This week is Lean series week at Beyond Lean. The blog posts will center around strategy deployment (or Hoshin Kanri). Justin Tomac, Chad Walters, Karen Wilhelm and Tony Ferraro will be guest blogging. This will give you different perspectives from on strategy deployment all right here at Beyond Lean.
Today’s post is from Tony Ferraro, on behalf of Creative Safety Supply based in Portland, OR (www.creativesafetysupply.com). Tony strives to provide helpful information to create safer and more efficient industrial work environments. His knowledge base focuses primarily on practices such as 5S, Six Sigma, Kaizen, and the Lean mindset. Tony believes in being proactive and that for positive change to happen, we must be willing to be transparent and actively seek out areas in need of improvement. An organized, safe, and well-planned work space leads to increased productivity, quality products and happier employees.
There are many businesses out there proposing new and creative ideas but somehow lack the guidance and direction to make a good product idea a successful reality. What is it that curbs these business ventures? Is it funding? Is it technology? Or is it a true sense of guidance and leadership? In most cases, the unfortunate truth is that a great product idea or truly unique business plot will flounder and fail without a strategic direction and strong force of leadership helping to guide business objectives. One of the ways to meet this need is to implement the principles of Hoshin Kanri or simply Hoshin Planning. Hoshin Planning is a Japanese term that basically means “strategic planning.” This type of planning strives to really involve all employees in the objectives and improvements within the organization. Top levels of management make it a priority to assure that that all employees feel involved and that they are working as one big team towards a common goal. With this mindset there are no winners or losers within the company, it is purely a team effort and everyone participates and is accountable to help in meeting the identified objectives. The need for continuous improvement is also a highly valued component in this type of planning.
Possible Hoshin Objectives
One of the first and most important steps within Hoshin Planning is to identify the areas in need of improvement, and since Hoshin Planning is about setting clear business objectives it is important identify which objectives are most valuable to the livelihood of the business. Some common continuous improvement objectives include: increasing production, improving current market share along with new market sales, reducing raw material costs and also reducing direct and indirect labor costs. The reason this step is so vital is because everything can’t be tackled at once, think of the analogy that the “big rocks” must be taken care of first in order to start focusing on the “little rocks.”
Organizing Objectives for Clear Measurement
Unfortunately, objectives are merely a list of far-fetched desires if they are not organized properly for action. Sure, a group of leaders can set aside some time to devise a list of company objectives and write them neatly upon a fancy sheet of paper. However, without a concrete plan to guide the objectives the objective planning session would be deemed useless, and the paper may even end up getting lost in someone’s briefcase only to stumble upon it again weeks later. Instead, once objectives are identified they need to be taken seriously and should be categorized and organized for efficiency. For example, once a group of leaders has clearly identified the objectives they would like to implement into the business, they could categorize them into four different types such as improvement projects, specific action projects, 3-5 goals, and annual objectives. By doing this, top company leaders as well as employees will be able to visualize the different objectives and goals and really understand the time frames behind them as well. Essentially this sets the stage for developing the approaches needed to help pursue the stated objectives and goals when moving on to the strategy development phase of Hoshin Planning.
Hoshin Planning is really a dynamic and multifaceted form of strategic planning which involves all areas of a business. However, in order to reach optimum effectiveness all staff should be on board and involved. With that said, and in conjunction with the right objectives, Hoshin Planning can be a huge asset to any business looking to improve overall company performance.
One of the books that were recommended to me a couple months back was a book called “Scorecasting”. It’s sort of Freakonomics meets sports statistics tome. Without stealing the thunder of the book and getting too far in to the details, two points stood out to me as they could relate to other business data.
The first interesting point was the historical data showing umpires and officials to make fewer borderline calls late in games. In a simple way of saying it, they were more likely to err on the side of not making a call that should have been made than in making a call that shouldn’t have been made. The second piece that related to me was the chase of round numbers. Again in simple terms, the rate of people who cross a round number (multiples of 5, 10, 100, etc) is much higher than those just under the line. (The book offers a much better, more detailed description of these phenomena).
In most cases, the people who are a part of these activities aren’t attempting to undermine or “game” the system. It seems to be more of a reflection of overall patterns of human behavior. Where this gets interesting to me is in wondering how this behavior may influence business performance or metrics. I don’t necessarily mean that a company may “manage” its earnings to match Wall Street commitments. I am thinking more on a micro level of individuals changing their behavior around a performance level (efficiency, yield, throughput, etc.) or in how they select samples to measure. Is the data that we are able to gather influenced by people who may not want to be the “cause” of attracting any extra attention?
The answer to that question, I know, is that the data absolutely is subject to human influence. Unless the process is fully automated, at some point you have individuals who are responsible for gathering and recording data or issuing go/no-go decisions on quality or pressing the start and stop button on the machine. Any of these folks can make the decision that ultimately influences what we see. Does it make a huge difference? I don’t know for sure and I have no clue on how to filter out the data collection process for every set of circumstances. Ultimately it comes back to looking at data with a critical, but open mind. Sometimes the toughest part of dealing with data is trying to know what it does and doesn’t say. That may mean that the measurement system is skewing your data in ways you never expected.
Just for the reader’s information, I’m going to start a run here for a couple weeks about problem solving. Some of these points I have touched on in other avenues, but these seem to fit as their own mini-series. This isn’t a “How To”, but more of ‘Some of The Stuff They Don’t Tell You’. Pretty much any structured problem solving method will lean heavily on data. The good news is that most companies have a pile of numbers that can be used to identify problems. The bad news is that these numbers often seem to lack some key characteristics that would make them very useful. There are some serious pitfalls to be aware of as you are digging through the data.
One of the usual suspects to look for in terms of using data is the context that it comes from. Does the data have a time or sequential relevance? How can you tell what has changed in the process or the product that may have driven the data? Put another way, what are the known special causes that can be filtered out so that the unknown special and common cause variation remains. The data itself can almost never be taken at face value as a reflection of a stable reality.
A second area to dig in to is how much the data reflects what you are trying to measure about the process. How direct and traceable are the measures to the actual process? Do the numbers have to get combined and factored into something or are they transparent? Is the data a reflection of a leading or lagging indicator? Are they timely or delayed? How much do the financial reports reflect actual dollars vs. some sort of calculated dollar figure? All of these are important to understand to determine where you should be spending your time and how you need to leverage resources.
Once you can harness the data, gather the context it comes from and understand exactly what it tells you, there is another key step…verifying your measurement system. Whether this step occurs in the form of a Gage R&R, a human verification, or whatever your MSA may need to be, it has to be done. You have to know that the data you are getting is a reflection of what is attempting to be measured.
More times than I’d like to recall I’ve been a part of activities where one or more of these steps were skipped. While you hate to say that any activity where you learn something is a waste of time, there has been a lot of time wasted in chasing problems that weren’t really there or trying to improve performance on a less important process. That ‘waste’ could very easily have been avoided by investing the upfront time to study what was really there. Maybe my errors can help save you the effort of going down the wrong path in the future.