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Balancing Push and Pull Approaches to Improvement

Brad Power

Here is an excerpt from an article written by Brad Power for the Harvard Business Review blog’s “Conversation” series. To read the complete article, check out the wealth of free resources, and sign up for a subscription to HBR email alerts, please click here.

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Almost every process improvement initiative I’ve researched over the last three years in more than 50 organizations has been pushed from the top.

These mandated-from-above programs include Lean Six Sigma initiatives with experts (“Belts”) in command, big IT implementations, and reengineering of major end-to-end processes. While most of these interventions produced tangible business benefits, they often didn’t stick. Because the top-down pushes imposed changes from the outside, front-line people went along, but they didn’t own or internalize them.

For me the lesson is this: Companies should complement a top-down push with as much bottom-up pull as possible to sustain momentum and avoid regression back to previous, inferior levels of performance.

Consider the competition between push and pull camps in a major oil company. An executive in the company’s finance operations adopted a Six Sigma belt-driven approach to reduce costs in the company’s global shared service centers. (The centers employ several thousand employees who provided accounts payable and receivables services to the firm’s business units.)

The company put 10% of its service center employees through a very practical, low-cost “green belt” training program. The firm then tasked each employee with a specific project to cut costs, armed with their tools and training. In the first year, each service center worker identified cost cuts from $15,000 to $30,000. The oil company lopped off 10% of the service centers’ cost base in the first year, followed by 11% the next.

However, the program had several internal critics, who believed the belt-driven approach offered only transient benefits. They would have preferred a lower-profile approach that relied on service center managers — not Six Sigma experts — to do the heavy lifting of identifying inefficiencies and making changes. In other words, this camp favored a bottom-up pull approach, although it would have allowed for a few experts and training focused on managers and supervisors as part of their jobs.

Which camp is right? Many executives are attracted to push approaches, especially senior managers who need big results fast. They like the notion of using experienced improvement experts (internal or external) to drive projects with short ramp-ups and delivery times. For example, GE runs process improvement projects with Six Sigma Master Black Belts, Black Belts, and Green Belts armed with explicit financial targets. GE’s attitude is, “Tell me how much money you want to save, and I’ll tell you how many Belts you need.”

If you want to shake up your organization in a way most of your people are not positioned or predisposed to attempt, the top-down approach is very alluring. You get immediate attention by announcing a program, paying for external or internal advice and training, and setting clear financial targets. Using experienced consultants can lower your risk. At the very least, they can give you political cover if the initiative fails; you can blame it on them.

However, the push approach comes with complications. Project interventions led by outside experts usually carry the promise of sizable results, but they often aren’t sustained. When the project is over and the consultants leave, the process tends to revert to its previous state. Accountability for sustaining the changes often isn’t transferred from the consultants to someone in the organization. In addition, using outside experts implicitly demonstrates management’s distrust of the workforce, which is de-motivating. Further, a company can miss the opportunity to transfer knowledge from the process experts to its people. Finally, the improvement experts (and I am one!) can often have a superior attitude and be zealots with a hammer, so that everything looks like a nail.

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The push approach to process improvement has serious limitations — in order for it to be successful, senior executives must also create pull from front-line workers. If there are continual changes in a company’s markets or strategy, that company will most likely need to make productivity improvements part of everyone’s job. To increase worker commitment and satisfaction, it will need to inspire every one of them to think about how they do their work and how they can improve it.

In my next two posts, I’ll look in greater depth at the challenges of pulling improvement ideas from the front lines, using examples of companies such as Toyota which have shown how to do it.

Question: How have you seen organizations effectively balance their push-and-pull approaches to improvement?

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To read the complete article, please click here.

Brad Power (bradfordpower@gmail.com) is a consultant and researcher in process innovation. His current research is on sustaining attention to process management — making improvement and adaptation a habit (even fun?). He is currently conducting research with the Lean Enterprise Institute.

 

Saturday, June 11, 2011 Posted by | Bob's blog entries | , , , , , , , , , , , , , , , , , | Leave a comment

Uniting the Religions of Process Improvement

Brad Power

Here is an excerpt from an article written by Brad Power for the Harvard Business Review blog (March 7, 2011). To read the complete article, check out other articles and resources, and/or sign up for a free subscription to Harvard Business Review’s Daily Alerts, please click here.

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When they set out to turn around processes that have become woefully inefficient or ineffective, most companies choose one of four process improvement “religions”: Lean, Six Sigma, Business Reengineering or Business Process Management (BPM).

After hearing about its success at another organization, many companies choose just one. For example, several companies embarked on Six Sigma programs after their CEO heard about GE’s success with the approach, and many other companies have adopted Lean because of Toyota’s success.

It’s like adopting a diet or exercise program that a friend has used and lost 50 pounds.

But some companies realize they need to go beyond making episodic improvements. They try to institutionalize process improvement — that is, put in place the right mechanisms in their management systems so that their business processes don’t become grossly unproductive in the future. That is, they try to build continuous improvement into their DNA. It’s like the difference between going on crash diets every two years and fundamentally changing one’s eating and exercise habits.

But moving from episodic process improvements to having the wherewithal to improve processes continually is a tall order because of five key challenges I highlighted in a previous post: competing demands for attention, competing mindsets and behaviors, strategic irrelevance, traditional management processes, and the pain of disruption.

If an organization tries to institutionalize process improvement based on the tenets of just one process religion, it will run into trouble because no single religion has all the approaches for sustaining organizational attention to improvement. Lean has the most complete set of approaches for continuous improvement among the four religions. But a company that embeds Lean thinking into its DNA may occasionally need the hard financial results that Six Sigma can produce. In addition, Lean converts have a predisposition against adopting large, centralized IT solutions, which may cause them to ignore useful approaches from the BPM religion.

The result: Organizations need to consider every possible approach, not just those offered by one religion. To stay with the diet and exercise analogy, being aware of multiple diet programs will help you pull out common themes and arrive at a tailored program that works best for you.

Consider this example. Many companies adopted Six Sigma in the late 1990s. They trained experts in improvement projects (“Black Belts“) who then drove initiatives that achieved large financial results. In some of these companies, senior managers were dubious about the claims. They suspected there was some backsliding or double counting because the results were almost too good to be true. Many of those organizations then embraced Lean for different set of tools for improvement projects, tools that helped them connect project results to key strategic measures. They also stressed organizational learning (meaning, capturing the methods of Lean so that other parts of the organizations could adopt them). Adding another religion helped these companies embed continuous improvement into their DNA.

If organizations want to keep their processes up to date continually, they need to be able to use many approaches to embedding improvement in their management systems. Let’s review the distinguishing features of what each religion has to say about sustaining improvement.

1. Six Sigma zealots say “Belts,” lots of training, and performance measures are what matter.

Motorola pioneered the Six Sigma statistical tools, but it was GE that built the training programs and the hierarchy of accreditations or “Belts” (Green, Black, Master Black) with which it is so strongly associated. People who have earned these belts drive projects with clear financial targets set at the top organization, with progress monitored by the CFO. Six Sigma zealots argue that if you train enough people, you get a cultural transformation. You instill process improvement into the corporate DNA.

2. Business Reengineering’s high priest said core process owners, process maturity, and performance measures are what count.

Reengineering focuses on radical changes in core, end-to-end processes. In addition to laying out an approach for making one-time improvements, Reengineering’s high priest (the late Michael Hammer) had advice for organizations wanting to sustain improvement. He implored their leaders to create and track end-to-end process performance and establish an organization — including process owners and councils — to support the processes. He also advised them to continually assess their processes against a model of process maturity — PEMM for short — which he unveiled in an HBR article.

3. Lean “senseis” (teachers) say strategy deployment, executives as coaches, and front-line problem-solving sustain improvement.

Followers of Lean, which is based on the Toyota manufacturing approach that made it the leader in automobile quality (the Toyota Production System), believe top executives need to break down strategic objectives into implications for process improvements to get everyone moving in the same direction. For example, to improve customer satisfaction, an insurance company decided to focus on reducing the number of service requests over 30 days old from 40% to below 5%, which translated into activities in 30 departments. All organizational levels must identify and solve problems, but senior managers must tell front-line workers why efficiency is critical at all times, and then help them remove waste and improve service to customers.

4. BPM missionaries say processes and process knowledge embedded in software, an enterprise architecture, and a central process management organization sustain improvement.

Most missionaries of the BPM religion come from a heritage in information technology. They believe companies can sustain process improvements if their people use a company-wide software system (such as an ERP application), which has standard processes embedded in the software. They also advise companies to use business process management software to map and document process flows and how work should be executed and to monitor performance. They also believe in building a BPM “Book of Knowledge” (a codification of process improvement “best practices”) and a BPM “Center of Excellence” (a central organization where process experts reside and develop guidelines and procedures for documenting and analyzing business processes).

A few companies that lead in sustained process improvement have drawn from the best of each religion to embed continuous improvement in their organization.

Shell Oil’s downstream (refining and retail) businesses have rolled out a global implementation of enterprise software SAP with standard global processes (as the missionaries of BPM would preach). The company has trained its people to be Shell Sigma Belts (following the precepts of Six Sigma), and appointed process owners and established an elaborate process governance structure (as Hammer would have recommended). What’s more, the company helped develop Hammer’s PEMM concept and is now training Lean managers.

Chemical company Air Products has adopted nearly every approach for sustaining improvement from all four religions. Sloan Valve appointed core process owners several years ago following the Reengineering playbook. The manufacturer has since introduced quality techniques (“kaizen” events), as well as Lean strategy deployment methods and tools.

There is no reason that organizations wishing to sustain process improvement should not draw on all these ideas, becoming “Unitarian Universalists” and bringing together the best of each religion.

Request: What approaches have you seen companies adopt that have kept their attention on process improvement? Have any of these companies combined the approaches of different process religions?

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Brad Power is a consultant and researcher in process innovation. His current research is on sustaining attention to process management — making improvement and adaptation a habit (even fun?). He is currently conducting research with the Lean Enterprise Institute.

 

Thursday, March 24, 2011 Posted by | Bob's blog entries | , , , , , , , , , , , , , , , , , | Leave a comment

   

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