Organization Alignment using Policy Deployment Created with funds from WIRED NW

Organization Alignment and Policy Deployment After the class today you should be able to: Identify the top goals of your company Understand “break though” goals Produce your own “X” Matrix Know what a “bowler “ is and how it is used Create actions plans Develop a countermeasure Learning objectives Created with funds from WIRED NW

Roots of Policy Deployment Called “Hoshin Kanri” Hoshin- Direction Kanri- Map or plan 1960’s- Originated in Japan as part of TQC (Total Quality Management) 1980’s- Widely used in Japan Based on MBO (Management by Objectives) and Plan-Do-Check-act improvement cycles Created with funds from WIRED NW

Policy Deployment Hoshin Kanri Goals into Actions Results meet Goals To align all efforts management must translate Goals into Actions Actions must be tracked and measured to assure Results meet Goals This policy deployment process is called Hoshin Kanri Created with funds from WIRED NW

Need for Alignment Focus change energy on area with the “mass” to move the needle Align all levels to Corporate Goals Transform long range plans to actions Consistent methodology Drive actions and accountability Created with funds from WIRED NW

Hoshin Kanri – Harness the Power Actions Results Goals Actions GOAL OBJECTIVES Created with funds for WIRED NW MANAGEMENT CREATES STRATEGIES SUPERVISORS CREATE ACTION PLANS ASSOCIATES CREATE RESULTS Created with funds from WIRED NW

Lean Conversion Process Education- All levels on Lean Principles Policy Deployment Establish key projects, metrics, linkages, accountabilities Value Stream Mapping Establishment of future state and work plans Work plan execution Lean tool applications Best practices cross linking Created with funds from WIRED NW

Linking Long-term Strategic Goals to Current Action Plans Strategic Planning: Linking Long-term Strategic Goals to Current Action Plans Created with funds from WIRED NW

Strategic Planning Process Assessment: Candid analysis of where you are today Mission: What you do Vision: Where you want to be Strategic Plan: How do we get from where we are to where we want to be? Action Plan: How do you set short-term action plans to get to your long-term goals? Created with funds from WIRED NW

How do we bridge the gap from where we are to where we want to be? Strategic Planning How do we bridge the gap from where we are to where we want to be? Policy Deployment Map Created with funds from WIRED NW

Components of a Policy Deployment Statement: Start with a Vision Strategic Results Required Strategic Objectives Near-term Goals Current Action Items Tracking Metrics Created with funds from WIRED NW

Policy Deployment Created with funds from WIRED NW

Performance Expectation Setting Created with funds from WIRED NW

Organizational Business Results What are some of the desired business results of your organization? Write down the three most important “business results” expected of your organization. Created with funds from WIRED NW

Have the same understanding of the expectations “Setting expectations” discussions will be effective when you and individual: Have the same understanding of the expectations See how all expectations align with the group’s or organization’s goals Reach agreement that the individual will meet each expectation Created with funds from WIRED NW

Making Expectations Clear Draw a picture of a ball…… What are the major questions you would ask me to gain more understanding of what I expected? Created with funds from WIRED NW

”In God we trust – everybody else bring data” ”You don’t have to change – after all survival isn’t mandatory” Created with funds from WIRED NW

SMART Criteria S M A R T Specific Measurable Attainable Relevant Time Bound Created with funds from WIRED NW

SMART Card Activity Determine if your assigned “goals” meet the SMART criteria Created with funds from WIRED NW

Created with funds from WIRED NW

Continue to strengthen relationships Created with funds from WIRED NW

Performance Expectations & Timing Visualize a football field…100 yards long Your “game plan” can take multiple paths… Overall goal – win the game on the scoreboard Interim goals – score by quarter, number of first downs, etc. Created with funds from WIRED NW

Performance Expectations & Timing Setting interim goals, with adequate timing and rhythm, is essential to sustain improvement and meet overall goals Created with funds from WIRED NW

Performance Expectations & Timing What “rhythm” is your work group on? Annual? Quarterly? Monthly? Weekly? Daily? Hourly? Created with funds from WIRED NW

Applied Goal Setting Is it S.M.A.R.T.? How will you measure your success? Do all of the people on your team have an understanding of the desired outcome? How will you get their involvement and support (for your stretch goal)? Created with funds from WIRED NW

Daily Management Smaller, incremental, performance expectations Measure daily – where you ARE vs. where you WANT TO BE Examples: Schedule goals Quality goals Productivity goals Safety goals Inventory goals Created with funds from WIRED NW

Share Best Practices Share best practices with others: How do you set expectations in smaller increments (hourly, daily, by shift)? How do you measure performance? What works best to gauge performance? How do you communicate actual performance? What doesn’t work? Why not? What are the options? Created with funds from WIRED NW

Hoshin Kanri Steps Establish organizational vision Develop 3-5 year strategic plan Develop annual objectives Deploy/roll down to departments Departments develop plans and means Focus deployment – not everyone needs to be involved in everything Iterative (catchball) nature may take time Created with funds from WIRED NW

Hoshin Kanri Steps Implementation of plans Review progress regularly Annual review Drop or continue incomplete policies Check results What caused us to miss targets Created with funds from WIRED NW

Relationship Between Strategic Plan & PD World Class Perf. In: Q D C & S VOC Strategic Plan Policy Deployment Breakthroughs Key Deliverable from Strategic Planning: Top Level Policy Deployment Created with funds from WIRED NW

7 Phase Policy Deployment Process Establish Organizational Mission PLANNING Strategic Planning/ Develop 3-5 Year Breakthrough Objectives Develop Annual Breakthrough Objectives and Improvement Priorities Self-Diagnosis Deploy Improvement Priorities Implement Improvement Priorities IMPLEMENTATION Root Cause Countermeasures REVIEW Monthly Review Annual Review Annual Review Created with funds from WIRED NW

Critical Thinking Process (CTP) Step 1 : WHAT Breakthrough Thinking Step 2 : HOW FAR Annual Breakthroughs Step 3 : HOW Identify Key Driver Process Step 4 : HOW MUCH/WHEN Determine Measures & Track Step 5 : WHO Identify Key Resources & Deploy Created with funds from WIRED NW

Who do you compare your company and its performance to? Competitors Industry Standards Best in Class World Class How do you get to be World Class? Created with funds from WIRED NW

CTP Step 1 WHAT? Breakthrough Thinking World-Class Breakthrough Objective Best-In-Class Industry Standard GAP Current Situation Current Situation Breakthrough Thinking Drives to World Class Created with funds from WIRED NW

CTP Step 2 HOW FAR? Identify First Year Breakthrough Objective Yr 3 Annual BT Objectives Yr 3 Yr 2 Annual BT Objectives Yr 2 Yr 1 Annual BT Objectives Yr 1 Current Situation Identify First Year Breakthrough Objective Created with funds from WIRED NW

CTP Step 3 HOW? Identify Key Driver Processes Annual Breakthrough Objective Improvement Priority Why? Why? GAP Why? Why? Current Situation Why? Identify Key Driver Processes Created with funds from WIRED NW

CTP Step 4 HOW MUCH/WHEN? Determine Measures & Track NOTE: If class does not have the data to do this step immediately, it may be necessary for the instructor to go to the next step, “HOW MUCH/WHEN” in order to “jump start” the class into being able to do this step– “HOW.” 100 . Determine Measures & Track Created with funds from WIRED NW

CTP Step 5 WHO? Identify Key Resources & Deploy NOTE: Get them thinking about where their resources are and where they need them to be. Instructor can expand discussion discuss “resource” in a variety of ways. 100% 100% Resource A 17% Team B 3% Current Resources 20% Relative Impact On Improvement Priorities 20% Resource C Resource D 40% Team E 0% 0% Identify Key Resources & Deploy Created with funds from WIRED NW

What Is A Breakthrough? Represents SIGNIFICANT change in process improvement, especially as seen through the eyes of the customer. Requires the organization to stretch itself. Usually requires multi-functional efforts and teamwork. Usually, no standard or system exists for this level of breakthrough. Can be characterized as a “Big Win.” Created with funds from WIRED NW

Breakthrough Objective Summary Checklist DO: For item #1, be sure to explain that it is important to have daily management systems steady in your organization that can support your organization taking on a new breakthrough. Establishing a Daily Management System that is not in place could be breakthrough for a company. What is breakthrough for one company is not breakthrough for another. For #4, explain that we will do some things for shareholders (customer) (reference our core values). For #8, we want that “lack of uncertainty” to stretch us. Breakthrough Objective Summary Checklist Are daily management systems in place that allow us to improve? Is it a stretch goal ? Is it measurable ? (SMART?) Is it linked to Voice of the Customer ? Will it provide significant competitive advantage? Does it require multi-functional involvement? Will it result in a new standard and/or system? Is the answer to how to do it unknown? Have you checked that no problems exist in other areas that need to be fixed first? When we accomplish the above objectives, does the customer/shareholder benefit? Created with funds from WIRED NW

Annual Breakthrough Objective Checklist Did you consider the pace of meeting the 3 yr breakthrough when developing the annual objective?? Does it divide the 3-5 Year Breakthrough into annual amounts? Does it quantify the first year goal? Is it still a stretch goal? When we accomplish the annual objective, does the customer/shareholder benefit? Will it provide significant competitive advantage? Does it require multi-functional involvement? Will it result in a new standard and/or system? Is the answer to how to do it unknown? Have you checked that no problems exist in other areas that need to be fixed first? Created with funds from WIRED NW

Effective Top Level Improvement Priorities Are: Process Oriented Should lead to the creation of sustainable, results-oriented processes… not short-term tasks. Focused Meets Current or Emerging Customer Needs Limited to a Critical Few Created with funds from WIRED NW

Effective Top Level Improvement Priorities Are: Clear Easy to Communicate Simple Flow of Logic Team understands what is to be achieved and why If you can’t easily communicate… Go back, Simplify, Clarify Created with funds from WIRED NW

Effective Top Level Improvement Priorities Are: Measurable The objective you write must be something that can be measured But, not a Measure! Created with funds from WIRED NW

Top Level Improvement Priorities Contribute to the Annual Breakthrough Objective We apply problem solving techniques to identify the key process that drives the improvement priority. This will enable us to reach our overall annual breakthrough objective. Improvement Priority Annual Breakthrough Objective Why? Why? GAP Why? Why? Why? Current Situation Identify Key Driver Processes Created with funds from WIRED NW

Top Level Improvement Priority Checklist 1. Does it lead to creation of a sustainable process? 2. Does it lead to creation of a results-oriented process? 3. Does it meet current or emerging customer needs? 4. Is it easy to communicate? 5. Does it demonstrate a simple flow of logic? 6. Is it measurable, but not a measure itself? 7. Does it enable the implementation of a process which exceeds budget targets, if and where applicable? Created with funds from WIRED NW

Identify Targets To Improve For Each Improvement Priority Targets are measures of the effectiveness of a given process Think in terms of process capability (statistics) Improvement Priorities tell “how”, Targets tell “how much” & “by when” 100 Determine Measures & Track Typically a from:___to:___by:___ statement Created with funds from WIRED NW

Targets to Improve Checklist Does it track progress toward full implementation of the Improvement Priority? Can it be broken down into at least monthly progress increments? Does it exceed budget targets? Does it track progress toward achieving the Annual Objective? Does it reflect if the Improvement Priority has an impact on the Annual Objective? Does it measure results, rather than action plan milestones? Is it easy to calculate and communicate? Does it demonstrate a simple flow of logic? Created with funds from WIRED NW

Critical Thinking Process & the Top Level PD Matrix Improvement Priorities HOW All items are listed in priority order starting from the center Annual Breakthrough Objectives HOW FAR Targets to Improve HOW MUCH WHO 3-5 Year Breakthrough Objectives WHAT RESOURCES = Primary Responsibility = Secondary Responsibility OWNER Created with funds from WIRED NW

Complete Top Level PD Matrix NOTE: It is not necessary to insert dots linking targets to the 3-5 year breakthrough. The whole picture of your company on one sheet of paper! 3- HOW Use dots to show relationship of Targets and Resources to the Improvement Priority Use dots to show relationship of Improvement Priorities to Annual Objectives 5- WHO Top Level Improvement Priorities NOTE: Only Solid dots on a resource deploy to the next level Annual Breakthrough Objectives 2- HOW FAR Targets to Improve 3-5 Year Breakthrough Objectives 4- HOW MUCH RESOURCES = Primary Responsibility 1- WHAT = Secondary Responsibility OWNER Created with funds from WIRED NW

Linkage on the Matrix Dots show linkage from Target back to Breakthrough for that level Top Level Improvement Priorities Annual Break- through Objective Targets To Improve 3-5 Year Breakthroughs Created with funds from WIRED NW

Policy Deployment Created with funds from WIRED NW

Points to Remember about the Matrix As soon as a solid dot is placed above a resource, that resource will get a lower level matrix or an action plan. Clear circles indicate support resources. They do NOT get a lower level matrix or action plan unless they get a solid dot on another matrix. The dots are to be used as a sanity check The Improvement Priority is deployed to the lower level matrix or an action plan TOP LEVEL - Company Danaher Business System Office - Policy Deployment 1998 l Primary Responsibility m Secondary Responsibility Resources Improvement Top Level Priorities Breakthrough Annual Objectives Targets Improve to Breakthrough 3-4 year Objectives SECOND LEVEL - Plant Second Level Policy Deployment Second Level Improvement Priorities Improvement Top Level Priorities Improve Targets to Breakthrough Annual Objectives l RESOURCES m Primary Responsibility Secondary Responsibility Created with funds from WIRED NW

Cascade as many times as Improvement Priorities Cascade to the Point of Impact TOP LEVEL – Company/Group Danaher Business System Office - Policy Deployment 1998 l Primary Responsibility m Secondary Responsibility Resources Point of Impact - Action Plan The level where root causes are addressed! Action Plans can be initiated out of any matrix level. Top Level Improvement Priorities SECOND LEVEL – Plant/Business Annual Breakthrough Objectives Target to Improve Breakthrough 3-5 Year Objectives Second Level Policy Deployment l Primary Responsibility m Secondary Responsibility RESOURCES Second Level Improvement Priorities Top Level Improvement Priorities Target to Improve Annual Objectives Breakthrough ROOT CAUSE LEVEL- Sub Plant/Dept POINT OF IMPACT - ACTION PLAN Engineer/Supv Cascade as many times as necessary to the Root Cause Level Second Level Policy Deployment l Primary Responsibility m Secondary Responsibility RESOURCES POINT OF IMPACT Third Level Improvement Priorities Second Level Improvement Priorities Target to Improve Top Level Improvement Priorities Created with funds from WIRED NW

Creating Action Plans Create an Action Plan For every Improvement Priority at the Point of Impact Step 4: Identify the impacts on the improvement priority and top level breakthrough objective Step 1: Determine actions & write on worksheets Step 3: What is the current status of the action. Color code background as red to show items past due. Step 2: Record ownership and timing of the actions Created with funds from WIRED NW

Planned date could become the revised date if there is a change to the original plans Milestones are discrete events that indicate that action step has occurred If there are multiple TTI’s (metrics) for a single Improvement Priority, they are listed here in Core Objective Status should be: Complete OR On time OR Past Due OR % complete These are specific tasks to be accomplished, they are generally in chronological order for simplicity. Use outlining to better communicate. Shade the month the action step is to be completed – shade several months if needed. Place “x” where activity actually takes place. The impacts should sum to the improvement priority goal with specific numbers and/or actions Created with funds from WIRED NW

Notes about Action Plans How long should Action Plans be? Long enough to track progress weekly. Include key actions and kaizen events. No prize for length. Keep brief and to the point. Created with funds from WIRED NW

Action Plan Checklist Does it “tie” to PD (is the Improvement Priority it “ties” to clear)? Are all the top-part sections of the Action Plan complete? Are the Actions clearly documented? Are there appropriate number of Actions? Litmus test is should be able to track improvement actions on a monthly/weekly basis. Is the Ownership of each Action identified? Is the timing of each Action identified? Is the impact of each or grouping of Action(s) quantified and is there enough to get you to reach your Objective? Is the correct timing legend used (plan vs. progress at review)? Created with funds from WIRED NW

Targets To Improve are entered in priority order Bowling Charts Targets To Improve are entered in priority order JOP – Jumping Off Point from which you started tracking the target YTD ACT – Each month this field gets updated (is YTD from the monthly fields located to the right) Planned targets are established for each month based on the overall Target to Improve. An actual that is a miss from the plan, is color coded red Created with funds from WIRED NW

Bowling Charts Are Created For All Policy Deployment Matrices TOP LEVEL BOWLING CHART Danaher Business System Office - Policy Deployment 1998 l Primary Responsibility m Secondary Responsibility Resources Improvement Top Level Priorities Breakthrough Annual Target s to Objectives Improve Breakthrough 3-5 year Objective Created with funds from WIRED NW SECOND LEVEL Second Level Policy Deployment l Primary Responsibility m Secondary Responsibility RESOURCES BOWLING CHART Improvement 2nd Level Priorities Targets to Improvement Top Level Priorities Improve Annual Breakthrough Objectives

IMPROVEMENT PRIORITIES 3-5 YEAR BREAKTHROUGH OBJECTIVE Each Target Is Copied To The Top Level Bowling Chart Reduce New Prod. Dev. Cycle TOP LEVEL IMPROVEMENT PRIORITIES ANNUAL BT OBJECTIVES TARGET Increase Market Share to 60% Dev. Cycle to 120 Days by 12/95 TO IMPROVE Production Department Materials Department Engineering Department Marketing Department Human Resources Dept. Sales Department Finance Department 3-5 YEAR BREAKTHROUGH OBJECTIVE RESOURCES = Primary Responsibility = Secondary Responsibility TOP LEVEL MATRIX TOP LEVEL BOWLING CHART Created with funds from WIRED NW

Personal Tracking Report Created with funds from WIRED NW

What are Countermeasures? Countermeasures are actions plans designed from problem solving techniques designed to bring you back to your PD target Written for any monthly miss on Policy Deployment Can also be required for KPIs based on the manager’s discretion Created with funds from WIRED NW

Countermeasure Components Format: can use A3 or matrix format Include trend charts, pareto diagrams, or any visual tools to help speak with data and tell the story Must be at Point of Impact Assure the countermeasures are tied to the greater vision Define the root causes and quantify amount of “miss” Focus on the critical few… may not get to 100% of the “miss” in 30 days-Sometimes you will have short-term and long-term countermeasures Clearly define ownership and timing Created with funds from WIRED NW

Countermeasure Key Points Know the “tie” to PD! May need More Paretos to “Peel-back-the Onion” Define the Root Causes and Quantify amount Of “Miss” Run chart of Plan vs. Actual Same data from PD Bowler Must be at “Point of Impact!” Clearly define Ownership And timing! Focus on the critical few… May not get to 100% of the “Miss” in 30 days Sometimes you Will have Short-term and Long-term CMs Quantify the Impact! Do you have Enough? Created with funds from WIRED NW

Countermeasures Having a PD miss and having to write countermeasures does not mean that someone has failed PD Targets, by their nature, should be aggressive stretch targets Outstanding organizations will normally be required to write numerous countermeasures each month Created with funds from WIRED NW

Countermeasures Good countermeasure preparation will drive an organization to productive self-criticism, more robust systems, closer customer contact, a higher level understanding of the marketplace, etc. Effective Countermeasure development is a team effort. Writing them in a vacuum normally does not yield the best results or plans Created with funds from WIRED NW

Countermeasure Checklist Does it “tie” to policy deployment (is the “tie” clear)? Does it have a run chart showing plan versus actual data? Does the Pareto show the why versus the where (i.e., get to root cause)? Is the Root Cause Statement made with quantified amount of miss? Are the Countermeasures focused on the critical few? Are there short-term as well as long-term countermeasures (if appropriate)? Is the Ownership of each Countermeasure identified? Is the timing of each Countermeasure identified? Is the impact of each Countermeasure quantified and is there enough to get you back to Plan? Created with funds from WIRED NW

Do a Monthly Review of Your Action Plan Policy Deployment meetings are held monthly (a meeting for each PD matrix) Countermeasures are fact based Countermeasures are specific, with due dates and responsibilities listed Problem solving tools are used to determine countermeasures PD targets are measured frequently enough to provide adequate data Created with funds from WIRED NW

Top Management’s Role in Policy Deployment Conduct lively policy deployment sessions that test people’s understanding. Information must be fact-based. Evaluate effectiveness of specific projects & action plans Evaluate effectiveness of the overall improvement process Decide when to take action & what type of action to take Communicate Stretch vs. Budget and hold associates accountable Created with funds from WIRED NW

Summary ASSESSMENT - Take careful stock of where you are today VISION - Decide where you want to be in the future STRATEGIC PLAN - Work out a Policy Deployment Map to bridge the gap from now to your vision AOP - Ensure that current year actions are included in your Annual Operating Plan MEASURE PROGRESS - Establish formal tracking for management team for their short term action items ACCOUNTABILITY - Keep the plan alive by getting monthly strategic updates regarding progress CELEBRATE your victories! Created with funds from WIRED NW

Independent Assignment #2 Meet with your mentor and review the materials discussed in today’s session. Mutually agree on opportunities to apply what was learned today, using as many tools as possible. Bring a completed X matrix to the next session. Discuss Independent Assignment expectations before concluding today’s session. Allow time for questions. Created with funds from WIRED NW