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Policy Deployment

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by Laurie West of Westco International LTD shown at Lean Summit 2012 - Learning - Educating - Sharing on 27/28 November

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Policy Deployment

  1. 1. 1 POLICY (STRATEGY) DEPLOYMENT A proven process for strategy execution.
  2. 2. 2 PRESENTATION AGENDA 1. A FEW COMMENTS ON STRATEGY DEVELOPMENT. 2. THE POLICY DEPLOYMENT PROCESS EXPLAINED. 3. A CASE STUDY ; BORAL Ltd.
  3. 3. 3 WHAT IS STRATEGY ALL ABOUT? STRATEGY EXPLAINS HOW AN ORGANISATION, FACED WITH COMPETITION, WILL ACHIEVE SUPERIOR PERFORMANCE. •WHAT VALUE WILL THE ORGANISATION CREATE? •HOW WILL THE ORGANISATION OFFER A UNIQUE PRODUCT OR SERVICE TO CUSTOMERS?
  4. 4. 4 Research consistently identifies reasons for failure include: 1. People cannot implement what they do not know. 2. People do not implement properly what they do not understand. 3. People do not implement what they are not committed to. 4. People give up on a strategy, the implications of which, have not been anticipated and thought through. 5. Management overlook the importance of the “HOWS” of executing the strategy. WHY DO SOME BRILLIANT STRATEGIES FAIL? “Policy deployment will help Management identify and practically manage the implementation of a strategy of the Company’s products, markets, customers, organisation structure, systems, processes, personnel and culture”
  5. 5. 5  The key to success is to focus on doing the right things and getting the right results.  Problems in operations often originate in other functional areas. P.D. provides the means to cement all functions together by aligning objectives. (This is equally applicable to any process, in any industry wherever there is a customer)  There are so many things to do, we need to de-select some worthy initiatives!  It starts with correctly identifying the business critical issues.  Then it’s about developing the plan to resolve the issues and deliver the strategy.  Policy (strategy) Deployment keeps everyone focused on the real prize ; creating value for the customer. All our lean tools are means to this end and not ends in themselves.  Lean must be supported from the top of the organisation. Anything less will not be sustained. Policy Deployment directs people to do what they should do, rather than what they want to do by aligning all activities to the top level Strategic Vision THE LEAN CONNECTION What has Policy Deployment got to do with Lean and continuous improvement?
  6. 6. 6 POLICY DEPLOYMENT ISSUES Because; • It is dealing with a multitude of complex issues. • It addresses the many conflicting goals which can arise between functions. • It puts people and culture centre stage. However, once mastered, the benefits are significant and include; • It aligns people and actions to the true “North Star” • It generates synergies via teamwork. • It helps each part of the organisation become aware of the effect of its own actions on every other part. • Cross functional learning is fast tracked. • It builds confidence in the plan knowing every facet has been empirically considered. • It identifies and prioritises the business critical issues and deselects the unimportant. POLICY DEPLOYMENT IS THE PIECE THAT IS THE MOST DIFFICULT TO MASTER;
  7. 7. 7 THE PROCESS EXPLAINED
  8. 8. 8 Purpose  To support the achievement of the business strategy through the alignment of all employees, functions and divisions to the business goals  To execute the strategic plan, identifying and focusing on the business critical issues and de-selecting non essential activities.  To achieve ownership, focus, direction and commitment through the involvement of everyone The Foundation Stone  W Edwards Deming’s PLAN, DO, CHECK, ACT (P.D.C.A.) cycle is at the heart of Policy (Strategy) Deployment. (The planning normally gets done well but the Do, Check and Act don't!) WHAT IS IT ALL ABOUT?
  9. 9. 9  We assemble the entire top team. This must include all the people that contribute to the business performance : Engineering, Sales, Marketing, Divisional Heads, Production, Purchasing, Legal, Finance, HR, IT, Logistics, etc.  The first analysis is focused entirely on what the customer really, really wants. (which may be different from what we think he wants!)  We must insist on reality Agree Debate Challenge THE PROCESS STARTS BY CONSIDERATION OF THE WHOLE VALUE STREAM Co. A
  10. 10. 10 TIME Procurement Engineering Manufacture Design Contracts Sales Test Peoples objectives Inconsistent Working hard achieving Departmental goals Peoples objectives aligned Working hard achieving Business goals Policy Deployment Process THE POLICY DEPLOYMENT PROCESS
  11. 11. 11 Business Long Term Plan 1 Year Plan Company Objectives Divisional Objectives Site Objectives Individual Objectives Purpose & Values Strategic Vision Cascade Power of processPower of process STAGES OF POLICY DEPLOYMENT
  12. 12. 12 CORPORATE STRATEGY DIVISIONAL STRATEGY COMPANY/ PLANT STRATEGIC PLAN THE BIG PICTURE; STRATEGIC FIT & ALIGNMENT Function / Departmental Objectives Individual s Objectives
  13. 13. 13 …SO, WHAT IS THE DIFFERENCE BETWEEN BEING “INVOLVED” AND BEING “COMMITTED”? Well think of a nice breakfast of Eggs and Bacon THE CHICKEN IS INVOLVED, BUT THE PIG IS COMMITTED!
  14. 14. 14 THE MOST ADMIRED COMPANIES; What do they do? How do they do it? What do they measure?
  15. 15. 15 Requirements Criteria (examples) Improvement Measure Current Group Perform. 2013 2014 2015 Best in Class Measures Where we need to be in 2016 Safety and Environment Quality Cost Market Share Profit Cost On Time Delivery Working Capital Innovation Management and Organization etc. etc. LONG TERM PLAN WALLCHART
  16. 16. 16 Criteria “Measures that matter” Improvement Measure Current Group performance Reqt. in 2013 Gap Statement Safety & Environment LTIFR 2 1.5 The i care programme must be implemented across all sites by end 2012. We must eliminate all accidents on the front line and back offices. The root causes of muscular stress need to be determined Internal auditing 5 issues 2 issues We should strive to obtain ISO 18001 in year 1. We should record all scrap and disposal bin details Green house gas emissions 3.2 2.9 Evaluate alternative fuels PIN 5 2 Dust controls required Quality Process ppm 10,000 Cost $ per c.m. $ 5 $ 4 We must improve process efficiency through value stream mapping. 20% reduction is required. We must negotiate better terms of payment with suppliers. Cash Generation $750k $1.5m We must reduce our w.i.p by implementing a pull system, getting better ontrol of suppliers and forecasting capability. Delivery DIFOT 78% 95% We must achieve significant improvement in supplier performance in support of our requirements for delivery and cost Lead Time 9 hrs 2 hrs We must improve our systems to reduce throughput times. Lead times should be halved in 12 months. Development Management Forecast accuracy +/_ 20% +/_ 5% We must implement a Sales and Operations planning process and reduce product complexity. DEVELOPING GAP STATEMENTS ; An example When determining the Gap statements consider; What is the gap; what are we trying to improve? What is preventing us from meeting our target? What are the root causes in order of importance?
  17. 17. 17 COMPANY OBJECTIVES FEEDBACK FROM CUSTOMERS STRATEGIC ISSUES FROM LONG TERM VISION MANAGEMENT FEEDBACK CARRIED OVER OBJECTIVES FEEDBACK FROM THE WORKFORCE BUDGETARY & BUSINESS PLAN REQ’TS DIVISIONAL/ PLANT OBJECTIVES SPECIFIC PROJECT ALIGNMENT OUTSTANDING FUNCTIONAL OBJECTIVES RESOURCE ALLOCATION FUNCTIONAL ISSUES FUNCTIONAL/ DEPART- MENTAL OBJECTIVES PROJECT ALIGNMENT RESOURCE ALLOCATION & DEPARTMENTAL ISSUES INDIVIDUAL OBJECTIVES INDIVIDUAL NEEDS INDIVIDUAL & DEPARTMENTAL ISSUES ESTABLISHING COMPANY OBJECTIVES - REFERENCES
  18. 18. 18 The only daft questions are the ones that don’t get asked! • Are we facing reality? • What are the critical issues facing the business? • Do we understand what our customers really want? (internal and external) • We need to double our stock-turns. How can it be improved? What help do you want? • Do we have the best suppliers? Do we have too many suppliers? How do we improve them? • Do we have the best people? Are they suitably rewarded? • Do you understand the Plant objectives and what are you working on to help achieve them? • What keeps you awake at night? (work related of course) • If you had 3 wishes what would they be? • If you travel at the speed of light, do your headlights work? • How do you know when you are out of invisible ink? “CATCHBALL” DISCUSSIONS UP AND DOWN THE ORGANISATION EXAMPLES “Outstanding Leaders know how to ask questions – the right questions”
  19. 19. 19 people systems cost quality safety environment delivery innovation ”CATCHBALL” REFERENCES & IDENTIFYING THEMES
  20. 20. 20 1. WORK SAFELY Strive to create a harm free work place and business environment which is best in class 2. ACHIEVE OUR BUDGET Meet or exceed financial and efficiency improvement targets 3. GROW THE BUSINESS Be recognised by our customers as a “World Class” service provider 4. DEVELOP OUR PEOPLE Plan and execute a Training and Development program to create customer focused leaders and develop a skill base which will constantly improve our business 5. CONTINUOUSLY IMPROVE Become an agile and lean organisation, built upon a foundation of continuous improvement that is recognised as “Best in Class” COMPANY / PLANT OBJECTIVES – AN EXAMPLE
  21. 21. 21 THE OBJECTIVES MUST BE “SMART” Specific Measurable Agreed/Achievable Realistic Time related TESTING THE OBJECTIVES
  22. 22. 22 DETERMINING THE TOP LEVEL COMPANY TARGETS (THE DASHBOARD ON THE BRIDGE) Profitability Safety/Envir. People Customers InnovationOperations HMAS COMPANY X Sales
  23. 23. 23  For each objective consider how it could be achieved  What actions can we take to achieve them? These are the potential projects to be considered  We identify the projects required to achieve each objective and list them.  We then prioritise them using the “seriousness, urgency and growth” analysis process  Then we consider the improvement that each project will make and set quantifiable targets and completion dates. PROJECT SELECTION
  24. 24. 24 When determining the Projects ask; 1. What are we trying to improve? 2. What is preventing us from meeting our target? 3. What are the causes in order of importance? 4. What actions will address the most important causes? PROJECT SELECTION Cont.
  25. 25. 25 POLCY DEPLOYMENT MATRIX PLANT XXX COMPILED BY; THE MANAGEMENT TEAM THE POLICY DEPLOYMENT MATRIX EXPLAINED .
  26. 26. 26 THE MATRIX EXPLAINED cont.
  27. 27. 27 THE MATRIX EXPLAINED cont.
  28. 28. 28 POLCY DEPLOYMENT MATRIX PLANT XXX COMPILED BY; THE MANAGEMENT TEAM THE MATRIX EXPLAINED cont.
  29. 29. 29 COMPLETING THE MATRIX Next:  Decide who, from the senior team, will lead each project, who will support as a cross functional team member, and who will facilitate it  Work your way round the matrix completing the boxes to show the alignment of the Company objectives ( LH envelope) to the Improvement targets (bottom envelope) and the Company projects, (top envelope) to the project metrics (RH envelope)  The first cut of the PD matrix can now be completed. Hint! An important part of policy deployment is growing strong deployment leaders who help develop trust and collaboration between functions necessary to acknowledge and address deeply rooted problems.
  30. 30. 30 30 Departmental Objectives Personal Objectives (held by employee) Company Policy Deployment Matrix Divisional/ Functional/plant Deployment Matrix A POLICY DEPLOYMENT MATRIX EXAMPLE
  31. 31. 31 A CASE STUDY; BORAL LTD
  32. 32. 32 MONITORING PROGRESS & ACOUNTABILITY
  33. 33. 33 Now the entire team can see the complete landscape and not just the next mountain. In the time allowed I have only been able to provide an overview of the process. There are many related issues including hints and tips regarding such questions as; • How best to manage projects using A3s. • How to deal with non committed bosses. • How to conduct follow up reviews and at what frequency. • What if the process does not start at the very top? I will be covering these and more in the workshop discussion session later. In summary let me say this is a process, not an event. The key is to develop commitment through involvement whilst giving people the freedom to make decisions, but within a framework of a “box”, or “Russian Doll”, aligned to the top level strategy, focused on the important few projects whilst having the courage to deselect or defer the less critical. CONCLUDING COMMENTS
  34. 34. 34 THE END THANK YOU FOR LISTENING.

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