This document discusses how operational excellence (OE) initiatives in complex organizations often follow a cyclical pattern of progress and setbacks, referred to as the "yo-yo effect". OE efforts may gain momentum at a business unit level but then be disrupted by corporate or business unit leadership losing focus. Alternatively, a corporate OE group may be established but then dismantled with claims of too much overhead. The presentation will explore themes around OE adoption, how to avoid common problems that undermine progress, and ways to sustain OE efforts long-term.

1. Operational Excellence
Managing Change and
Avoiding the Yo-Yo
Effect
Jerry Timpson & Sean Wright
©2013 ASQ & Presentation Kaufman Global
http://reliabilitycalendar.org/webina
rs/

2. ASQ Reliability Division
English Webinar Series
One of the monthly webinars
on topics of interest to
reliability engineers.
To view recorded webinar (available to ASQ Reliability
Division members only) visit asq.org/reliability
To sign up for the free and available to anyone live
webinars visit reliabilitycalendar.org and select English
Webinars to find links to register for upcoming events
http://reliabilitycalendar.org/webina
rs/

3. Operational Excellence
Managing Change and Avoiding the Yo-Yo Effect
INTERNAL COMPETITION AND PREFERENCES
OFTEN DERAIL BEST INTENT TO
S Y S T E M AT I C A L LY I M P R O V E P E R F O R M A N C E
Tele: +1.317.818.2430
Web: www.KaufmanGlobal.com
Email: info@KaufmanGlobal.com

4. Operational Excellence: Managing Change and Avoiding the Yo-Yo Effect
Today’s Presenters
Jerry Timpson — President and Principal
Expertise: 30+ years; Operational productivity strategies, Lean enterprise
transformation and implementation design, Office Kaizen, executive
coaching
Interests: The connection between organizational change and business
results, leadership’s role in transformation and the application of
operational improvement methods across broad geographies.
Sean Wright — Executive Vice President and Principal
Expertise: 30+ years; Lean enterprise transformation and implementation
design, operational productivity strategies, technology solutions
complementing Lean, Office Kaizen and value / supply chain, executive
coaching
Interests: The structure and implementation of enterprise continuous
improvement systems, transformation in state government and hospitals
and the use of communication as an major driver of change.
© Kaufman Global 4

5. About Kaufman Global - Proven Implementation Partner
Accelerate Performance
Oil Services omitted
for confidentiality
• Hands-on implementation for
operational excellence
 Plants / Office / Supply Chain
• Collaboratively design and deliver
improvement projects
 Business case, progress measures and
delivered results
• Enterprise-wide global engagements
© Kaufman Global 5

6. Agenda • OE Overview
• OE Evolution
• Countermeasures
 Leadership
 System Definition
 Change Management
• Parting Thoughts
“Culture does not change
because we desire to change • Q&A
it. Culture changes when the
organization is transformed
— the culture reflects the
realities of people working
together every day.”
~ Frances Hesselbein
© Kaufman Global 6

7. OE Overview
We’re Here to Discuss
• Themes that emerge as organizations
pursue operational excellence (OE)
• How to avoid select problems that
occur in such pursuits
• How to enhance odds of making OE a
long-term, value-adding proposition
© Kaufman Global 7

8. OE Overview
Observations
• Operational Excellence consolidates • Many OE brands often confuse the
Problem-solving, Continuous answer to “what does good look like?”
Improvement and Change  Multitude of techniques
Management, aligning them with  Enterprise or not
“business priorities”
 Functions, administrative and supply
chain included or not, etc.
• OE is pursued by many complex
organizations recognizable by labels
such as:
 (Entity) Production System
 (Entity) Performance System
 (Entity) Business Operating System
 (Entity) Lean
 (Entity) Six Sigma
 (Entity) Lean Sigma
© Kaufman Global 8

9. OE Overview
Where Does Operational Excellence Apply?
• Where can OE work?
 Everywhere
• Manufacturing
 Habitual launch point
• Office and Administrative
 Mapping is leading opportunity
• Supply Chain
 Procurement, logistics, inventory
From mass production insights through today’s sophisticated
and transportation ripe for change
office process transformations, Operational Excellence enjoys
a rich history – and hopeful promise for top performance
• Engineering
 Commercialization, warranty, etc.
If everyone is doing OE, why doesn’t the competitive landscape change much?
It’s because only a very few do it well enough to differentiate themselves
© Kaufman Global 9

10. OE Evolution
Operational Excellence Takes Off! – Classic OE Journey Configurations Contrasted
OE Journey Grass Roots Corporate Enabled
• Flexible • Standards
• Responsive • Best Practices
Characteristics • Relevant • Broadened
• By the Operating Unit (OU) for the • Best chance of solving shared
Operating Unit; should be closest enterprise issues and attaching OE
Focus to customer imperatives to the culture
• Difficult to sustain; personality • Keeping it relevant to user issues
dependent • Easily distracted by corporate’s
Issues • Hard to spread outside the domain other strategic priorities
• Easily distracted by Operating Unit • Often viewed as an untoward tax
crises and financials by the Operating Units
Both approaches have merit. Is there a blend that can serve all
masters and can endure?
© Kaufman Global 10

11. OE Evolution
Three to Five-Year Cycle – How Complex Organization OE Can Play Out
1. Grass Roots OE Takes Off 2. Operating Unit Grows OE 3. Corporate “Rescues” OE
• Someone takes risk with OE. It’s • Working but focus distracted by • HQ can enforce process
“working”; results are “running the business”; other symmetry. System definition
compelling somewhere in OU segments seem to have a lot and standards ensue; tracking
Operating Unit (OU); looks easy; of “valid business reasons” to mechanisms become popular;
everyone wants “slice of pie” defer from grabbing onto it select central resources doled
OE is now on life support, 5. Operating Units Retake OE 4. Corporate “Absorbs” OE
yet, there remains an • Resources redirected to • Forward progress resumed. OUs
acute need to predictably operating units by CEO on some asked to be accountable for
“business pretense” … to results yet resources / attention
improve somewhere, so… enhance OU focus / relevance; have centralized; OU grumbling
OE relegated to has-been pile and behind-scene tactics begin
© Kaufman Global 11

12. OE Evolution
Ouch! Unanticipated Outcomes
• So, while everyone believed it had
promise, maybe OE isn’t working
Flavor of It’ll never
• Yo-yo syndrome wastes energy and time the month! stick!!
that could be better spent to gain results
• Setbacks include:
 Supporters who drove initial change have
become utterly discouraged
 Detractors who survived exposure have
mutated and become more resistant
Why not spend a little energy up front on getting it right from the start
© Kaufman Global 12

13. OE Evolution
Where Did We Get Off Course? – Three Areas to Consider
Three primary reasons Operational Excellence goes off track and where energy can be
brought to bear to make a significant difference in it’s results and long-term viability:
Cause of Low OE Performance Description
Primary function of Leadership is to genuinely display
1. Leaders don’t understand their role
personal enrollment and drive organizational engagement
Roles and accountabilities, standards, tool suite, flexibility,
2. The system isn’t well defined
personal performance linkage, etc.
If the above two elements are not defined and
3. Change isn’t actively managed
measurable, then change cannot be actively managed
© Kaufman Global 13

14. Countermeasures – Leadership
Traditional Organization
Planning
Running
the Business
Sales / + Improving the Business Operations Most energy is spent on running
Marketing
the business and reacting to
problems
Leadership Team
Engineering Admin.
If we improve the
business, maybe
running it
will be easier?
© Kaufman Global 14

15. Countermeasures – Leadership
A New Model: Structured Engagement — Executive Steering Committee (ESC)
Planning
Running
Sales /
and Improving Operations
Marketing ESC Special Project
the Business
Engagement, Visual Systems,
Metrics, Communication
A subset of the local
Leadership Team
Engineering Leadership Team Improving The ESC: • Prioritizes Special Project
the Business • Decides
• Directs
Admin.
Leadership:
• Establishes structure
• Engages themselves and their organization
• Manages change
© Kaufman Global 15

16. Countermeasures – System Definition
Balance and Structure Corporate and Operating Units Roles
Operating Unit Corporate
• Change Management • Change Management
 Engagement  Mandated Engagement Structure and
 Communication Protocols Measurement of OE
 Visual Systems  Communication – Strategy and Plan
 Coaching  Linkage to Performance System
• Narrow Targets: Improve their • Broader View: Fix enterprise (cross-
business – near term functional) problems – longer term
• Resources • Standards
 Vocabulary
• Training – Frontline  Tools / Training Materials
 Prepare Internal Consultant Resources
• Routine Progress Roll-up
 KPIs / Metrics Dashboard Definition
One other thing… if unsure, collaborate! A cross-functional team to
address system definition concerns may take longer, but it’s worth it
© Kaufman Global 16

17. Countermeasures – Change Management
Actively Manage Change — It’s Not “Soft Stuff”
Establish framework Create and sustain buy-in
• Roles are defined; actions and • Seek involvement – always
performance can be measured
• Make coaching real – seeking help
• OE system is defined, resulting in is a strength, not a weakness
“OE standard work”
• Surface and work with resistance
• Communicating according to a
measurable plan and protocols
Try new NEVER! Try new Hmm?!
things! things?
© Kaufman Global 17

18. Parting Thoughts
Related Trappings
• Call “It” Something – Carefully consider the name (hint: DIRTFooT isn’t a great choice)
• Measure Results – Often takes more that a single metric to avoid myopic view
• Don’t Discriminate – Factory, Office, Engineering, etc. … OE is for everyone
• Communicate, Communicate, Communicate – Strategy | Plan | Protocols | Measures
• Be Relevant – Push decisions down to the lowest practical level
• Make it Stick – Link to Human Resources and the Personnel Performance System
• Succession Development – Use OE to cultivate future top leaders
• Re-use What Works – Develop networks for sharing best demonstrated practices
© Kaufman Global 18

19. Thank You!
May we have your
questions?
© Kaufman Global 19

20. Additional Information
Want to Learn More?
NAVIGATE our online Knowledge Center
+1 317 818 2430 telephone
info@kaufmanglobal.com
www.kaufmanglobal.com

21. • Content and design - ©2013 Kaufman Global. This presentation may not
be reproduced, in whole or in part, either digitally, in print or in any
Copyrights and other form without the express written consent of Kaufman Global
Attributions • SLIM-IT®, Lean Daily Management System®, LDMS®, 20 Keys® and the
Kaufman Global logo are federally registered trademarks of Kaufman
Global and must be attributed as such
• Client logos are registered marks / copyrights of their respective
organizations
• All other images are the property of Kaufman Global and may not be
used in any form without the express written consent of Kaufman Global
21

22. Operational Excellence
Managing Change and Avoiding the Yo-Yo Effect
Complex organizations competing in today’s markets by corporate leadership complaining about “too little
recognize that operational excellence (OE) is a vital attention to growth” and “not enough focus on
piece of their path to success. Business units within stakeholders and profits.” OE is then unceremoniously
those organizations often determine to sponsor a dismantled, labeled as another passing fad, and,
central “operational excellence” function whose removed from the organizational agenda without
mission is to propel OE inculcation… broadening, having fully achieved its intent. In the end, the yo-yo
deepening and speeding results. Sometime later, that has traveled full cycle. The lifecycle of each of these
function’s notable progress is discredited by the same approaches to accelerating internal change and
business segments that sponsored it complaining business performance share striking similarities as
about “too much corporate overhead” and “not they encounter similar problems, barriers,
enough focus on my problems.” OE is then achievements, successes, dramas… and in many cases,
unceremoniously dismantled, labeled as another eventual demise.
passing fad, and, removed from the organizational
agenda without having fully achieved its intent. In this presentation, you’ll learn about common
themes that emerge as complex organizations
Still, the opposite can also occur. A corporate-level embrace formal internal change structures, what can
OE group might never be established, and with that, be done to avoid some of the more frequent and
no Continuous Improvement standard work. Multiple thorny problems, and, how to improve the odds of
duplicative OE approaches blossom (then die) within maximizing ongoing vitality and results of your in-
the business units. OE progress is de-valued house OE system.