The Outstanding Organization: Building the Foundation for Everyday Excellence

© 2013 The Karen Martin Group, Inc.

Building the Foundation for Everyday Excellence

The Outstanding Organization

The Nordic Forum for ImprovementsNovember 5, 2013

© 2013 The Karen Martin Group, Inc. 2

Why?

3

The average company performs at levels that are

a fraction of what it’s capable of.


Success with Improvement

4

2001 – The Economist

None17%

Lasting20%

Temporary63%


…A Decade Later

2010 – Accenture

0%

10%

20%

30%

40%

50%

60%

70%

80%

Minimal financial impact

Needs re‐evaluation, restart or complete

makeover

“Mixed” to “disappointing”

results

33%

58%69%


Up to 98,000 deathsannually due tomedical errors.

Improvement goal:Reduce by 50% in 5Years.

To Err is HumanInstitute of Medicine, 1999


Something Is Terribly Wrong…

2009

2005 2010

2010

2011

“Progress has been slow.”

Journal of the American Medical Association

“Annual death toll from medical

errors is closer to 200,000.”

Dead by MistakeHeart Newspapers Special Report

“180,000 Medicare patients die annually from medical errors.”

Office of the Inspector General

“No significant change in rate of

preventable errors.”New England Journal

of Medicine

“33% hospitalized patients are harmed; 7% result in permanent

injury or death.”Health Affairs

8

7 in 10 American workers are “not engaged” or

“actively disengaged” in their work.

Gallup estimates actively disengaged employees cost the U.S. $450 billion to $550 billion a year in lost productivity.


Employee Engagement – Gallup Findings

18

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19

18

20

20

15

15

17

17

17

16

18

52

52

53

54

51

50

55

59

54

55

53

54

58

30

29

28

28

29

30

30

26

29

28

30

30

26

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

9

ACTIVELY DISENGAGED

NOT ENGAGED ENGAGED0% 100%


http://businessjournal.gallup.com/content/162953/tackle‐employees‐stagnating‐engagement.aspx



Typical Organization



Does Your Organization Seek the Silver Bullet?


Continuously Shifting Priorities?


Fire Fighting

Constantly fighting fires?



Blaming People?

19

The idea that performance is primarily a factor of the employee is just wrong.

The Outstanding Organization, p. 154

20

Work doesn’t have to beas hard as we make it.


What are the Mindsets and Behaviors That Produce Excellence?

Photo #4 TBD – Greta Garbo?


Requirements for Excellence in ANY Endeavor

22



Outstanding Business Performance

CHOS

Prob

lem Solving

Continuo

us

Improvem

ent

Resilience


Lean Principles,Practices & Tools

Outstanding Business

Performance


Common Areas Lacking Clarity

• Organization purpose & vision• Customers & products• Business goals & priorities• Company policies• Roles & responsibilities• Work systems & process performance• Problem solving & decision making• Terminology & communication

26




27


Who are your customers?What do they value?

28


Value is a verb, not a noun. And it’s often emotional.

29




30


Customer

Receive customer call

Call Center

PT = 2 mins.%C&A = 60%

Review & Post Invoices

Posting Admin

PT = 3 mins.%C&A = 98%Batch: 1x/day

0.0833 hours

2 minutes

2 hours

5 minutes

1.5 hours

90 minutes

1.25 hours

75 minutes

2 hours

120 minutes

4 hours

5 minutes

10.7 hours

10 minutes

48 hours

25 minutes

4 hours

3 minutes

10.7 hours

10 minutes

2 hours

4 minutes

480 hours Lead Time = 572 hours

Process Time = 349 minutes

Select & Dispatch Tech

Dispatcher & Service

Manager

PT = 5 mins.%C&A = 60%

Make Repair; Call to raise

the NTE

Tech

PT = 120 mins.%C&A = 40%

Complete Call in GP

Dispatcher

PT = 5 mins.%C&A = 80%

Review Service Call

Data

Service Manager


Review Open Ticket Report

Billing Admin

PT = 25 mins.%C&A = 75%

Upload time card

Tech


Close call in Verisae

Account Manager (West)


Process Time Cards

Payroll Admin


Process A/P

A/P Admin


Tech

Assess Problem

PT = 90 mins.%C&A = 90%

Tech

Special Order Part

Tech

Pick up Part at Parts Store

PT = 75 mins.%C&A = 95%

Tech

Get Part from Truck

PT = 0 mins.120 m.

Great Plains

Verisae (Customer)

Review Invoices; Close in

Verisae (Pac)

Account Manager

PT = 10 mins.%C&A = 85%Batch: 3-5x per wk

Enter Invoices into Verisae &

Excel; Mail Invoices

Billing Admin

PT = 4 mins.%C&A = 95%Batch: 1x/week

Excel Spreadsheet (Customer)

40%

Receive

Cash; Post Payment

Collections

75 m. 120 m. 240 m. 640 m. 6 days 240 mins. 640 m. 120 m. 60 days90 m.5 m.

?%

?%

Supplier

%C&A %Complete and AccurateAR Activity RatioFTE Full Time EquivalentLT Lead TimePT Process TimeRFPY Rolled First Pass Yield

Acronym KeyLead Time to invoice = 86.2 hrs

Process Time =5.9 hrs. NOTE: Business hours

Activity Ratio = 6.8%RFPY = 1.1%

Lead time to cash = ? days

Value stream maps provide clarity.


TruthTruth

TruthTruth

TruthTruth

TruthTruth

Truth32


Gaining Clarity via Visual Management


How are you performing?

Gray – Highest industry quality scores; Purple – Median industry quality scores; Blue – Client quality scores


Key Lean Metrics: Quality

• %Complete and Accurate (%C&A)–% time downstream customer can perform task without having to “CAC” the incoming work:• Correct information or material that was supplied

• Add information that should have been supplied• Clarify information that should or could have been clear

35


How does work get accomplished? And well how are we doing at it?

36

Customer

Process1

Process2

Process3

Process4




37

38

A problem clearly stated is a problem half solved.

— Dorothea Brande (writer/editor)

39

“If I had an hour to save the world, Iwould spend 59 minutes definingthe problem and one minute

finding solutions.”

— Albert Einstein

A3 Management

40

Plan Do, Study, Adjust


“Going to the gemba has been life changing for me as a leader.”

‐ Ginny Cattaneo, Sr. VP, FranklinTempleton Investor Services


Activity #1• Pair up or work in groups of 3.• Discuss where your organization

lacks clarity, the root cause(s) for it, and potential countermeasures.

• How will you know if you’re successful? (measurable outcomes)

• 5 minutes to work; 10 minutes for report outs and questions.


Where does your organization lack clarity?Problem Root cause(s) Potential Countermeasure

43



Sporting Goods Manufacturer –Product Launches Per Year

45

0

10

20

30

40

50

60

70

80

Pre‐Focus Post‐Focus

73

24

No additional resources; higher quality products launched

* Poll of 700+ Subscribers

70%Organization is attempting “more than”

or “significantly more than” we can reasonably handle.*

46


Booz & Company Findings

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

No writtenpriorities

Conflictingpriorities

Competingdemands

82%

64%

49%

47


Focus Law #1:STOP DOING

Focus Law #2:DO FEWER THINGS

AT ONCE



There is no such thing as multitasking.*

* For cognitive tasks.


Task #1: Focus Reduces ChaosTask #2: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Round 1 – Alternate between tasks : letter, number, letter, number, etc.

Round 2 – Complete one task before beginning the next.

Sentence:

Numbers:

Sentence:

Numbers:

The Cost of Switch Tasking – Timed Activity

© 2013 The Karen Martin Group, Inc. 52© 2013 The Karen Martin Group, Inc.


To create new ideas is a gift, but to choose wisely is a skill.

— Ryan Morgan

A Key to Apple’s Success?

54

“…saying no to 1,000 things to make sure we don’t get on the wrong track or try to do too much. We’re always thinking about new markets we could enter, but it’s only by saying no that you can concentrate on the things that are really important.”

— Steve Jobs

© 2012 Karen Martin & Associates, LLC


What is Your Improvement Strategy?

55


Classic Strategy Deployment (Hoshin Kanri)X‐Matrix


1. Increase sales 5%.3. Achieve 10% profit.

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec IT Mktg Ops HR Bob Fin PE Pario COM Direct

CDs / AMs

PD Rec

PD Mgmt

BMD SWS

23,500 units sold by 12/31/2013 through al l channels (approx. $700K)

X X X X X X X X X X X X Bob Dana 2 3 3 3 2 3 3 1 1 3 3 1 3

11 Develop & del iver tra ining to top 50 Dealers X X X X X X Bob Rex/Tim 3 3 3

21 Revised course materia ls by 6/30/2013 X X X Bob Josh R? 2 3 3 2 2

5Education: 1 school dis trict spec'd/underperforming COM dis tributor (25) by 12/31 valued at min $35K each

X X X X X X X X X X X X Howard Michael S 1 3 2 3 3

810 new dea lers on board (net) ($500K per dealer this year)

X X X X X X X X X X X X Howard Mike B 2 3

95 new dis tributors bringing $200K annual rev (& 5 terminated)

X X X X X X X X X X X X Howard Howard 1 1 1 2 3

17 10 projects spec'd by 12/31; $300K rev by 12/31 X X X X X X X X X X Howard Dana 1 3 3 3

29 20 by year‐end X X X X X X X X X X X X Howard Mark H 2 3 3 3

32 TBD X X X Howard Howard

33 TBD X X X X X X X X X Howard Howard

10Useful reporting and metrics are establ i shed and in place

X X Jim Randal l 3 1 1 1 1 1 1

30 TBD X X X X X Jim Josh 3

31 TBD X X X X X X Jim Josh 1 1 1 3 1 1 1 1 1 1 1 1 1 1

25 TBD Jim Shannon 3 3 1 1 1 1 1

26 System 7.0's in place X X X Jim Randal l 3 2 1 2 1

15100% accurate payrol l ; 100% management sati s faction at Apri l mgmt. meeting

X X X Josh Phyl l is 1 3

20Internet task l i s t i s s impl i fied and streaml ined for PDs then plan i s rol led out to PDs

X X X X Michael M Michael M 2 3 2 3

22Des ign Calculator i s updated success ful ly and rol led out

X X X Neal l Matt D 3 1 1 3 2 2 3

24 Competi tive Analys is complete and distributed for use X X X Neal l Dana 2 3 3 3 3 3 3

1 Des ign changed to solve delam i ssue long‐term X X X X X Susan David R 3 2 3

1230 parts sourced in U.S.; completed plan for managing China ‐sourced parts

X X X X X X Susan Shannon 3 3 2 2

13Warehouse la id out; kanban revised; Syspro implemented

X X X Susan Shannon 3

14 Lay out complete; equipment ins ta l led X X X Susan David R 3 3

X = Planned

2013 Priorities

2013 Goals & Objectives4. Improve morale (metric TBD).2. Achieve 50% gross margin. Created: 01‐14‐13

Revised: Level of Effort/Involvement Required

Priority Goal or Measurable Objective Exec Owner

Plan review dates:

Tactical Owner

● = Actual

< Company Name >Co

nten

trem

oved

for con

fiden

tiality

Modified Strategy Deployment Annual Plan


Strategy Deployment Key Feature: Catchball

58

Executive Team

What?How?Who?When?

Senior Mgmt

What?How?Who?When?

Middle Mgmt

What?How?Who?When?

FrontlinesWhat?How?Who?When?


Cascading Goals is the Means to Organizational Alignment

Organization

Division/Business Unit

Department

Individual

Individual

Department

Individual

Individual


Department

Individual

Individual

Department

Individual

Individual


Department

Individual

Individual

Department

Individual

Individual


Rockwell Automation

60

20

12

3

12

0

5

10

15

20

25

Pre‐Focus Post‐Focus

ProjectsStarted

ProjectsCompleted


ClarityConsensusCourageCommitment



lacks focus, the root cause(s) for it, and potential countermeasures.




Where does your organization lack focus?Problem Root cause(s) Potential Countermeasure

63

© 2013 The Karen Martin Group, Inc.© 2013 The Karen Martin Group, Inc.

Practice vs. Performance

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Athletes Businesses

TrainPerform

65

Train90%

Train1%

Perform 99%

Perform 10%

Jim Loehr & Tony Schwartz, The Power of Full Engagement


Develophypothesis

Conduct experiment

Measure results

RefineStandardize Stabilize


Building mastery takes 10,000 hours of deliberate practice

67

From The Outstanding Organization, p. 115


Value Stream Mapping

Strategy Deployment (Hoshin Kanri)

or A3

Daily Improvement, Projects, & Rapid Improvement Events

Ways to Practice PDSA


Standard Work Creates Clarity & Builds Discipline

Metrics‐Based Process Mapping, Karen Martin & Mike Osterling, 2012, Productivity Press

0

10

156-1

0Activity PT LT %C&A Activity PT LT %C&A Activity PT LT %C&A Activity PT LT %C&A Activity PT LT %C&A

1 Fax PO to Sales Rep 0 0 45%

2

Review PO; clarify with

customer as needed

20 2 90% Fax PO to warehouse 10 4 90%

5

6

Check inventory levels; notify

Sales Rep re: status

5 4 95% Fax PO to Sales Rep 5 0.33 90%

0 20 10 5 50 2 4 4 0.33

45% 90% 90% 95% 90%0 20 10 5 5

Rolled %C&ACritical Path LT

Total PT

Critical Path PT

5431 2

Mary Townsend

Hours Worked per Day Sally DampierOccurrences per Year Sam Parks

Current State Metrics-Based Process Map

Dave Morgan25-Jun-088 Facilitator

Process Details

Michael Prichard

Order FulfillmentProcess NameSpecific Conditions Domestic orders through sales force

37,500

Date Mapped

Sean Michaels

Sales Rep

Ryan AustinDiane O'SheaMapping Team

LT Units

Function / Department

PT Units

Step # ►

Customer

Finance

Warehouse / Shipping

Seconds

Minutes

Hours

Days

Seconds

Minutes

Hours

Days


True Continuous Improvement

71

Process Owner ≈ Process Doctor


Process Owner Role

• Manager or below• NOT a third party (C.I. staff or external consultants)• Responsible for overall process performance

– Tracks performance against 2‐5 Key Performance Indicators– Leads corrective action when negative trends appear– Leads continuous improvement to progressively raise the bar

• Granted authority to cross org chart “boundaries”– And widely recognized to possess this authority

72


Value Stream & Process Oversight

73

Value Stream Value Stream Manager Process Process Owner

Outpatient Imaging Sally V Scheduling & Registration Bill G

Exam & Clinical Reporting Jose C

Reports to physician Maria J

Inpatient surgery Tonianne S Admission Tom M

Clinical stay Kathleen T

Discharge Mike M

Billing Sylvia S

Revenue Cycle Management Bruce T N/A N/A

Value Stream & Process OwnershipABC Medical Center



lacks discipline, the root cause(s) for it, and potential countermeasures.




Where does your organization lack discipline?Problem Root cause(s) Potential Countermeasure

75



“I’ve become a better person, a better husband, a better friend, from working at

Gore.”— Terry, a W.L. Gore Associate


Employee Engagement & Business Performance*

7%18%

26%

49%

67%

33%

9.57:1 1.83:1

EngagedNot EngagedActively Disengaged

World Class Average

*Per Gallup

Ratio of engaged to actively disengaged employees


Lean (Done Right) Fuels EngagementEngagement Accelerates Transformation

79

LeanPractices

Employee Engagement



Engagement Drivers: The Three C’s

Connection

The Outstanding Organization, pp. 155‐158

To vision, annual goals, immediate supervisor,

peers, customers

81

The single most important process for you to nail in your

organization is new hire onboarding.

© 2013 The Karen Martin Group, Inc.82

You had them at“You’re hired.”


To what degree do new hires receive all of the tools and information they need to function effectively on day one?

0%

10%

20%

30%

40%

50%

60%

70%

Always, Sometimes Rarely, Never

Before initial roundof improvementAfter initial round ofimprovement

14%

44%

63%

23%


Onboarding – Common Missing Pieces

• General information– Company (e.g., purpose, products, customers, values, business goals, etc.)– Org charts– Phone directories

• Job‐specific orientation– Role and responsibilities– Documented procedures (standard work)– Apprenticeship approach: Observe, do with supervision, do– Clear understanding about what constitutes “success.”

• Tools– Physical (e.g. desk, etc.)– Technology (e.g. phones, computers, physical access, access to applications

needed, logins, etc.)– Identifiers (e.g. signage, business cards, etc.)

85

Value Stream Maps: Effective for New Hire Orientation

You are here




Connection

Control


Heavy involvement in decisions that

influence how they do their work.


Improvement Roles

Who? Accountability Practice / Tool

Senior Leadership What has to happen

Strategy Deployment and Value Stream Mapping

Frontline Workers How it will happen

Daily Continuous Improvement and Rapid Improvement Events

Middle Management

Strategic

Tactical


Leaders determine strategy (what)

Workers determine tactics (how)



Connection

ControlCreativity


Full use of talents, capacities,

potentialities, & skills


Problem solving and making improvement—done properly—is a high.


Cross‐Functional Problem Solving & Improvement:Connecting, Using Creativity, Gaining Control


“I went home yesterday and told myfamily that it was one of the best

working days I’ve ever had. I was able to fully use my capabilities for three days.”

— Fred Valenzano, Professional Engineer



93

Connection

ControlCreativity


To vision, annual goals, immediate supervisor,

peers, customers

© 2012 Karen Martin & Associates, LLC

Heavy involvement in decisions that influence

their work life.

Full use of talents, capacities,

potentialities, & skills


—The Outstanding Organization, p. 153



Activity #4• Pair up or work in groups of 3.• Discuss where your organization lacks

engagement, the root cause(s) for it, and potential countermeasures.


• 5 minutes to discuss; 10 minutes for report outs and questions.


Where does your organization lack engagement?Problem Root cause(s) Potential Countermeasure

96

97




Outstanding Business Performance

CHOS

Prob

lem Solving

Continuo

us

Improvem

ent

Resilience


“You can make a difference no matter where you sit in the organization.

But only if you start.”


Karen Martin, President7770 Regents Road #635San Diego, CA 92122

858.677.6799

[email protected]

For Further Questions

Blog & newsletter: www.ksmartin.com/subscribe


To Download the Organizational Self Assessment:

www.ksmartin.com/the‐outstanding‐organization

Click “Download a free organizational

assessment”


Self‐AssessmentSheet 2: Assessment


The Outstanding OrganizationSelf‐Assessment Sample Questions

Key Behavior Assessment Questions

Clarity C‐1: What % of the workforce can describe your organization’s purpose and the value you provide to your external customers?C‐6: What % of work areas have visual management in place?

Focus F‐2: What % of the workforce say that priorities are stable and don’t shift unnecessarily?F‐6: What % of meetings have stated goals and written agenda that are communicated in advance?

Discipline F‐3: What % of processes have 2‐5 Key Performance indicatorsthat are consistently used to measure success and drive improvement?F‐5: What % of processes have a clearly identified process owner who’s accountable for performance?

Engagement E‐4: What % of the workforce feel they have a degree of control over their work processes and environment?E‐5: What % of new hires receive all of the information, equipment and supplies they need to be successful beginning on day one?


Self‐AssessmentSheet 3: Scorecard


Organizational Assessment:Sample Baseline Measurements by Department

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

A B C D E F G H

ClarityFocusDisciplineEngagement

106

© 2013 The Karen Martin Group, Inc. 107© The Karen Martin Group, Inc.

How Do You Rate? (1 = strongest; 4 = weakest)

Clarity Focus Discipline Engagement

Dept A 1 2 4 3Dept B 1 3 4 2Dept C 1 2 3 4Dept D 4 1 2 3Dept E 1 3 4 2Dept F 1 2 3 4Dept G 2 3 4 1Dept H 2 4 3 1Dept I 1 2 3 4


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

1st shift 2nd shift 3rd shift Management

ClarityFocusDisciplineEngagement

108

Organizational Assessment:Sample Baseline Measurements by

Shift & Employee Type


Tack för erat engagemang ochlycka till med erat

förbättringsarbete framöver.

― Karen