Pactiv's continuous improvement journey since 2007 has been like a relay race with no finish line. Through lean initiatives, Pactiv has improved productivity, freed up $250 million in cash in 2010 alone, and used that cash to fund acquisitions and growth. Pactiv now focuses on cash flow and working capital rather than just productivity. Their operational excellence approach has earned them the "Perfect Engine Award" and allowed annual revenue growth of over $1.6 billion through acquisitions.

1. August 2012 | Issue 3
OpEx Review
A TBM
Consulting Group
Publication
Pactiv’s Perfect Engine:
Turning Improved Productivity
into Cash and Growth
Pactiv’s CI journey is Many lean companies Far from running out of “The company went from
describe their continuous steam, Pactiv’s 12,000 being capital-oriented
less like the colloquial,
improvement efforts as long, employees get stronger as the to being working-capital
ambling lean journey purposeful journeys down race continues. From 2007 oriented — it’s gone from
and more like a cross- a never-ending road. This to 2011, the company grew worrying about productivity
country relay race with hasn’t been the case at food- revenues by more than $1.6 to worrying about cash,”
no finish line. packaging giant Pactiv. Since billion through acquisitions said TBM Consultant, Glenn
its first kaizen event in the funded by freed up cash. In Kubisiak, who worked at
food service segment in April 2010 alone, employees at one of Pactiv’s Hefty plants
2007, Pactiv has pursued Pactiv’s 55 sites collectively in 2007 and 2008. “That’s a
a CI strategy more like a freed up $250 million in cash whole different attitude as far
cross-country relay race with and drew the attention of as running the company.”
no finish line: Train, stick to Auckland private-investment
the path, execute the crucial company, Rank Group,
hand-offs, and if the weather which purchased it in 2011. (continued on page 4)
changes suddenly—don’t get
distracted—keep moving and
push harder than you think ALSO IN THIS ISSUE:
you can.
2| Leadership: Seaman Co-President John Crum
“I ask for 130 percent of
6| Maintenance: A TPM system approach
goal,” says Greg Noethlich,
formerly Pactiv’s VP of 8| Case Study: Quality improvement for medical implants
Operations and now President 10| Strategy: Beyond operational excellence at Apple
of Prestone, a sister company.
www.tbmcg.com

2. Leading Thoughts Leadership Insights – Q&A
OpEx Review 2012 Perfect Engine
August 2012 | Issue 3
Award Co-Winner:
Alignment Feeds Pactiv’s Success
When I made my first visit to Pactiv
Seaman Corporation
in 2006, it was made clear to me
Seaman Co-President John Crum shares
that this would be the company’s last
attempt to make lean work. They had his insights on the coated fabric company’s
tried two other times, and TBM would ongoing pursuit of operational excellence.
have the last at bat.
Fortunately, we became a team, and After six years, how ingrained is Seaman’s
together we hit a home run. LeanSigma® program?
Today, Pactiv is applying operational excellence across the Participation is driven from the top to the bottom.
enterprise to improve profitability, asset utilization, supplier Approximately 90% of our associates participate in
performance, and to successfully integrate new products into LeanSigma events, including the senior management.
its manufacturing processes.
It’s all about leading by example. Our owner and
The organization continuously achieves best-in-class CEO, Dick Seaman, constantly reminds our associates
performance because of this effort. Pactiv’s results include: of the gains that we’ve made and that this is an
• 38 percent EBITDA improvement in just one year
ongoing journey
• 8 percent reduction in plant conversion costs
• 11 percent improvement in productivity
To address the quality issues I understand that
• 12.6 percent improvement in sales per employee
you started with standard work and shortening
since 2009. changeover times to reduce lot sizes. When did
you start to focus on inventory?
Performance has earned Pactiv TBM’s The Perfect Engine
Award for operational excellence this year, along with Seaman We deliberately decided to build our LeanSigma
Corp., which also is using the LeanSigma® approach as part capability first, before tackling our inventory. A lot of
of a strategic roadmap for value creation and growth. companies start by reducing inventory to get the cash
I’m still involved in Pactiv’s LeanSigma work, and two men flow impact right out of the gate, and it actually makes
have provided a common thread during the six years of the sales force and the customer cringe. We made sure
incredible change: John T. McGrath, now Pactiv CEO but we had quality processes in place, and had reduced
formerly VP of Sales, and Kevin Quinn, VP of Manufacturing
and Engineering. Their cooperative work is a testament to
how crucial alignment is to achieving success through lean. About Seaman Corp.
From the beginning they had a unified vision: One invoice.
One order. One truck. Today, that vision has become one
Headquartered in Wooster, Ohio, Seaman
of a company that can achieve exceptional growth with Corporation has two additional production
remarkable efficiency. In other words, a perfect engine. facilities in Bristol, Tenn. using advanced
weaving and coating technology. The
plants manufacture coated fabrics for
commercial roof systems, architectural
structures, geomembrane liners, truck tarps,
Dan Sullivan is Executive Vice President of TBM. and many other applications. Founded in
He can be reached at dsullivan@tbmcg.com. 1949, the privately held company employs
approximately 310 people.
Send OpEx newsletter feedback
and story ideas to opex@tbmcg.com.
2 | OpEx Review | August 2012 | www.tbmcg.com

3. Leadership Insights – QA, continued
20 percent and, because of the cross-training and the
standard work and how we do things here, we can take
that in stride. It’s not a big deal. We have really created
a lot of flexibility and agility in our business.
We’ve also been able to reinvest in new capabilities.
We recently made a $5 million capital equipment
investment. Some of that money comes from our
LeanSigma savings. When we put in the new equipment,
we didn’t have to build a new building because we
had freed up enough space in our existing operations.
In addition, using TBM’s 2P process, we were able to
optimize the design of the equipment so that it will
not only produce a superior product, but have a highly
efficient operation.
Culturally, is there anything about being
a private, family-owned company that has
made the LeanSigma implementation easier
or more difficult?
our changeover times, from four hours to one hour in Our owner, Richard Seaman, has always been progressive
some cases. Once people saw that we could produce in his approach to the business. Dick has always had
and deliver any order within a week, they realized tremendous passion for innovative ideas for both
products and processes. Once Dick Seaman started
that we didn’t need six or eight weeks of supply. Then,
seeing results and fully understood the process, he
with the support of sales, we’ve been able to increase our
pressed us to institutionalize the LeanSigma principles
annual finished good turns from 4 turns to 11 turns.
as part of our culture.
Can you describe what your quality and
Due to the family culture here everyone is engaged in
productivity improvements, and enhanced the business. It’s like having 300 owners. They all want
responsiveness to customers, have enabled to see the business do well. I think we are a “Can Do”
Seaman to achieve in your markets? company. We are not a company that resists change. The
Our quality and productivity improvements have people here are willing to stretch and to reinvent things
allowed us to remain competitive in the industrial fabrics and commit to breakthrough performance versus just
and roofing industry. The raw materials for industrial being satisfied with small, incremental changes.
fabrics come from petro-chemicals. As I’m sure you
know, chemicals have had significant raw material price
increases over the last couple of years. Our LeanSigma For more information about the early years of the company’s
cost improvements have allowed us to partially outset LeanSigma journey, see the case study, “Seaman Corporation
many of the raw material cost increases. Is On the Transformation Fast Track,” at tbmcg.com. As part
of our recognition of the TBM 2012 Perfect Engine Award
Because of our fast response times, we’re able to deliver co-winners, we will feature an updated report on Seaman’s
our product to customers faster, driving the top line LeanSigma efforts in the next issue of OpEx.
by getting new customers, while maintaining our high
John Crum was interviewed by business
market share. With our LeanSigma environment, we
journalist David Drickhamer.
can flex our capacity quickly. Our demand can fluctuate
OpEx Review | August 2012 | www.tbmcg.com | 3

4. Pactiv’s Perfect Engine, continued from page 1
teams were able to improve productivity
beyond the 2005 level by November. CI
efforts at other plants in Frankfurt, Ill.,
and elsewhere, produced similar results.
The CI work that year and into 2008
focused on manufacturing, involved
much one-on-one teaching about
how to identify waste, and laid the
foundation for what would later become
the Pactiv Production System. Largely,
it was about learning to see waste where
no one could see it before.
“We talked about vibrancy, we talked
about 5S, and we talked about some of
the fundamentals of lean,” says Mike
Hatto, a TBM consultant who worked
with the Canandaigua teams. “Within a
week’s time we put in place a plan to do
one kaizen event a month.”
Before the year ended, the kaizens at
Canandaigua and other plants had
Greg Noethlich, President, Prestone; Kevin Quinn, Vice President of Manufacturing and Engineering,
demonstrated significant opportunity
Pactiv Corporation; and Anand Sharma, Chairman CEO, TBM Consulting Group, Inc.
for improved productivity and
decreased costs. For example, in the
Pactiv has sustained and expanded CI 2007: Laying The Foundation thermoforming area at Canandaigua,
gains using workbooks that are the cases produced per man-hour
Pactiv’s lean relay had a traditional increased 67 percent post-kaizen, and
outcome of annual strategy deployment start. The company’s Canandaigua,
planning and are used by four levels throughput per machine-hour improved
N.Y., thermoforming plant wanted to 25 percent. At Frankfurt, kaizen
of the company—each with its own reverse a trend of lagging productivity,
workbook designed for that level— teams demonstrated an 83 percent
which started in 2005. Using traditional improvement in machine setup time.
to guide and document daily CI assessment of the plant followed by a
work. Company leaders provide the series of rapid-improvement events,
workbooks and ample war room space
for supervisors, managers and teams
to use to choose, plan and implement
CI projects that enable the sites to
Pactiv Acquisitions 2002-2011
meet financial goals set during Year Company Revenue ($ millions) No. of Plants
strategy deployment. 2002 Winkler Forming 120 3
Getting to this stage took time, though, 2003 Jaguar (Mexico) 95 1
to train and hone lean fundamentals. 2003 Rock Tenn 60 2
2005 Newspring 110 2
“Throughout all the different endeavors, 2007 Prairie Packaging 500 4
the bottom line kept improving because 2010 Reynolds 520 6
the fundamentals were there,” Kubisiak 2010 PWP 175 4
said. “As far as sustainment goes, once 2011 Dopaco 465 6
you educate people, they look at $2,045 28
things differently.”
4 | OpEx Review | August 2012 | www.tbmcg.com

5. Pactiv’s Perfect Engine, continued
While the results of these and the The Process – Strategy Deployment
other front-line improvements were
impressive, Pactiv leaders knew that LEVEL I Growth
they couldn’t stop there. Enterprise- • E
xecutive Team (AIP) Productivity
wide problems that could block growth • S
WOT Analysis Talent Management
potential persisted: • A
nnual Improvement Priorities
• lants were working independently,
P • M
onthly Update Countermeasures
without networked strategic alignment.
LEVEL II MANUFACTURING
• uccess stories were insular,
S • V
alue Streams ENGINEERING MARKETING
and progress spotty. • S
WOT Analysis
LOGISTICS/PIC FINANCE
• B
ottom-up Plan Development
• ustaining gains was tenuous.
S
• A
nnual Improvement Priorities (AIP)
• I work was not clearly tied
C • M
onthly Update Countermeasures
to the corporate bottom line.
LEVEL III/IV
“There was also a dawning awareness that • lants, Warehouses, Sales Teams
P
they were going about this in a disjointed • orkbooks – Specific Projects – Time Bound
W
effort and so weren’t leveraging what they • onthly Update
M Countermeasures
could,” Hatto says.
According to Hatto and Kubisiak, they Kubisiak says. “When other companies
2008: Value Streams Elevate installed the system by introducing it were doing badly, Pactiv was out buying
Learning, CI Work to multiple plants within a value stream its competition. In 2008 they were not
This drove Pactiv leaders to start with a single event at one plant. In the even acknowledging that there was a
organizing work by product line so they foam value stream, for example, three to recession. There’s no question that the
weren’t duplicating efforts: Building five people from each of the sites would work they did in those years helped
on the knowledge the company gained come for a kaizen event at one plant, them to make important acquisitions.”
in 2007, Pactiv reorganized into value and then would set up a calendar with
streams in 2008. the regional CI leaders for each plant to 2010–11: Strategy Deployment
conduct a replication event because they Improves Alignment, Performance
Part of the reorganization was
all have similar equipment and processes.
building the early company-wide As Pactiv grew through acquisition,
CI infrastructure, which included CI leaders gave each plant time-specific the need to replicate its processes and
corporate-level regional CI leaders and performance goals scaled up to the practices became a critical need, as
widening deployment of the Pactiv kaizen-demonstrated capabilities. About did the need to do a better job of
Production System, the company’s a month later, CI leaders would audit sustaining gains and tracking progress
unique interpretation of lean systems the project to make sure the team was toward high-level strategic goals. The
management. using PPS standard work and tracking time had come to introduce strategy
to meet expectations. deployment, and this is when Pactiv
“ hen other companies were
W As this was happening, the Pactiv CI leaders created the four-level approach
effort was being elevated to the systems to achieve alignment.
doing badly, Pactiv was out
and philosophy level, and knowledge Today, lean CI is embedded in the
buying its competition. In
was rapidly building throughout company’s go-forward strategy, although
2008 they were not even the organization. with an increased emphasis on wringing
acknowledging that there out costs and freeing up cash.
Additionally, as more costs were taken
was a recession.” out of the business, the company had Editor’s Note: Pactiv and Seaman Corp.
—
­ Glenn Kubisiak, more cash for acquisitions and to weather each received TBM Consulting Group’s
TBM Consultant the 2008 and 2009 global recession. Perfect Engine Award in June 2012.
“All of the work that we were doing See page 2 for an interview with
with them was allowing them to buy Seaman Co-President John Crum.
other companies during the recession,”
OpEx Review | August 2012 | www.tbmcg.com | 5

6. Management Briefing
TPM: Achieving Maintenance Excellence
8 Steps to Better Equipment Reliability,
More Capacity and Sustained Improvement
By Doug Kiss
You’ve launched your continuous
improvement (CI) initiative. Product
lines have replaced process villages.
There’s more floor space. Supervisors
and executives are closer to the gemba
after experiencing 5S, visual factory
and managing for daily improvement.
Standard work has made abnormalities
more visible, and Six Sigma
methodology has corrected problems
that have plagued the operation
for years.
The results are showing on the bottom
line, and Accounting has credited your
CI effort as a large contributor. Fair Equipment-Maintenance workarounds and special tricks and
skies and smooth sailing, right? Well, Challenges tools to limp things along. Some of
partially right. Momentum like this— these are good ideas but are seldom
effectiveness like this—needs growth Let’s look at equipment-maintenance shared as best practices.
to sustain. challenges that are common among
manufacturers and cause problems such • omputerized Maintenance
C
But many organizations are hesitating as downtime, reduced speed, product Management Systems often are not
to make investments needed for yield and the unknown costs/availability in place or poorly used. No useful
growth. Often the roadblock is of parts and time associated with data is available quickly—equipment
finding, preserving and expanding restoration of lost capacity: history or spare parts inventory/cost.
manufacturing capacity. Good data and history are essential
• usterity has forced a general
A for making good decisions about
The tenuous global economy has held degradation of equipment condition modifying preventive maintenance,
back some capital investment, but some in the past decade. The maintenance stocking or ordering spare parts, and
company leaders could also be cautious skills base has eroded due to attrition, upgrading or purchasing equipment.
because they have been dissatisfied with a decline of technical school graduate
equipment lifespan and/or lifecycle availability, and a tendency among • aintenance and Production don’t
M
costs despite using Total Productive companies to drop maintenance partner and share ownership of the
Maintenance (TPM) as part of an mentoring/apprenticeships. equipment. If maintenance skills
operational excellence program. Maintenance departments often are below par and spare parts are
lack basic and specific skills, and not tracked or managed, preventive
If TPM did not produce results
few have taken the time to quantify maintenance likely takes too long
or sustainment at your company,
the gap, let alone plan to bridge it. and causes significant equipment
perhaps it was because you took a
downtime. The other result is that
tools approach rather than a systems • roduction departments are focused
P everyone sees that Production does
approach. Instead of being viewed as a only on “making the numbers.” Basic not value equipment maintenance.
fixit (or fixit-prevention) measure, TPM daily care and equipment monitoring
should become the foundation of a are not performed by the person A TPM event is a start to fix problems.
larger maintenance vision that supports who is operating or tending the However, a long-term plan is needed to
strategic high-level goals. equipment. We find operators using create manufacturing capacity necessary
for growth.
6 | OpEx Review | August 2012 | www.tbmcg.com

7. Management Briefing, continued
The benefits of TBM’s system approach
to TPM are that you create a roadmap Creating TPM Systems for Long-Term Benefits
of what needs to be done and so have
a vehicle for enhancements, course TPM events often don’t show is the enormity of the scope—and
corrections and communication; know payback or sustain because they are therefore the scarcity of—resources
how you are going to do it; and know one-offs: The systems that support to get the work done. Using a
how to measure the effects and returns. the equipment effectiveness are not criticality matrix and numerical
put into place; the measures that scoring criteria, we take the
Any lean organization could find itself support the effort are not created; or “emotional noise” out of the
up against equipment effectiveness and the wrong measures are forced. identification and let the data tell
machine capacity as a barrier to bringing us what equipment is truly critical.
the benefits of operational excellence to TBM’s methodology for helping
bear. This may be the result of less-than- clients move beyond the TPM “tool” 4. etermining the condition of each
D
successful efforts in the past or simply stage to the systems stage includes piece of critical equipment.
the last part of the puzzle to be put these eight steps: Looking at each sub-system
together. In either case, it’s important on the equipment (hydraulics,
to understand that the end goal is not 1. nowing the current state.
K pneumatics, controls, etc.), we
TPM, but maintenance excellence. We start by examining the can code the condition based on
production floor, the maintenance the current state. This not only
department(s) and the equipment. helps with the planning of TPM
Area owners and operators provide improvement events, but also
input for an assessment, which helps organizations plan and
is a systems view of where the prioritize upgrades, overhauls,
factory is from a standpoint of rebuilds and purchases.
maintenance excellence. We use
a progression benchmark, often 5. onducting a maintenance skills
C
in the structure of bronze/silver/ assessment, implementing a
gold to determine the level of lean skills matrix. Gaps in skills must
progression. The output provides be addressed. The first step is to
parameters for priority and scope, identify what basic skills are in
as well as a solid reference in need of enhancement and what
structuring a get-well plan. machine/process-specific expertise
needs to be upgraded.
2. stablishing a steering committee
E
or ownership structure. While 6. reating a communications
C
TPM can be described as a plan and determining initial
“bottom-up” effort (meaning metrics/measures. It is necessary
without support from the top), that both maintenance and
it still requires a team to set goals production organizations know
Doug Kiss is a Senior Management and identify good measures for full the why/how/when, and that
Consultant at TBM. He can be implementation and sustainment. changes are in store.
reached at dkiss@tbmcg.com. These are set as the organization
establishes a “maintenance vision.” 7. rioritizing and planning
P
This Management Briefing has been workshops/events/training.
modified for OpEx. For the complete 3. dentifying critical equipment.
I
One of the causes of less-than- 8. mplementing, assessing
I
version, go to the Resource Center at
optimum TPM implementation and improving.
www.tbmcg.com.
OpEx Review | August 2012 | www.tbmcg.com | 7

8. Case Study
Proactive Defect Resolution: Medical Device Maker Avoids
Shutdown, Achieves Full FDA Clearance with No Failures
A basic tool continuous-improvement teams use to discover
“hidden” quality problems is process mapping. Often, the
root causes of long-entrenched problems become so obvious
during mapping that it stuns and—well—embarrasses those
who’ve been overlooking the problems day in and day out.
But when the product is a highly engineered implantable
medical device with an extremely complex supply chain
(multiple lots of raw materials) and production processes
(both process and discrete manufacturing; and a high
frequency of production-machinery component changes),
the sources of defects are not as obvious and can take
months to identify.
This was the case with a TBM client company that makes
implanted medical devices.
Despite the inherent complexities of the product and
production processes, a CI team was able to identify the
sources of the defects using common LeanSigma mapping
and statistical tools, and the company resolved the problems
and returned to full production with full clearance from the
FDA and no reported failures in the field.
During the subsequent multi-month process, two unique
In-house researchers had discovered one defect during design- challenges presented themselves. First, the inspection method
of-experiments testing on an unrelated product-design issue. that had identified the surface irregularity had never been
The researchers discovered that during implant, a crack would used before, and team members believed that the irregularity
form in the device. The team tested several more devices and was not a “new” defect, but simply one that had never been
observed the same outcome. noticed before. Once the defect became apparent, though, it
was impossible to “un notice” it to try to replicate previous
During these tests, the researchers uncovered a second inspection techniques. A second challenge was that although
previously unnoticed defect—a surface irregularity. the defect rate was extremely low, many of the expensive
Ultimately, the team concluded that the surface irregularity units had to be deployed for testing while production—and
was cosmetic and did not affect product performance or hence sales—were suspended. So financial considerations put
patient experience; however, the company’s high quality additional pressure on the team to resolve the issue as quickly
standards required correction. and efficiently as possible.
The crack defect could have been more problematic: Had any Testing of process-related variables was an obvious path to
defective devices been shipped and discovered as defective pursue for root-cause analysis. But because it was not known
after a surgery, a surgeon would have had to remove the how long the defects had existed before they were detected,
defective device and replace it. This additional surgery could and because of the high number of variables, parameters for
cause scarring and other complications for patients. testing (where to begin and which changes to consider) were
not obvious.
The company expanded the investigation to include both
defects after already suspending production and partnering with According to TBM Senior Management Consultant, Beth
TBM to facilitate a kaizen to find the root causes of the crack. Morrison, the team started with a simple process-mapping
8 | OpEx Review | August 2012 | www.tbmcg.com

9. Case Study, continued
activity that ultimately provided invaluable insight into been an ‘aha’ tool, but it did make visible to everyone how
which variables to consider, where to focus experimentation, changes that had been considered small could potentially
and how seemingly small changes were having a big impact have a major impact on production performance, especially
on processes. “We drew a chart on the wall that showed in combination with other changes.”
successful past production leading into when the defect was
detected, and then started writing on the wall—to scale— With insight from the timeline, the team conducted
all of the things that had changed over time.” research to see if there was some combination of parts
and materials that had led to the defects. Additionally,
the team conducted experiments on different ways of
using the device in the field, i.e., how it would be
implanted, as well as changes to how the device’s
“ timeline may not have been an ‘aha’
The materials were manufactured.
tool, but it did make visible to everyone how The team also tested inspection methods for consistency
changes that had been considered small using standard measurement systems analysis tools
could potentially have a major impact on (attribute agreement analysis and expert re-inspection
production performance, especially in techniques). Also important was the use of the external
resources (SEM technology) to validate what the internal
combination with other changes.”
team had found.
The problem-solving tools the team used led to discovering the
root causes of both defects. Both of these issues were corrected,
one defect being addressed through an improved assembly
As team members gathered information for each research method and the other through a new finishing method.
assignment (i.e., When did we change the raw materials
lots? When did the new lots go into production? When did
we change the lots of the device-application tool? When
did we put in a new water-filtration system? When did
we start a new cleaning procedure?), all of the activity—
regardless of who performed the assignment—was
documented and made visible to the team.
The resulting timeline stood 30 inches tall, 10 feet long and
covered about 18 months of process changes. At first, it
hung in a conference room, but someone had been given the
job of capturing it electronically, so it was moved from the
conference room out into the hall so the person could work
on it without disturbing people in the conference room.
This serendipitous move elevated the timeline from a simple
kaizen-team mapping tool to a method of providing deeper
and wider visibility into end-to-end manufacturing processes.
“Other people in the company—not just those on the
team—were also able to comment on things that had
changed,” Morrison said. “The timeline may not have
OpEx Review | August 2012 | www.tbmcg.com | 9

10. Strategic Vision
As Apple’s Success Attests, Operational Excellence
Isn’t Everything, But It Is Essential
By Anand Sharma
Operational excellence isn’t everything.
Strategic Growth
You might be surprised to hear such
a statement coming from me. After Strategic
Growth
all, for more than two decades now
we’ve helped clients become more
Model
operationally effective—by many
orders of magnitude—and achieve
vastly superior financial performance.
Disciplined Execution
But operational excellence is only one
path to superior market performance.
Another path is probably best illustrated
by a company that’s never far from Operational Value
today’s business headlines: Apple. Excellence Innovation
The death of Apple’s co-founder and
Leadership
CEO, Steve Jobs, and release of his
biography last year gave business owners
and managers many opportunities to
reflect on the life and accomplishments
of an incredible business leader. Jobs’
remarkable and successful resurrection
of Apple can’t help but make us think
about the performance potential of our
own companies, and the legacy that we
want to leave behind.
Very secretive on the supply chain
side of its business, Apple isn’t known
for operational excellence or lean
production methods, mostly because Organizational Mission Core Values
it subcontracts manufacturing
and assembly of its products and
components. Still, it repeatedly manages
to meet dramatic demand spikes with subject of endless fascination. Still, Connect that which you
every new product launch. But from a there are elements of its value-creation VALUE to that which you DO
value perspective—as in recognizing, model that other business leaders The mission and core values of an
creating and providing value that its can learn from and build upon. organization empower people by
customers are willing to pay for, a.k.a., The Strategic Growth Model that defining behaviors and clarifying rules of
innovation—very few companies in I will explore here begins with an engagement. Our core values at TBM—
history have been so successful. organization’s mission and core values, which I won’t recite here—reflect our
and combines operational excellence focus on providing clear economic
If it were easy to replicate Apple’s with value innovation through value to our customers and treating our
success, the company wouldn’t be a disciplined execution. employees with the utmost respect.
10 | OpEx Review | August 2012 | www.tbmcg.com

11. Strategic Vision, continued
• hat factors could be raised well
W countermeasures when expectations
Apple’s Core Values beyond the industry standard? are not being met, and hold people
Connect to Leaders, accountable. It incorporates buy-in from
• hat services could be created that
W your leadership team and makes everyone
Employees and Consumers the industry has never offered? focus on the most important areas for the
“ e believe that people with
W future of the organization.
The mindset of the leadership team must
passion can change the world for also change. You have to think less about
the better... And that those people Watering the Soil
your customers as companies that buy The final component of the strategic
who are crazy enough to think your products, and more as people who growth model is leadership. The
they can change the world, are the you want to help be more successful. business leaders who I have worked
ones who actually do.” Think less about building on what you’ve with personally share some common
—Steve Jobs,1997 always done, and more about what personality characteristics. They are great
could be done. Think less about current communicators who can clearly convey
industry conditions, and more about their vision for the future. They realize
how those conditions can be shaped and we have two ears and one mouth for a
A company’s mission and values should transformed. Think less about doing
make it clear for everyone what is reason, and therefore prize the inputs of
more with less, and more about doing others. They are zealots whose passion is
expected and accepted. Ideally, for such something that’s never been done before.
values to have resonance, they will contagious and who can be deliberately
connect personally with leadership, A Vision Without unsettling when necessary in order to
employees and customers. Of course, release pent-up creativity. Finally, they
a Plan Is a Dream
management behavior and decisions are servants who derive their greatest
The loftiest and most visionary strategy
must always reflect the company’s values. satisfaction from putting their skills,
means nothing if it can’t be executed.
position and experience in service to others.
According to one research study, only
Become a Market Maker half of companies report some success In closing I’d like to leave you with two
To avoid becoming a commodity executing their strategic plans, and questions to consider. What do you need
producer, manufacturers must regularly only one out of three report significant to be “more of ” or “less of ” as a leader
develop and offer forward leaps in success when it comes to execution. to transform your business for strategic
customer value. By gathering relevant growth? And, how do you want to be
customer insights and unarticulated The Japanese quality expert, Ryuji
remembered? This strategic growth
needs, and applying proven analytical Fukuda, noted that most business
model can help get you there.
tools, companies can uncover new, strategies and transformations fail
exclusive knowledge about their markets primarily because of a lack of direction,
and customers. Following this value resources, time and cooperation. He This article is based on
innovation approach, they can then created the X-matrix to monitor and TBM President and
translate this knowledge into unique address such issues as part of the strategy CEO Anand Sharma’s
products and services. deployment framework. The strategy leadership presentation
deployment process makes it possible at the TBM Executive
For example, consider the key for managers to align an organization’s Exchange in June 2012.
competitive issues and factors in your energy at all levels, implement
markets. Do the answers to any of the
following questions reveal any new
Blue Oceans: The Value Innovation Metaphor
paths to customer value?
If a company limits its innovation efforts to increments of what already exists, trying
• hat product or service factors that
W to outperform rivals to grab a bigger share of the market, it’s swimming in waters
the industry takes for granted can be bloodied by competition, a red ocean. But if your company can identify an
eliminated? unfulfilled need and respond with a unique solution, it creates its own blue ocean
free of competition where demand is created rather than fought over.
• hat factors could be reduced well
W
below the industry standard? — Paraphrased from Blue Ocean Strategy,
by W. Chan Kim and Renée Mauborgne, 2005
OpEx Review | August 2012 | www.tbmcg.com | 11

12. Updates and Events
New TBM VP to Focus on Growing Drug, Medical Device Markets
Continuing the application of traditional lean As a TBM leader, much of his focus will
TBM’s tradition manufacturing methods, but to help be on new-product development, which
of fostering those industries understand that he sees as the greatest opportunity for
mutual education operational excellence can accelerate operational excellence in these industries.
through its client time-to-market for new healthcare
relationships, Mark products and speed the achievement “The cycle of both drug discovery and
Pope has stepped of firms’ internal goals.” drug development on the pharmaceutical
into the role of side of the house is extensive. The
Vice President for the Pharmaceutical Prior to joining TBM, Pope was the average drug takes eight to 10 years
and Medical Products Practice. These Vice President of Business Excellence from the time the new molecular entity
industries will explode over the next for Pfizer Pharmaceuticals. He led is developed through human clinical
30 years, as developing countries grow an internal consulting group of 30- trials, and the registration processes with
economically and healthcare spending plus people focused on operational regulatory authorities. Devices have a
in industrialized nations tilts drastically improvement within Pfizer’s global shorter cycle than drugs, but have a lot
toward older citizens with more operations focused on material revenue of room for improvement as well.
healthcare needs. increases, new capabilities development
and cost efficiency. In two years, his “Compressing these cycle times and
“My goal is to help TBM serve leadership delivered $200 million in bringing new technology to the market for
pharmaceutical and medical incremental revenue and $1 billion in the betterment of the disease state and the
products markets not only through SGA cost reductions. human experience is absolutely critical.”
AIM for OPERATIONAL EXCELLENCE Publisher:
Anand Sharma: asharma@tbmcg.com
® Executive Editor:
Angela Scenna: ascenna@tbmcg.com
September 19–20, 2012 • Atlanta, GA
Three OpEx tracks: Contributors:
Growth, Leading Change David Drickhamer, Doug Kiss,
Beth Morrison, Mark Pope,
and Improving Profitability. Angela Scenna, Anand Sharma,
Dan Sullivan, Tonya Vinas
Art Direction and Design:
Crossbow Group, crossbowgroup.com
Accelerate value creation
and master new OpEx Printing:
strategies at this year’s Carter Printing Graphics, Inc.,
carterprintingnc.com
LeanSigma® Global Summit.
Visit www.LeanSigmaGlobalSummit.com
OpEx Review is a publication of
TBM, the TBM logo, and LeanSigma® are registered
TBM Consulting Group trademarks of TBM Consulting Group, Inc.
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Durham, North Carolina 27704 Find us on Our
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12 OpEx Review | August 2012 | www.tbmcg.com