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Strategy Deployment

A discussion of both methods and challenges

Chris YockeyClipper [email protected]

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Discussion Outline Intro and Background Clipper Windpower Definitions Deployment Methods

Management by Objective Hoshin Kanri Balanced Score Card

Quality Management Systems that Support Strategy Deployment ISO Baldrige

Discussion Points “The Mind of the Lean Manager” by Jim Womack Resources and References

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My Background and Experience Education

B.A. in Business Management from UNI Working on Masters of Manufacturing Operations at Kettering

Work Experience Human Resource Intern at Beef Products Inc. (Waterloo) Department Manager for Pella Windows and Doors. (Clear Lake)

Developed interest and passion for Continuous Improvement Quality Supervisor for Beef Products Inc. (Waterloo) Assembly Supervisor for Clipper in March 2007 (Cedar Rapids) Continuous Improvement Manager for Clipper in November 2009

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Clipper Windpower Company Incorporated in 2001 Manufacturing began at Cedar Rapids in 2006

2006 - 8 units produced 2007 - 137 units produced 2008 - 289 units produced 2009 projecting 117 units (no orders cancelled, only delays)

Approximately 280 employees in Cedar Rapids Approx. 190 assembly Others include Engineering, Quality, RMDC, Clipper Fleet Service, etc.

The Facility is 330,000 sq. ft. Manufacturing the 2.5 MW Liberty Wind Turbine

Gearbox, Hub, Machine Base, Rectifiers, Parts Containers Assembled Nacelle, Towers, Generators, Transformers, etc. outsourced

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Clipper Windpower Continued As a whole, Clipper is in the Energy Business The Cedar Rapids Operations is generally

considered a Heavy Manufacturing facility The process is entirely assembly based

no material processing or fabrication work The company is in the process of developing a 7.5 to

10 MW offshore wind turbine Projected Capacity of the Cedar Rapids facility is

approx. 550-600 turbines per year

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The Disclaimer Not an Strategy Deployment expert Interest in Learning about Strategy Deployment That interest all too quickly transformed into an

opportunity to lead this IQC network meeting I’ve been dedicating extra time to this particular topic I’ve collected and condensed some SD information Many of you probably have relevant experience

Please, stop me at any time for discussion or if you’d like to contribute by further clarifying a particular item.

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Focus of Today’s Discussion When suggesting that we discuss strategy deployment, I was

most interested in the transition from planning to action. Effectively moving from Plan to Do in the PDCA cycle.

My Approach Basic Overview of the different Methods Tools associated with those methods Open Discussion Thought Provoking Article

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Why Focus on Strategy Deployment? The feeling of many good but unaligned goals The need for a consistent top-to-bottom message The importance of management effectively communicating

directives in a way that all can engage with and implement. The importance of knowing what activities align with goals. It’s a Criteria for Performance Excellence (Baldrige)

Strategic Planning and Business Results are two key criteria for performance excellence

The transition away from command and control, and the frustrating that may accompany it.

Bottom line, it’s a necessary part of realizing success.

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Definitions Strategy –

Is a plan of action designed to achieve a particular goal. The word strategy has a strong military connotation.

Strategy is different from tactics.

Deployment – To arrange in a position of readiness, or to move strategically or

appropriately. Again, deployment has a strong military connotation In business, it stands for a methodical procedure of introducing an activity,

process, program, or system to all applicable areas of an organization

Strategic Management – Developing, evaluating and making decisions that will enable an

organization to achieve its long-term objectives

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What is Strategy Deployment? The nervous system of a business system

Guides planning and action across an organization’s total value stream

Provides a closed circuit between an organization’s business needs and day-to-day activities.

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Pre-requisites to Deployment Company Philosophy and Quality Policy Basic Strategic Planning

Vision and Mission Values Statement SWOT Analysis

Strengths, Weaknesses, Opportunities, and Threats

Any others?

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Discussion Points Questions we should be asking as strategic planners.

How widely understood is our company’s mission and/or vision and the company’s top strategy among our employees? Are certain industries better at this than others? If so, why?

Does your company have a published set of values or beliefs? How widely known are they? Do they make a difference?

The answers to these simple questions will serve as indicators of the company’s ability to effectively deploy a strategy. A commander can’t effectively deploy troops without each of them

clearly understanding the mission.

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Methods of Deployment Management by Objectives

Cascading Objectives and Goals SMART Goals

Specific Measurable Achievable Relevant Time bound

Hoshin Kanri Catchball, A3-X, and A3-T

Balanced Score Card

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Management By Objective (MBO) The Principles of Management by Objective

Cascading of organizational goals and objectives Mission Critical Objectives at the CEO Level Mission Critical Objectives at the Plant Level

Specific objectives for each member Cascaded Goals through Success Factors

Performance evaluation and provide feedback Performance Evaluation System

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Management By Objective Important features and advantages of MBO are:

Motivation – Involving employees in the whole process of goal setting and

increasing employee empowerment increases employee job satisfaction and commitment.

Better communication and Coordination – Frequent reviews and interactions between superiors and

subordinates helps to maintain relationships within the enterprise and also solve many problems faced during the period.

Clarity of goals – The concept of SMART goals

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Limitations and Arguments Against Over-emphasizes setting of goals, as opposed to the

working of a plan Could lead companies to evaluate employees by

comparing them to the “ideal employee” “What gets measured gets done” W. Edwards Deming

argued that a lack of understanding of systems commonly results in the misapplication of objectives

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Discussion Points When done properly MBO ideally:

improves motivation and communication involves employees in goals setting provides frequent feedback on performance

Is this typically what would be found if a company’s MBO process were reviewed?

Does MBO provide an opportunity for all employees to provide their input and understand their importance?

Any other challenges or short comings experienced by those who have utilized or been a part of MBO?

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Definitions Hoshin = direction, a course, a policy, a plan, an aim Kanri = management, administration, or control Hoshin Kanri – A method of implementing strategy

to get the right thing done. Often referred to as:

Policy deployment, Strategic Initiatives, Management By Policy, Hoshin Planning, Policy Management, Managing for Results, Strategic Deployment and Goal Deployment.

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Hoshin Kanri Purpose and Usage–

Long term strategic planning for systems Developing shared strategic goals (compare Balanced Score Card)

Continuous organizational improvement Cascading or deploying top management policies

and targets down the management hierarchy

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Hoshin Kanri Steps and Skills Required

Planning and Communication Get Involvement Set the course X-Chart

Project Initiation and Execution Two Deployment Styles or Target – Top-down and Bottom-up

“Catch Ball” Target Deployment Project Charter Standard Process for follow through

Reflection Review of what worked and what didn’t work

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Hoshin Kanri Hoshin Kanri can be thought of as the application of Deming's Plan-Do-

Check-Act (PDCA) cycle to the management process.

The PDCA cycle represents a generic approach to continual improvement of activities and processes.

PLAN = a plan of action is developed to address a problem. DO = the plan is implemented. CHECK = information is collected on the control parameters. ACT = the results are analyzed. Corrective action is identified.

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Hoshin Kanri Three key elements

Catchball Project Charter (A3-T) X-Charts (A3-X)

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Catchball A participative approach to decision-making. Used in policy deployment to communicate across management levels

when setting annual business objectives. The analogy to tossing a ball back and forth emphasizes the interactive

nature of policy deployment. Used when establishing the terms of the organizational contracts or

project charters. Provides employees with an opportunity to review the plan and

objective and to respond with their thoughts and ideas.

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Project Charter (A3-T) Boil things down to one page Clarifies that no one person can accomplish a strategy Very reminiscent of PDCA and DMAIC

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X-Charts (A3-X) A bundle of contracts called team charters A visual tool for planning Can appear complex at first Becomes simple quickly The key is the Linkage of high and low

level action with people and results Mostly an aid to communication

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Strategy Area

•Contains the highest level mandates

•Start here

•Should link directly to corporate strategy, one level above the

group for which you are planning.

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Metrics Area

•Fill this in second

•Put in standard and/or mandated

operational figures your group needs to

meet

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Tactics Area

•Work on this third

•Will lay out specific projects

•Will become the basis for managing implementation

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Team Members Area

•Work on this fourth

•List Names of the people who will be responsible for

implementing the tactics

•Use proper names, not titles

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Connectional Areas

•The absolute key to making this work

•Forces reflection, debate and conversation in an open manner.

•Do these last, in a back-and-forth manner, with others on your team and in

your company

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Strategy-to-Tactics Correlation

•Does a tactic really support one or more

strategies?

•Is there a more effective tactic?

•Is there a non-necessary tactic?

•Do you really understand the individual strategy

statements?

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Tactics-to-Metrics Correlation

& Contribution

•Does a tactic improve a specific metric's)?

•Will it move the metric adequately?

•Does each metric have some tactic to

improve it?

•Do you really understand the individual

metrics?

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Tactics-to-Team Member

Accountability

•Does each tactic have a skilled person to lead it?

•Does one individual have too many tactics to lead?

•Are there other people who need to be listed?

•Does each individual understand his/her

accountability?

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Metrics-to-Results

Correlation/Contribution

•Does each metric contribute to one or

more financial results which we value?

•How much does each metric contribute?

•Are we measuring the right things in our

results?

•Can we compare plan to actual over the

period covered by the plan?

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Strategy-to-Results Correlation

•Does each strategy contribute to one or

more financial results which we value?

•How much does each strategy contribute?

•Is a strategy “for show” or for results (e.g.

a Super Bowl ad)?

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Hoshin Kanri Strengths

Focuses organization on the vital few

Communication of a shared vision

Creates alignment through participation

Encourages cross functional cooperation

Planning is systematic

Limitations A rigid implementation

is necessary Requires a long term

commitment Relatively Static – the

breakthrough objective must be stable during a 5 year period

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Discussion Points How many currently use or have experience with

this method of planning and deployment utilized?

Where HK has been utilized, was it well structured and routine or informal and possibly haphazard?

In what ways was it’s use effective or ineffective?

Would you recommend this system to others? Why?

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Balanced Score Card A Strategic planning and management system

May mean different things to different people (the BSC spectrum) From a Performance Measurement Framework = Dashboard To a Robust Organization-wide Strategic Planning, Mgmt, and

Communication System

Originated by Drs. Robert Kaplan and David Norton as a performance measurement framework

Added strategic non-financial performance measures to traditional financial metrics to give managers a “balanced” view of performance.

The “new” balanced scorecard transforms an organization’s strategic plan from a document into “marching orders.”

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Balanced Score Card View the

organization from four perspectives

Develop Metrics

Collect Data Analyze Data

to each perspective

PDCA

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Balanced Score Card Continued Why Implement a Balanced Scorecard?

Increase focus on strategy and results Improve organizational performance by measuring what

matters Align organization strategy with the work people do on a

day-to-day basis Focus on the drivers of future performance Improve communication of the organization’s Vision and

Strategy Prioritize Projects / Initiatives

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Balanced Score Card Continued Scorecards simply for organizing measures aren’t justified. Start with the end in mind, focus on the desired results Stephen Covey – “People and their managers are working so

hard to be sure things are done right , that they hardly have time to decide if they are doing the right things.”

Developing a balanced scorecard system is like putting a puzzle together The pieces are strategic components They have to be checked for fit

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Recall Lou Novikoff, a.k.a.“The Mad Russian”, Chicago Cubs, 1940s

Stole third base with the bases loaded

“I got a good jump” he explained.

Unfortunately, there is no point in being fast at doing the wrong thing.

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BSC Continued The major system components:

Engaged Leadership Interactive Communications and

Change Management Vision and Mission Core Values Organization Weaknesses and

Strengths

Customers and Stakeholders Customer Value Proposition Strategy, Strategic

Objectives, and Initiatives Performance Measures Performance Information

Reporting Rewards and Recognition Evaluation

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Questions and Discussion? How many currently use or have experience with the

BSC method of planning and deployment?

Do you notice any added benefits or disadvantages of Hoshin Kanri vs. Balanced Score Card?

If we aren’t using either method, what else is being done in order to fill this need?

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Quality Measurement Systems that Support Strategy DeploymentBaldrige Criteria

1. Leadership2. Strategic Planning3. Customer and Market Focus4. Measurement, Analysis, and

Knowledge Management5. Human Resources6. Process Management7. Results

2.2 Strategy Deployment: How do you deploy your strategy? Describe how

your organization converts its strategic objectives into action plans. Summarize your organization’s action plans, how are they deployed, and KEY action plan performance measures or indicators. Project your organization’s future performance relative to KEY comparisons on these performance measures or indicators.

ISO Standards1. Customer Focus2. Leadership3. Involvement of People4. Process Approach5. Systems Approach to Management6. Fact Based Decision Making7. Mutually Beneficial Supplier Relationship

With ISO-The concentration is on the quality systemsTakes an adoption of process approach

With Baldrige-Performance excellence for entire organizationFocus upon business results

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Discussion Topics How many have experience working for companies

that utilize either ISO and/or Baldrige?

Does it seem that one system is utilized more often or more commonly accepted? Why?

Does the industry affect which system is utilized? What else might affect which system is selected? Is there a need for the use of both systems?

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Discussion Points All methods seem to have a distinct tie back

to Plan-Do-Check-Act Are we informally utilizing these methods on a

daily basis, in some cases without realizing it? If so, would it be beneficial to formalize and

document the process? If so, what ways can we go about that or how

have you seen it done in the past?

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The Mind of the Lean ManagerThoughts from Jim Womack

Finding companies with X-Charts, completed A3 analysis, and all the elements of standardized work. What’s missing?

Success in Achieving the Goals Inability to actually read and interpret A3 No standardized work or not following it

Lean management techniques are quickly becoming tools (which are necessary).

Every manager loves a tool because it seems to provide a short cuts to doing a better job.

They can’t achieve their potential results or even any results without managers with a lean state of mind to wield them.

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What is a lean state of mind? The Lean manager embraces the role of problem solver

The Lean manager realizes the no manager at a higher level can or should solve a problem at a lower level. Instead assign responsibility to the manager at the lower level

The Lean manager believes that all problem solving is about experimentation by PDCA

The Lean manager knows that no problem is ever solved for ever

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Other Sources of Information Books In IQC’s Library

Hoshin Kanri: Policy Deployment for Successful TQM - Yoji Akao

The Balanced Score Card – Translating Strategy into Action

Kaizen Sketch Book http://www.kaicomm.com/KaizenSketchbook.html

And Multiple Others….

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Hoshin Kanri for the Lean Enterprise

Technical description of Hoshin Has a CD with all forms Good resource; tough reading

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Getting the Right Things Done

Novel style, a la “The Goal” Author has terrific experience Has excellent examples

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Leadership and Self-Deception Deals with root cause of people

problems Novel style You can use it instantly “Outside the Box” Thinking

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Balanced Scorecard and Hoshin Kanri by Marketing Partners, Inc. http://www.mpicompanies.com/PDFs/Balanced%20Scorecard%20and%20Hoshin%20Kanri.pdf

Management Coaching and Training Services http://www.mcts.com/Hoshin-Kanri.htm

Hoshin Kanri – Lean Strategic Planning by Joe Ely Director of Operations for Cook Biotech

Baldrigeplus.com http://www.baldrigeplus.com/Exhibits/Exhibit%20-%20Catchball%20processes.pdf

Strategy Deployment in Action: One Executive’s Perspective http://www.lean.org/Events/WebinarHome.cfm (Lean Enterprise Institute) Pascal Dennis and Dave Brule II

Balanced Score Card Institute http://www.balancedscorecard.org/BSCResources/AbouttheBalancedScorecard/tabid/55/Default.aspx

Management By Objective http://www.12manage.com/methods_smart_management_by_objectives.html

The Mind of the Lean Manager Jim Womack – Founder and Chairman of Lean Enterprise Institue

Resources and References