© Novus Via Consulting, LLC © 2006 Novus Via Consulting, LLC Creating a Process Improvement...

© Novus Via Consulting, LLC © 2006 Novus Via Consulting, LLC

Creating a Process Improvement Mindset in a

Silo EnvironmentAmerican Public Power Association

2006 Business and Financial ConferenceMinneapolis, Minnesota

Keith SetterholmPrincipal, Novus Via Consulting, LLC


So what the heck is a “silo environment”?


What are some characteristics

of a silo environment?


One example:Disconnects between functional areas


Today’s Roadmap

Thinking in Silos - "Well, here's another fine mess you've gotten us into." Systems thinking and the process mindsetRenewed urgency for improvement in the utility sectorIdentifying and characterizing current processesSelecting improvement opportunitiesWhat’s needed to sustain improvement


Why all the fuss about processes?

1. Quality was getting to be an old buzzword; we needed a new one?

2. People need something new to be confused about?

3. We were running out of paradigms?


If customers are really so important, we need a “clear line of sight to them”It’s hard to improve if you don’t know how the work gets done

Why we fuss about processes


The Visible Hand, Alfred D. Chandler, Jr.

TopManagement

Middle Management

LowerManagement

Supervisorsand so forth

An 1840s innovation for companies: the basic hierarchical structure of business enterprise.

A functional world


System Concepts

A purposeful system should have an aimA system is composed of components or partsThe components must interact in very special ways to accomplish the aimWe should attempt to optimize the systemSometimes a component is optimized at the expense of the entire system (sub-optimization)


A systems perspective is fundamental for enterprise-wide improvement:—The essential properties of a system taken as

a whole derive from the interactions of its parts, not their actions taken separately. Therefore, when a system is taken apart, it loses its essential properties.

—Because of this – and this is the critical point – a system is a whole that cannot be understood by analysis.

Russell Ackoff (emphasis added)

A Systems View


What are some Systems Thinking challenges for the public power

sector?


Process View of an Organization

Receiving Production Assembly Shipping

CU

ST

OM

ER

S

OUTPUTS

STAKEHOLDERS

Sett ingD irection

Seeking Future Opp ortun ities

Review in g Org anizational

Performance

Deploying Policy

SU

PP

LIE

RS

INPUTS

CORE PRODUCT AND SERVICE PROCESSES

Log istics M arketing Sales Adm in

LEADERSHIP PROCESSES

SUPPORT PROCESSES

SU

PP

LIE

RS

CU

STO

MER

S

22


Anatomy of a Process

Inputs Processes Outputs Customer

Process Data

Suppliers

Customer Needs/Data


Processes are Nested


Process tiers

Service Delivery

Contract Design Produce Deliver

A B C D


“Going Horizontal” – from here . . . to there . . .

Functions Drive Organization

CustomerS

ales

an

d M

ark

etin

g

Op

erat

ion

s

Fin

ance

Processes Identified But Functions Still Prevail

Customer

Processes Drive Organization

New Product Development

Customer Support

Planning

Customer

Customer Customer

Fin

ance

Op

erat

ion

s

Sal

es a

nd

Mar

ket

ing

Info

rmat

ion

Sy

stem

s

Info

rmat

ion

Sy

stem

s


Getting to Process . . .

Is primarily an organizational change challengeEach of the elements in the formula must be present to overcome resistance or inertia

D x V x F > RDissatisfactionDissatisfaction VisionVision First StepsFirst Steps ResistanceResistance


Project Charter

Title: Champion/Sponsor:

Problem Statement:

Business Case/Financial Impact:

Team:

Project Scope/Boundaries:

Process Start:Process Stop:In Scope:Out of Scope:

Milestones/Timeline: Scheduled ActualCTQ and Defect Definition :

Customer Impact:

Project Objective:(Process, Progress Measure, Direction, Baseline, Target, Deadline)

© Novus Via Consulting, LLC © 2006 Novus Via Consulting, LLC4

Need Charters to Avoid:

Lack of focus and directionDisagreements about the purpose and scope of the team’s work from both inside and outside the teamInadequate or poor support and resources to accomplish the taskMisunderstandings about the budget and resources allocatedLess than optimum selection of team membersIncreased likelihood that the team’s work will conflict or duplicate with another team’s efforts


Developing a ProjectBusiness Case

The project business case is essential to securing widespread agreement to pursue an improvement project. A sponsor works with the project lead to draft the business case. As project team members begin to define the project and develop meaning from the data they gather, their new knowledge may drive enhancements to the business case.A good business case addresses the current reality, the feasibility of achieving results, and projected benefits of success.


Current Reality - “Is it Real?”

Are customers experiencing dissatisfaction with your product or service?What is the impact of current performance on customer satisfaction and retention?How do we compare to our competition?What difficulty does this situation cause for employees and other stakeholders?How do you measure the impact of the problem?How long has this been a problem?Does this link to the current strategy

11


Feasibility - “Can We Win?”

Is this something we control? Influence?Have other fixes failed?Who else thinks this is a problem?Is this a manageable project?Are sufficient resources available to address this problem?

12


What are the benefits? – “Is it worth it?”

How will success be measured?What are the expected benefits of improved performance and their impact on the business?Will the benefits be long term? Short term?How will this project impact other areas of the organization?What is the strategic impact of this project?Why this now? Is the timing right to address this problem?

12


“Learning about a process” – Process Characterization

Learning About a Process

What are the problems in the process?

How does the process operate (flow)?

Who is the process owner, and who are the key stakeholders?

Who are the suppliers and what are their capabilities?

What measures will be used to monitor the process?

How is the process performing now?

Who are the customers and what are their needs?

What is the purpose and output of the process?

8 1

2

3

45

6

7

Questions 5-8 relate to the analysis of how the process works.

Questions 1-4 relate to the larger system or context of the process.


A Customer Support Process

Customer Support Line

CS

RS

peci

alis

tP

rovi

der

Cus

tom

er

Answers callCollects

Demographicinfomation

Discoveryquestions

Able torespond?

Transfers Call toSpecialist

NoProvides

information

Yes

Initiates call

Responds toCustomer

Providesinformation

Hiring Manager/ Team

RecruiterHR/Other

ManagementHR

AdministrationApplicant

Outside Providers

Submit requisition

Review and approve req

Develop recruitment plan

Implement recruitment plan

Receive, sort and route applications

Screen and select candidates

Coordinate and conduct phone

interviews

Log out non-viable candidates

Select and set up personal interviews

Conduct personal interview (s)

Log out non-viable applicants

Check references/ Arrange testing

Conduct tests and send results

Run employment ads

Report results/ decide and notify applicant of status

Prepare and extend verbal offer

Negotiate if necessary

Complete paperwork

Start work

(1) Requisition Submission

and Approval (8 days)

(2) Recruiting (14 days)

(3) Screening

(2 days)

(4) Interviewing

(16 days)

(5) Final

Screening (3 days)

(6) Offer

(21 days)

(7) Employee Transition (20 days)

Sub- processes

Prepare and send written offer

KEY

Activity

Cooperation

Example: “As-Is” integrated flowchart of Direct EmployeeAcquisition process


Knowledge is the Foundation

for Improvement

Business Survival

Customer Satisfaction

Quality, Price, Delivery

Process Capability/Performance

Level of Process Variation

Knowledge


What’s so significant about process variation?

25

Suppose we have two processes, A and B, which are call centers. Both are producing similar average results. In Process B, however, there are periods when the wait time is 16 to 17 seconds longer, over 60% greater!

28 Seconds 8 Seconds29 2130 2826 4227 3026 3331 4830 2426 18

28 Seconds 28 Seconds

Process A Process B


Process Variation – an example

25

Will your customer remember your average performance, or will she remember the “defects”?

0

10

20

30

40

50

60

Process A 28 29 30 26 27 26 31 30 26Process B 8 21 28 42 30 33 48 24 18

1 2 3 4 5 6 7 8 9

A

B


Strategy for Improvement

LSL USL USLLSL

Off-Target Variation

On-Target

CenterProcess

ReduceSpread

The statistical view of aproblem

USLLSL

LSL = Lower spec limit

USL = Upper spec limit

Large

The Nature of the Problem – A Statistical Look


Process Analysis

Process Analysis

Impact Look For Possible Actions

Time

Cost

Quality

• Delays • Illogical, inefficient sequence • Complexity

• Numerous sign-offs • Duplication of efforts • Excessive documentation • Bottlenecks and backlogs

• Rework/redo cycles • Unclear lines of responsibility • Documentation errors • Vague customer requirements

• Reduce • Change order • Simplify or automate

• Eliminate or process simultaneously • Eliminate • Eliminate/streamline • Collect data

• Prevent errors • Clarify • Simplify • Clarify, define

8


Improving flow and reducing waste

Do tasks in parallel Find and remove bottlenecks Minimize handoffs Move steps in the process closer together Reduce set up time Synchronize Cross train

12-13

Above all, Simplify!


Value of Process Management

A process management system is a fundamental source of sustainable organizational advantage. Business processes may be either significant assets or liabilities for an organization.Business processes are a source of identity and differentiation, and therefore are a source of specific competence in the same sense that strategy, products and structure are.


Components of Process Management

The role of Process OwnerProcess flowMeasures to collect, display and analyzeResponse planReviews


So what’s aProcess Owner, then?

A. The undisputed CZAR of the process?B. A fancy name for the boss of the

process?C. A person who has accountability for

the design and performance of the process?

D. Someone who has bought the process at an auction?


Leading and lagging measures

Lagging measure:—A results measure,

affected by one or more leading measures

Examples:—customer satisfaction—employee retention—# of babies

Leading measure:— A process measure,

affecting one or more lagging measures

Examples:— time to process

request— training $/employee— stork population


Process dashboard

0

5

10

15

20

Months

Min

ute

s

J F M A M J J A S O N D J F M AM J J A S O N D

Initial Wait Time

80

85

90

95

100

Months

Perc

enta

ge

J F M A M J J A S O N D J F M AM J J A S O N D

Percentage "OK"

0

20

40

60

80

Months

Min

ute

s

J F M A M J J A S O N D J F M A M J J A S O N D

Lab Time

0

20

40

60

80

100

Months

Min

ute

s

J F M AM J J A S O N D J F M AM J J A S O N D

Total Time


Process reviews

Common characteristics: —Conducted periodically for each major

process and sub-process—Process owner and process team

attend—The process dashboard is the major

item checked during the review—Quick hits, improvement projects, and

design projects are identified


The Dilemma of“Culture Change”

"We must not forget that culture as a concept was invented by anthropologists to describe those elements of a social system that were, in many senses, the least changeable aspects of that system“.

Edgar Schein


What we’ve learnedabout change –

“It is easier to act your way into a new way of thinking than it is to think your way into a new way of acting.”

Richard Pascale


Factors critical for success

Senior leadership takes calculated risks through a commitment in time and resourcesResults create renewable energyParticipants are energized, challenged, and rewardedPeople are engaged in meaningful work that makes a differencePeople’s contributions are valued and acknowledgedPeople are able to exercise their creative potential


Trust the People

“I know of no safe depository of the ultimate powers of the society but the people themselves, and if we think them not enlightened enough to exercise their control with a wholesome discretion, the remedy is not to take it from them, but to inform their discretion.”

Thomas JeffersonSeptember 28, 1820


When moving toa process focus...

Make a case for managing by processIncorporate key elements of process managementIt’s about change: D x V x F > RThink Globally, act locally


Act locally—Link to everyday work

Think globally—Create a Big Picture view linking

strategy and process

First Steps


Act Locally

Link to work you do every day and can controlTouch the customer to gain authorityIdentify the key components of work processes—Purpose, outputs, customers,

requirements stakeholders, process steps, measures, performance


Act Locally:things to remember

—Apply to daily work

—Keep managers involved

—You can’t improve without process knowledge and standardization

—Record your successes

— Stay aligned with overall organization strategy

— New skills are needed to integrate with people’s work

— Recognize and reward the behaviors that lead to managing processes


Think Globally

Create a process/system view of the organizationIdentify core, management and support processes and measures. Link to strategyInvolve top management


Think Globally:things to remember

— Involve Top Management

—The map is not the territory

—Can reveal significant, strategic issues

—People don’t always see where they fit

—Managers will question value

—Complex issues can slow down momentum

—Difficult to stay focused


Improvement never ends

P

DC

APlan

DoCheck

Act• Develop workshop • Revise a form

• Pilot workshop •Test revised form

• Change workshop • Use new form

• Evaluate workshop • Evaluate feedback/data

e.g.

e.g.

e.g.

e.g.

Plan the change

Implement the change on a small scaleCheck the results

Act on what was learned

27


Remember why we work

“Businesses need profits in the same way that any living being needs oxygen: We need to breathe in order to live, but we do not live in order to breathe.”

Arie de Geus

© Novus Via Consulting, LLC © 2006 Novus Via Consulting, LLC Creating a Process Improvement...

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