.
Remember, good is the enemy of great — being good enough is not good enough in today’s competitive environment. Make sure that all employees understand the best-in-class performance for their processes. Create a culture that strives to become world class.
The Business System
The second ingredient to break the work-harder syndrome is a clear, well-articulated Business System. This is often missed, and is the secret ingredient. There are three subsystems in the Business System. Although they are described separately, there is considerable interrelationship among them.
Leadership and Goal Deployment System — This system sets the direction for the company’s strategy, establishes and deploys goals and means to achieve the goals via an annual action plan, and assures accomplishment of the plan. Recognizing that resources for process improvement are at a premium, this system demands focus on only a very few critical objectives and unleashes resources to accomplish those objectives. This system is aimed at quantum-leap improvement.
Daily Management System — This system assures that daily output requirements are met and that process output reliably meets quality requirements. A core practice of the Daily Management System is the Standard Work Process. Recognizing the tendency for processes to go out of control or for performance to deteriorate, this process sets standards, assures the standards are followed, takes countermeasures when deviations occur, and learns from those mistakes. This system is aimed at standardization and incremental improvement.
Operating System
This system begins with an operating philosophy, such as Lean Manufacturing, and applies the principles of the philosophy to the company’s operations. Companies choose to produce in large batches or with minimal inventory. Companies choose to run to failure or to assure equipment reliability via autonomous maintenance and planned maintenance. The Daily Management System is what managers, supervisors, and team leaders do to assure that the operating system runs as expected. The operating system is how the operations are accomplished.
Many companies practice some parts of these three subsystems. Companies do set goals (or at least budgets), they do assure daily output requirements are met, and they have a way of operating even if it is poorly defined. However, few companies have consciously developed their Business System.
In our experience, three gaps are common:
• Goal deployment is diffused, with too many goals spreading resources too thinly.
• Daily management is only focused on meeting output requirements, and little or
no effort is placed on assuring that standards are followed.
• Operating system implementation is only surface deep.
As an example, how these gaps apply to maintenance processes is explored in the next section. However, the example could just as easily be for manufacturing or service operations.
An Example – The Reality for Maintenance Processes
Maintenance is often considered a necessary evil. Product has to be produced and delivery promises kept. Planned downtime for maintenance clearly decreases output while the equipment is down, but does it really result in more total output? Given the pressure to produce, the work-harder syndrome takes effect. The simple solution is to let equipment problems set priorities. The machine isn’t working so fix it — fast. If it isn’t broken, don’t mess with it. Unfortunately, maintenance costs are too high and equipment is unreliable. Something has to be done.
Imagine one manager in a company deciding to implement TPM. He or she can turn to many sources to learn about the 12-step process for implementation.6 The first steps prepare the company for TPM by educating, creating an organizational structure for promotion, setting goals, and developing a master plan. The next step begins implementation with a kick off. The remaining steps implement practices such as autonomous maintenance and planned maintenance, and improve critical equipment effectiveness. Learning about TPM is easy enough, just like Repenning and Sterman said it would be.
This manager learns that the first year of a typical TPM master-implementation plan is consumed by preparation such as establishing a committee, benchmarking, assigning coordinators, providing overview training, and developing a strategy. The work-harder syndrome and the urgent need to do something take control, and the manager decides to shortcut preparation. Now, let’s jump ahead in time and look at progress on one of the 12 steps — set up and implementation of autonomous maintenance. Some areas have accomplished an initial cleaning, placed autonomous maintenance boards, established inspection checklists and routes, and placed visual controls. Good job — even a casual observer can see the difference.
Now, move ahead six months and look into the same area. If our manager is from a typical company, you’ll still see some evidence of the autonomous maintenance effort such as the autonomous maintenance boards and the checklists. However, looking closer reveals that the inspection forms haven’t been completed for several months and the equipment condition is just about what it was before the initiative.
What caused this to happen? First, top management hadn’t aligned to use autonomous maintenance as a means to accomplish their business plans, specifically equipment reliability improvement. There was no real focus and no management follow up. In short, a goal deployment system wasn’t used. Next, we might observe that the supervisors in the area didn’t really understand autonomous maintenance other than that there were checklists that had to be completed. They didn’t know what to do to help assure that the operators followed the autonomous maintenance procedures. When another operator was assigned to the area, the supervisor didn’t have the time or the knowledge to provide training. In short, a daily management system wasn’t in place to assure sustainability.
Competitive pressures drive managers to press for immediate results that are most easily achieved by working harder. Little time is given to fundamentally changing the culture and establishing the new method as the way that work is accomplished. The result is a splashy rollout, some initial and visible results, and little else. Maybe they’ll try again in another year.
Why are methods to improve performance so difficult to implement; and why, if implemented, are the results so difficult to sustain? Solve this problem and unlock the key to sustainable competitive advantage.
Conclusions
Making process improvement is challenging. The pressure to do more with less engages the work-harder syndrome. In spite of the challenges, performance has to improve or the company’s survival is at risk. Here’s a guide for successful process improvement:
• Understand that the work-harder syndrome places powerful forces against
process improvement.
• Recognize the work-harder syndrome, believe that working smarter is better than
working harder, and focus on a precious few improvement goals.
• Follow the Pathway to Excellence. Each phase is necessary. However, don’t
complete each phase perfectly before moving onto the next. Instead, iterate by
adopting and repeating a learn-do-check cycle.
• Begin building a Business System. Start by setting and clearly deploying very few
goals for improvement and establishing methods for setting and sustaining
standard practices.
• Apply a methodology (e.g., 5S, Lean, Six Sigma, TPM) to make improvements,
but be absolutely certain to set clear standards during implementation of new
procedures.
• Put follow-up audits in place to review progress on the plan and to assure that
standards are followed.
• Develop competency in the front-line associates and supervisors so that the
system becomes self-sustaining.
• Expect to work incredibly hard.
Keep the payoff in sight – an operation where things gone wrong are a distant memory and the operations run smoothly.
Mike Bresko is a Lean Six Sigma Master who coaches and instructs practitioners, front-line associates, and executives; and guides clients to accomplishing and sustaining operational excellence. He has performed both Lean Six Sigma as well as Maintenance and Reliability conversion projects; and is an experienced senior-level executive who is also a hands-on practitioner of process excellence. Mike has 30 years of industrial experience, 15 being at Alcoa and the last 13 being with GPAllied or its parent. While at Alcoa, Mike held positions in product engineering, strategic planning, internal consulting, and as President, Alcoa-Zepf and Global Manager, Packaging Equipment where he took a hand-on approach to slash product lead times 60% and product development times 40-60%, and improve the reliability of Alcoa’s packaging equipment. While a consultant, Mike has worked with a wide variety of industries from automotive to smelting, insurance, and high tech. Mike has benchmarked world-class companies and published papers or books on 5S, Goal Deployment, Lean Transformations, Lean Reliability Culture, Daily Management, and Reliability Excellence. He holds B.S. and M.S. degrees in Civil Engineering from Carnegie-Mellon University and an M.B.A. from the University of Pittsburgh. Mike is currently Principal Advisor at GPAllied, and can be reached at 206-484-0816 or mbresko@gpallied.com
References
1. N. P. Repenning and J. D. Sterman, “Nobody Ever Gets Credit for Fixing Problems
that Never Happened: Creating and Sustaining Process Improvement,” Sloan
School of Management, MIT Center for Innovation in Product Development, work
reported under NSF cooperative agreement.
2. G. Easton and S. Jarrell, “The Effects of Total Quality Management on Corporate
Performance: An Empirical Investigation,” Journal of Business, 2 (1998) 253-307.
3. K. Hendricks and V. R. Singhal, “Quality Awards and the Market Value of the Firm:
An Empirical Investigation, “ Management Science, 3 (1996) 415-436.
4. A. Schneiderman, “Setting Quality Goals, “Quality Progress,” April (1988), 55-57.
5. S. Spear and H. K. Bowen, “Decoding the DNA of the Toyota Production System,”
Harvard Business Review, September-October 1999.
6. C. J. Robinson and A. P. Ginder, Implementing TPM: The North American
Experience, Productivity Press, 1995 ISBN 1-56327-087-0.
Don't Work Harder, Work Smarter.pdf
