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.
* * *
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?
* * *
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.
In an article written for strategy+business magazine (January, 2011), Jim Champy, coauthor, with Harry Greenspun, of Reengineering Health Care: A Manifesto for Radically Rethinking Health Care Delivery, introduces a lesson on the pitfalls of measurement from Faster, Cheaper, Better: The 9 Levers for Transforming How Work Gets Done, by Michael Hammer and Lisa W. Hershman.
Here is an excerpt from Champy’s article. To read the complete article, please click here.
* * *
The late Mike Hammer always delivered the unexpected in a strong voice with an intelligent edge that woke you up. When we coauthored Reengineering the Corporation, I discovered that no partner could have been more insightful, more probing into the behaviors of companies and their managers. Mike also had a great talent for metaphor. He said that inefficiencies were like fat marbled into a piece of meat, and that to get costs out you had to grind up the company and fry out the fat. That metaphor never made it into our first book. I told Mike that executives wouldn’t respond well to the notion of treating their companies so brutally.
But that didn’t stop Mike from being a radical thinker, always challenging the way things are done. He disdained the notion “if it ain’t broke, don’t fix it.” In this excerpt, from the book that Mike was working on before his untimely death at age 60 in 2008 (a work completed by his colleague Lisa W. Hershman), you will see that even things that look right can be wrong. Read it several times to grasp everything that’s here on how managers misuse metrics and measurement processes — sometimes unwittingly, sometimes purposely to deceive. It’s quintessential Hammer.
— Jim Champy
Excerpted from Chapter 2 of Faster, Cheaper, Better: The 9 Levers for Transforming How Work Gets Done:
In the sixth century Pope Gregory the Great formulated his famous list of the seven deadly sins — gluttony, greed, wrath, lust, sloth, envy, and pride. There are also seven sins of corporate measurement. Gregory’s list was meant to help an individual’s quest for salvation. Ours is more mundane: saving companies from fatal flaws in performance measurement.
Vanity. One of the most widespread failings in performance measurement is to use measures whose sole purpose is to make the organization, its people, and especially its managers look good. As one executive said, “Nobody wants a metric that they don’t score 95 on.” This is especially true because bonuses and other rewards are usually tied to performance measures. For instance, in distribution logistics, it is common for companies to measure themselves company performance; it does not lead to customer satisfaction or any other desirable outcome. All you have to do is keep promising a later date. Even if you manage to hit that target 100 percent of the time, it’s likely that your customer wanted the product days, weeks, or even months ago, so don’t go patting yourself on the back.
A far better metric would be performance against customer request date. But achieving that goal would be far more difficult and might lead to managers not getting their bonuses. When executives at a semiconductor manufacturer proposed shifting from last promise date to customer request date, they encountered widespread resistance.
A metals refiner had been using yield — the percentage of raw material that was turned into saleable product — as a key performance metric, and everyone was very pleased that this figure was consistently over 95 percent. An executive new to the company made the observation that this figure glossed over the difference between high-grade and low-grade product. The refinery was supposed to produce only high-grade product, but poor processing sometimes led to low-grade product. The company then started to measure the yield of high-grade product and discovered that figure was closer to 70 percent. That was a much more meaningful representation of the refinery’s real performance. Unsurprisingly, that insight did not generate a lot of enthusiasm.
* * *
To read the complete article, please click here.
Note: Regrettably, Michael Hammer died in September 2008 while at work on the first draft of this book. His colleague at the Hammer Company as well as his co-author and personal friend, Lisa Hershman, should be commended for completing the manuscript for publication. She conducted many of the interviews that are included while also making whatever revisions and editorial decisions were necessary. The results of her commitment both to her late colleague and to the book speak for themselves in this brilliant achievement.
* * *
Questions are much easier to ask than to answer. For example, why is it so difficult for most companies that have all the resources they need (including talented, skilled, intelligent, and energetic people) to achieve and then sustain continuous improvement of performance? According to Hershman, here is what Hammer’s research has revealed. “It’s simply the way companies today are organized and operated makes it impossible for them to get the dramatic performance improvements they need even if they were staffed by supermen and superwomen. The only option is deep and fundamental change to how they do the work. Providing the road map to doing so is the mission of this book.”
More specifically, what Hammer and Hershman offer in this book are five process enablers (i.e. the process design, appropriate metrics, performers who do the work, a process owner, and an effective infrastructure) that comprise the aforementioned road map for “transforming a process and creating breakthrough performance.” However, important as this map is, it is insufficient because so many companies seem to know what to do but just can’t get it done. In many instances, their leaders have developed what Jeffrey Pfeffer and Robert Sutton characterize as a “knowing-doing gap.” Companies that have been able to follow Hammer’s road map “did so because they have four enterprise capabilities in place – overarching characteristics that equipped them to undertake fundamental transformation: leadership; culture; governance; and expertise.”
To me, the most valuable material in the book is provided in the final chapter but only because Hammer and Hershman have used the previous chapters to create a context, a frame-of-reference, for the Process and Enterprise Maturity Model (PEMM) based on the nine critical high-level organizing principles “that can transform a mediocre company into a high-performance organization.” It is important to keep in mind that PEMM does not specify what any particular process should look like. Those involving the improvement of cycle time or first-pass yield, for example, will differ – sometimes significantly — from one company to the next; indeed, they can differ – sometimes significantly – in the same company from one department to the next.
Hammer and Hershman explain, PEMM identifies the characteristics that any company should have to succeed in implementing process transformation.” A company can apply PEMM to all its processes and can develop processes unique to its own needs…It is a model designed to measure how well the organization is adopting the nine principles of process. ” After working their way through the book to the final chapter, readers may ask, “How mature are the processes in my organization?” Hammer and Hershman conclude their book with a five-page detailed audit by which each reader can answer that question. The grid lists the nine organizing principles vertically and four levels of maturity horizontally. Annotations illuminate the evaluation process.
Here is an article written by Geoffrey James for BNET, The CBS Interactive Business Network. To obtain a free subscription to one or more of the BNET newsletters, please click here.
* * *
Most business books are mediocre; some are even useful. However, there are a few business books that are so idiotic in concept that it’s incredible that they got published. And there are also a few business books that got popular by encouraging toxic corporate and management behaviors.
This post contains my personal list of the worst business books I have ever seen or read. Some are famous, others obscure, but all of them are, IMHO, first class turkeys that would have been better left unpublished.
[All ten were on The New York Times bestseller list. Here are his first five. To read the complete article with his comments, click here.]
#10: Reengineering the Corporation: A Manifesto for the Business Revolution (1993)
James Champy and Michael Hammer
The reengineering concept caught on like wildfire and when the dust settled, analysts and researchers concluded that few, if any, of the so-called reengineering efforts had a beneficial effect on the corporations that attempted them. Meanwhile, reengineering immediately became weasel-speak for downsizing, giving it respectability as a corporate strategy. Even today, companies use the term “reengineering” to justify eviscerating companies in order to jack up the stock price, while producing little or no lasting value
#9: Jesus CEO: Using Ancient Wisdom for Visionary Leadership (1996)
Laurie Beth Jones
The real-life Jesus espoused a communal lifestyle with no private ownership of property. For over a thousand years, Christianity forbade the lending of money at interest, which is the soul of the business world. Since there’s no real meeting point between actual Christianity and the business world, all this book did was confirm the notion — already common among the ranks of top management — that the CEO should be treated like a god.
#8: The Fifth Generation: Artificial Intelligence and Japan’s Computer Challenge to the World (1983)
Edward A. Feigenbaum and Pamela McCorduck
This now-obscure text described how the Japanese government was investing hundreds of millions of dollars to create machines that could think and encouraged the U.S. to do the same. Japan’s AI investment turned out to be a monumental failure that consumed several billion dollars, channeling much of Japan’s high tech community into a technological dead end. Similar amounts of money invested in the United States (mostly in the form of private equity) similarly went down the toilet. Almost 30 years later, and strong AI (i.e. machines that emulate human intelligence) is no closer than it was back then.
#7: Radical E: From GE to Enron Lessons on How to Rule the Web (2001)
Joel Kurtzman and Glenn Rifkin
The authors must have excreted square pieces of adobe when Enron imploded a few months after they published this high tech manifesto. However, it wouldn’t have mattered much, since the book was full of recycled dot-com bromides and strategies that mostly didn’t pan out as the Internet outpaced the ability of most named companies to take advantages of the trends.
#6: Countdown Y2K: Business Survival Planning for the Year 2000 (1998)
Peter De Jager and Richard Bergeon
The Y2K turnover generated a slew of books, but this one was responsible for much of the Y2K overspending inside thousands of business. While Y2K bugs did exist, they were never a major threat requiring “survival”, as evidenced by the complete lack of the worldwide disasters that the authors predicted. In the end, companies wasted tens of billions of dollars on unneeded hardware and software upgrades, creating a dip in computer purchasing in the following years. That, combined with the crash of the dot-coms, helped propel the economy into a recession.
* * *
Geoffrey James has sold and written hundreds of features, articles and columns for national publications including Wired, Men’s Health, Business 2.0, SellingPower, Brand World, Computer Gaming World, CIO, The New York Times and (of course) BNET. He is the author of seven books, including Business Wisdom of the Electronic Elite (translated into seven languages and selected by four book clubs), and The Tao of Programming (widely quoted on the Web as a “canonical book of computer humor”.) He was also co-host of Funny Business, a program on New England’s largest all-talk radio station and has given seminars and keynotes at numerous corporations.
In this series, Bob Morris poses a key question and then responds to it with material from one or more of the business books he has reviewed for Amazon and Borders.
One man’s opinion, here’s my “Top Ten”:
Frederick Winslow Taylor (1856-1915) introduced measurement of time in relation effort to determine nature and extent of productivity.
Henry Ford (1863-1947) applied Eli Whitney’s ideas about mass production of interchangeable parts to what became the assembly line.
Chester Barnard (1886-1961) was one of the few who managed to bridge the gap between theory and practice. He was a highly successful practitioner and an innovative theorist.
Alfred Pritchard Sloan Jr. (1875-1966) did for the upper levels of government what Ford did for the shop floor: he turned it into a reliable, efficient, machine-like process; he also created a new organizational form, that combined decentralized operations with coordinated, centralized policy control.
Elton Mayo (1880-1949) was among the first to focus attention on workers as human beings, stressing the importance of creating organizations in which working conditions and career opportunities respond to workers’ needs and aspirations.
W. Edwards Deming (1900-1993) probably had greater impact upon Japanese manufacturing and business than any other individual not of Japanese heritage. He taught top management in major Japanese companies how to improve design (and thus service), product quality, testing and sales (the last through global markets) through various methods, including the application of statistical methods.
Akio Morita (1911-1999) and Konosuke Matsushita (1894-94) who demonstrated the practical value of Deming’s theories that enabled their companies (Sony and Matsushita) to produce innovative high-quality products and increase the global influence of their economic power.
Douglas McGregor (1906-1964) introduced two mutually-exclusive theories, Theory X and Theory Y, that continue to be debated today in terms of the relationship between workers and those who supervise them. Many organizations now synthesize features of both.
Peter Drucker (1909-2005) is generally credited with establishing management as an academic discipline and as a profession. He is arguably the most influential business thinker and certainly the most prolific, having written more than 40 books and published more than a thousand articles.
Rounding out my list of ten would be a cluster of business thinkers who became influential late in the 20th century and remain active and productive. They are listed in alphabetical order: Warren Bennis, Ken Blanchard, Ram Charan, Jim Collins, Gary Hamel, Michael Hammer, Rosabeth Moss Kanter, Michael Porter, C.K. Prahalad, Noel Tichy, and James Womack.
Comments, questions, requests, or suggestions? Please share them. They will be most welcome and I thank you for them. Best regards, Bob