Extreme Customer Loyalty

Here are a few tips on creating an organization with extreme customer loyalty.

With the holiday shopping season kicking into gear, it seems like a good time to discuss the importance of customer satisfaction and loyalty.  Even if you are not in a retail businesses depending on the holiday season to make your annual numbers, it is important to make sure you understand your customers so they return year after year.  Okay, so if you work for a Government agency or some other organization that does not have traditional customers, you are not excused.  Keep reading.  Fact is, that Government organizations, even the military, have customers.  They may not be clearly defined, but they exist.  Government organizations also have to fight for budget and human resources.  Often your customer is the very organization that grants your budget and resources. Understanding your customers and their ever changing needs is vital to defining Value, the guiding light for Lean Agile delivery of products and services.  If you are an organization espousing Lean as part of your strategy for organizational excellence, you must understand your customers or you do not understand Value and hence cannot be Lean.

Customer Loyalty Cycle

To begin, let’s review a few key facts about customer satisfaction.

Customer satisfaction is:

  • A mix of perception and reality
  • A moving target
  • Highly correlated to employee satisfaction
  • Driven by process and product excellence
  • Quantifiable
  • Critical to the success of almost every organization

In my years of study and consulting with various organizations, I have come to believe that organizations with fiercely loyal customers subscribe to two key principles of extreme loyalty.

  1. Directly addressing customer satisfaction does not work. Successful organizations excel with the root cause drivers of customer satisfaction.
  2. Customer satisfaction, employee satisfaction, process excellence, and corporate performance are bound in a continuous cycle of performance.

Consider the organizations known for extreme customer loyalty: Apple, Toyota, BMW, Walmart, McDonald’s, Twitter, Amazon, etc.  Each of these organizations has a clear market strategy based on a detailed understanding of customer segments and they effectively manage the drivers of customer satisfaction rather than react to the symptoms. Business insider has an interesting albeit dated list of brands with fierce loyalty, http://www.businessinsider.com/brand-loyalty-customers-2011-9?op=1.

Consider Toyota’s focus on quality and Lean process with products that are very sensible for their target customers.  I have always found it interesting that lower quality auto manufacturers advertise the quality of their vehicles, while consistently being beat out by Toyota who sells more and owns the global customer perception of Quality. Consider alternately Apple and their brash strategy of forging new markets.  It seems to work for them time and again, because they know their customer base eagerly awaits the next iThing. At the same time Hewlett Packard and others try the same strategy, but fail time and again.  Different customer base means different strategy.  McDonald’s provides tremendous training and career opportunity for its employees.  All of these organizations excel in the root drivers of customer loyalty and almost all of these organizations understand that success is a cycle of learning, improving, and delivering.  Without learning cycles at all levels, these incredible brands would not enjoy such success.

Here are a few quick tips for understanding and managing your organization for extreme customer loyalty.

  1. Begin with the end in mind. Understand that you must work toward a model that aligns customer segments, lines of business, internal operations, products and services into a measurement and management program that drives customer loyalty.
  2. Analyze and Segment Customers
    1. Clearly identify customer segments


  1. Use key attributes and key performance metrics
    1. Understand that perception and reality are not always the same.
  1. Perception must be measured and managed
  2. Reality must be measured and managed
    1. Data must be collected in recognition of timing and method
  1. Timing: At time of service & 6 months after service
  2. Direct Methods: Web, paper, phone, in person
  • Indirect Methods: Process data, returns, price analysis, social media
  1. Create customer segments and further analyze each segment by developing Kano models and House of Quality

The Kano Model of Customer Satisfaction


The House of Quality associates key customer requirements with product and service attributes.


  1. Develop detailed measurement and management plans for each customer segment.  Make sure accountability for continued improvement of the relationship with each segment is clearly defined and make sure each Line of Business knows their role in overall customer management.


  1. Develop a detailed plan of action for near term customer loyalty and satisfaction improvement along with implementation of the mechanisms that will ensure ongoing success with each customer segment.  I recommend the use of the Hoshin Planning Matrix as a way to establish a five year plan with clear goals and accountability.  See Mitigating the Effects of Baseline Budgeting for more information on the Hoshin Planning Matrix.  When conducting your customer loyalty and satisfaction improvement initiative, remember the following.
  • Customer satisfaction is A priority, not the priority
  • Satisfied employees drive satisfied customers
  • Teach employees about customer satisfaction
  • Define customer segments, models, & metrics
  • Employ overt and covert (ubiquitous) satisfaction management methods

The point here is that extreme customer loyalty comes from an understanding of what is of value to clearly defined customer segments and then focusing on the core competencies that drive the effective and efficient delivery of value to the customer.  Customer loyalty must be addressed from the inside out.  It is like personal health.  One can eat healthy, exercise, and sleep well to stay out of the hospital or you can ignore the fundamental drivers of health and medicate problems as they arise.  Eventually, the problems become too many to medicate, the medications begin to interact, and a death spiral begins.  There is a long history of organizations that ignore the drives of customer loyalty and instead waste time and money on customer satisfaction mitigation (symptom) strategies such as warranties, clubs, and price manipulation.  Some of these companies include: Blockbuster, Border’s Books, Circuit City, and the long list of home improvement chains run out of business by Home Depot.  This is not a list on which you want to be.

So while the holiday season is here and everyone is out being a customer, think about what makes you loyal to a brand, a company, or an organization then consider starting the new year with a plan to get better at managing the underlying root drivers of customer loyalty for your organization.

Mitigating the Effects of Baseline Budgeting


This posting is on a topic of particular concern to me.  As someone that has worked for and provided consulting services to major corporations and our Federal Government for more than 20 years, I have found baseline budgeting to be at the root of tremendous waste,  bloated budgets, and overgrown organizations.  It is my sincere hope to see our Government take serious steps to reduce the effects of baseline budgeting, for the sake of us all.  Here is some content from a concept paper I recently authored on the subject. Click here to download the entire paper Mitigating Effects of Baseline Budgeting.  Also, please post your comments and ideas on other ways to mitigate the effects of baseline budgeting.

Baseline budgeting is the financial planning practice in which an organization has an annual budget developed and approved based on a baseline of spending plus requests for additional funding in each financial planning cycle.  The baseline is based on previous year’s approved spending.  Additional funding is based on many factors including inflation, cost of materials, new programs, new technology, and other forms of growth. This is the approach to budgeting predominately used by Government agencies and some large businesses.  The most apparent problem with baseline budgeting is the assumption that current spending levels are the appropriate baseline or “bottom line” of spending.  This assumption is problematic for many reasons. Given that financial planning cycles range from 18 months (Industry) to four years (DoD), numerous things can reduce the required baseline of spending needed for an organization. Baseline budgeting is a root cause of inefficient use of Government resources.  The financial costs are measurable and easy to comprehend.  The human and performance costs are nearly impossible to measure on a large scale, but as we have witnessed, can outpace financial costs by several orders of magnitude, especially when baseline budgeting operations manage expensive end items (planes, tanks, buildings, or human capital).

Ways to reduce the effects of baseline budgeting, in order of importance, include:

  1. Hoshin Kanri (a.k.a. Hoshin Planning, Goal Deployment)
  2. Standardized Business Case Analysis[1]
  3. Cost/budget reduction based performance incentives

Hoshin Kanri, a Proven Method for Strategic Management

Hoshin Kanri is the most powerful technique for mitigating the problems with baseline budgeting. It is used by many of the world’s highest performing corporations including Toyota, General Electric, and Hewlett Packard.  It is just now starting to get traction in Government. Hoshin Kanri connects tasks to strategy through simple step-by-step planning, commitment to the plan, and rigorous management to the plan through a set of tools that continuously align every day activity to strategic goals.



In addition to the disciplined process for performance and financial planning established by Hoshin Kanri, the tool that specifically helps mitigate the effects of baseline budgeting is the Goal Deployment Matrix, shown below.  The Goal Deployment Matrix is particularly useful as a tool against baseline budgeting in that it captures all goals and objectives for the organization, plots them against the organization’s core functions and initiatives, and establishes ownership and performance metrics both horizontally and vertically.  When fully implemented, the Hoshin Goal Deployment Matrix is a matrix based catalog of every function (operational and developmental) within an organization and identifies the value each of these functions is supposed to drive.  This is used to mitigate baseline budgeting through enforcement of a budgeting process that requires all budget line items to be associated with the Goal Deployment Matrix.  If a budget line item does not have a clear place on the Goal Deployment Matrix, then it is not aligned to value and it is waste.  All new developmental initiatives are vetted against the Goal Deployment Matrix to again identify their value and place within the plan.

Standardized Business Case Analysis Drives Spending Discipline

Standardized business case analysis is another method that can help mitigate the negatives of baseline budgeting.  Though not as powerful, business case analysis is a great tool in conjunction with Hoshin Kanri.  Business case analysis primarily addresses the expansion of the baseline by forcing all new starts and developmental efforts through a standard business case process.  In each case, new starts must be vetted against a balanced set of criteria, must add value, and must align with strategic goals.  Further, the standard business case process forces a set of process steps and approvals that cannot be short circuited to enable end of year spending. The diligence of the process forces management to think more strategically about spending activities.

Individual Performance Metrics, a Useful Tool for Specific Problems

Perhaps the most difficult technique for reducing the effects of baseline budgeting is the application of individual performance metrics targeted at cost savings.  This is also the most risky, because personal performance metrics drive personally motivated behaviors.  These behaviors may not be best for the organization.  In other words, if people are incented to reduce cost for personal gain, they may do so at the expense of increased market share or improved customer satisfaction for the organization.  However, cost reduction individual performance metrics can be used sparingly when targeted at specific functions or offices within an organization.

Improving Financial Planning Processes, The Time is Now

It has been our observance during nearly two decades of management consulting that baseline budgeting is a root cause of significant Government inefficiency.  It is the source of compounding financial excess and irrational management behavior.  It is not feasible for Government to perpetually increase its percentage of financial and human resources consumed.  Sequestration and recent cuts in Government spending have created an opportunity for new ways of managing the tax payers’ dollar.  It is incumbent upon Government leaders to seek out and employ new strategic planning, financial planning, and human capital management techniques that ensure Government agencies build upon and institutionalize recent change.


[1] GAO INFORMATION TECHNOLOGY – OMB NEEDS TO IMPROVE ITS INVESTMENT GUIDANCE. (2011). Retrieved January 29, 2015, from http://www.gao.gov/assets/590/585915.pdf

Building a Great Mission Statement

It is the time of year when many organizations are doing their strategic planning for the year ahead.  In the spirit of the season, here is a strategic planning tool for revising or building anew a mission statement for any size or scope of organization.  The approach is simple and effective.  It originates from the management discipline known as Hoshin Kanri.  I have used it very successfully for many years in numerous environments including telecommunications, product development, defense, and information technology.

The method is very simple.  It begins with a mad libs (remember those?) style fill in the blanks.  The template is shown below.

Mission Statement Template

The mission statement building process will take from one to four hours depending on size and complexity of your organization.  Bring your team together, include a representational cross section from leadership, management, and staff and make sure you have a good facilitator.  Building the mission statement if fun and easy from this point.  Using a large white board, the facilitator should solicit answers to each blank line, beginning with purpose.  Get everyone to participate and throw out some stimulating ideas.  For example, you can propose to the team that the purpose of the organization is “to put all competitors out of business” or “to dominate the world.”  These are not likely realistic or productive as a true purpose, but they stimulate discussion and get people to loosen up and participate.

I like to begin the process with an example mission statement built using the process.  I often use a mission statement leveraging my past as a landscaping business owner, back when I was in college.

Lawn Mission Statement

In this simple and effective mission statement, we identify that our ultimate goal is to be the regional leader that protects its customer base and that we recognize our most important capabilities are with our crew chiefs and our equipment.  This creates both operational and strategic focus for the organization.

I regularly see mission statements from multi-billion dollar corporations that are less concise and less meaningful.  Yet, those mission statements typically take months to develop.  This approach can develop a great mission statement in hours.  Even if your mission statement is not open for revision, going through this exercise is a great early phase tactic for your strategic planning team.  It helps to get everyone focused and often exposes strategic gaps or lack of alignment.  If you choose to give this method a try, please send a comment to let us know how it worked out.






Using Lean Practices in IT, Big Savings and Performance Improvement

It has been a busy 2012 for everyone, It seems everyone I know is like me, working harder than ever, hoping the economy picks up and that our Government gets budgeting and contracting plans set and in motion.  While weathering the current economic storm, I had the opportunity to work with a client in the first quarter of this year in one of my favorite environments – IT.  I have found myself in various IT positions and consulting roles throughout my career, picking up technical skills as well as experience with ITIL, CMMi, and various development methodologies.  I have in many cases applied Lean and Six Sigma in conjunction with IT best practices to help organizations improve performance and save money.  Recently, I helped an organization shave millions in annual operating costs while significantly improving performance by applying agile work cells and leveraging a few simple Lean techniques such as one-piece-flow.  This article summarizes three methods nearly any IT support organization can use to drastically cut costs and improve performance.  Given the current economic and budget environment, this may be a timely read for some of our followers.


A graduate school professor assigns a software development final class project to teams of five students each.  All students on each five person team will receive the same grade and it accounts for 50% of the final grade for the class.  Team 1 (Sally, Jack, Dan, Tom, and Ken) and Team 2 (Bill, Dave, Will, Cindy, and Beth) take two different approaches to tackling the project. Team one assigns requirements to Sally, Design to jack, Development to Dan, testing to Tom, and presentation of the product to Ken.  Each person will perform their respective part of the project and then hand their work to the next until all work is complete and the final product is handed off to Ken who will present the final product to the professor and his assistant and the grade for the project will be determined.

Team Two decides that they will tackle each task from requirements through final presentation together, but take turns as the task leader based on the strengths of each team member.  The members of team two do not completely trust each other and want to make sure the project progresses on schedule and with high quality since it can cause them to fail the class if done poorly.  They also want to make sure they are all at the presentation to the professor just in case something goes wrong.

Which team would you want to be on? On team one, you know your part of the work, you can focus on your piece and the roles and responsibilities are clear.  On team two, the roles and responsibilities are blurred and everyone on the team will be pounding away the entire time to create the best product possible.  Anyone that has been to graduate school knows that almost without exception, students inherently adopt the collaborative approach of Team Two.  Why do these young minds, yet to be trained by corporate master-minds and molded by policy, politics, bureaucracy, and standardization take this collaborative approach almost every time.  It is because they still have “common sense” and they feel a true sense of urgency and commitment to excellence.  They know their future is on the line with each major project.  They also know that the deadline cannot be changed, resources are constrained, and quality cannot be sacrificed.  Common sense brings them together into what Lean experts call a work cell and software professionals call a Scrum team using an agile approach.

Is this really the best approach?  Many managers will say “this approach is a waste of labor.” “By taking team one’s serial approach they can have multiple projects underway, or Work In Process (WIP) with the same labor pool, while the team two approach limits me to one project at a time with the same resources.”  This is a logical pitfall.  Managers should focus on level of effort in value adding activities and throughput while minimizing WIP.  The Team Two approach on the other hand ensures a “connection” among tasks and essentially eliminates rework within the process.  It also eliminates work waiting in queues and mitigates risks associated with single points of failure in your labor pool.

Lean/Operations Research people call this one-piece-flow in a cellular work cell system.  This article is not a lesson in Lean.  It is a message that assembly line type of thinking is simply wrong in diverse IT environments as proven by the many successful Lean/Agile Scrum implementations.  Yet, this thinking is still prevalent and still the dominant approach to tackling IT projects in most organizations.

I have worked with numerous IT organizations from the largest telecommunications companies to start-up software companies and internal IT shops and can tell you with certainty, that a serial assembly line approach is almost always the wrong way to complete IT projects.  I remember clearly how one of the telecommunications firms I worked with, rooted in old school Bell Corps thinking insisted on breaking the work of implementing new equipment at their Points of Presence (POPs) into a serial approach of power installation, rack installation, equipment installation, wiring, configuration, test, and turn-up.  They would go round-and-round trying to get vital services running with each step of the process pointing fingers at the other. Projects usually made their way to some ridiculous phone conference where the bosses of the various technical teams would accuse each other of various sins until someone higher up would finally tell them all to get their technicians to the site at the same time and don’t leave until the service is working.  In other words, they pulled together a collaborative work cell to get the job done.  The technical leads would declare victory after working nights and weekends to get the service running. This scenario would play out over and over, but the process never changed. That was well over a decade ago and I would like to believe things have changed, but from what I hear, they are only a little better.

To avoid these same inefficiencies, to improve quality, and to drastically cut costs there are three simple methods we recommend.  We call this the “Lean Agile Work Cell Approach”.

  1. Align your IT work force to customer value propositions (a.k.a. value streams)
  2. Implement a Lean centric, pull based cellular work cell approach.
  3. Adopt a unified process automation environment

Aligning your work force to customer value propositions is actually very simple.  Think in terms of the services your IT organization provides to the end customer.  For example, enterprise software projects and support, desk applications and support, and printer support.  You can also think in terms of Service Oriented Architecture (SOA).  You need to understand the Voice of the Customer (VOC) for each line of value.  You need to quantify the key metrics for satisfaction, performance, cost, etc.  You then need to align your teams and processes to these value propositions and measure everyone in them against the key metrics.

Agile work cells aligned to the customer value proposition

Creating pulled based cellular work cells is partially explained above.  As an example, consider the process of deploying new desk top operating systems in your enterprise.  If this process is done in a serial process, disconnected from the customer, you get a situation in which technical details and requirements are gathered for months, then handed off the a integrator that has to figure out the requirements and then develop integration scripts, which are then handed off to a testing team who will then get into a series of re-work loops with the integrator and after many months of testing, the operating system push will be sent to some type of distribution team that will then blindly launch the distribution process.  Alternatively, a series of small work cells containing integrators, testers, distributors, and customer technical liaisons can work together on a focused integrated project team to integrate, test, and deploy operating systems in a rapid order.  By testing at an incremental level and developing deployment scripts with an eye for testing and distribution at the same time, cycle time is significantly reduced and defects essentially eliminated.  This approach also allows for the operating system deployment team to learn from each iteration and get better with each operating system project from customer to customer.  In my firm, we have implemented similar work cells in various organizations with profound improvements in both effectiveness and efficiency.

Lastly, adopting a unified process automation platform is a powerful way to significantly reduce your IT license costs, maintenance costs, and software support costs while improving process performance.  For the last ten years, these tools have been called Business Process Management (BPM) and for the organizations that have adopted them and implemented well, great savings, process improvement, and transparency have been recognized.  The process automation environment becomes a process centric integrated development environment eliminating the need for custom software development, institutionalizing processes, but raising the need for proper IT Governance and enterprise architecture.  Today, process automation tools are available in cloud computing platforms and costs are falling precipitously.

In summary, the Lean Agile Work Cell approach to information system management creates agile work cells working in alignment with customer needs that are developing new software and managing their own work within a common process automation/development environment.  This is bad news for custom software development shops and great news for the CIO with a shrinking budget and pressure to show results.

Mentoring – A Powerful Business Tool

This week’s post is about something we at MSI do on a daily basis.  The subject is mentoring.  Technically, we coach and mentor, but mentoring in particular is a powerful business tool in many ways.  Mentoring is something a successful person will leverage as both a mentor and as a protégé or mentee.  First, let’s define the term mentor.  According to Webster, a mentor is defined as “a trusted counselor or guide.”

The mentor can be a trusted counselor or guide at many levels and in many ways.  Mentors can be life coaches, technical advisors, career counselors, financial advisors, and so much more.  Existing survey data on the benefits of mentoring indicate it is well worth the expense and effort with a minimum of $2.00 returned for every dollar invested.  Additionally, most experienced professionals will agree that finding a mentor that will guide you and take you along a path of success is vital to a successful career.  Further, mentoring those less experienced is vital to both your success and the future of your organization or industry.  For the sake of this article, I will break business related mentoring into two categories: (1) career mentoring and (2) technical mentoring.  We will ignore personal, academic and other such mentoring as this is a business article.  Not to say those types of mentors are not vitally important, they are.  In many cases, the personal life mentor may be the same person as the business mentor.  However, most people reading this article will have a personal life and a business life and I am catering to the latter.  In all cases, there is one axiom that applies “learn from those that came before you.”  Learn from their mistakes and learn from their successes.  I would say one of the most important things that got me through my teens and twenties was my desire to learn from the mistakes of others and not make those mistakes myself.

Career mentoring is, from an individual perspective, the most important of the two.  Bad career advice leads to bad career decisions, which leads to a professional, financial, and personal death spiral.  Ego and ignorance are the enemies of good career mentoring.  I know many a humble person of average intelligence that followed sound career advice from a successful mentor that is now successful themselves. Unfortunately, I also know many more highly intelligent professionals living a dissatisfying career, knowing they are not maximizing their potential.  In most cases, it is ego and/or ignorance of the importance of having good mentors that constrains these people.  Things like title, degree, and personality get in the way of one allowing himself to be mentored.  The best leaders I know open themselves to mentoring from even those who work under them.  They know that the best advice can come from the most unlikely of sources.

To choose a good career mentor or mentors, the first step is to develop a realistic vision of your future.  Self-awareness of one’s capabilities, limitations, and tendencies is critically important.  Once you have developed that vision, identify people who are truly successful and living that vision.  I have found that people living a successful vision are fully aware of the importance of mentoring and are very happy to mentor those behind them on the same path.  Seek these people out, ask them questions about what they do and find out if their reality matches your vision.  If so, start asking them if they think you are capable of achieving what they have achieved.  Ask them to be honest and be prepared for a harsh slap from reality.  Note, a good mentor will not directly answer such questions.  Rather, they will ask you questions in a way that allows you to answer that question yourself.  If you come to the decision that your vision is sound and the path is righteous, these are the people you want to consider for your long term career mentor.  Keep your mentor informed, communicate via phone, email, and text, instant message, Facebook, and any other means that works for you.  To be successful, mentoring needs to be ubiquitously integrated into your routine, not just some formal meeting you have once per month.  Formal mentoring sessions are good, but only as punctuation in the series of ongoing mentoring interactions.

Technical mentoring is in many ways a different thing altogether.  Technical mentoring is often associated with a single technical subject one is learning, such as Lean Six Sigma or Project Management.  It will have a finite life-span.  It is more easily quantified and measured, and outcomes are clear.  Technical mentoring does not usually require the up-front personal discovery associated with career mentoring.  The mentee or protégé enters the arrangement knowing what they want to achieve and hope to find a mentor that can get the job done.

Matching the technical mentor to the mentee is again very important.  Personalities must gel and the pace of learning must be in synch.  Further, technical mentors are often needed for hard requirements the mentee has to meet, requiring a mentor that is available when needed and to the degree needed.  A risk with technical mentoring is the mentor doing too much or too little work for the mentee.  Further, the mentor has a more active role in the sense of keeping a mentor on track and on schedule with technical skill development.  The mentor may also be required to report mentee progress to management and may be mentoring numerous people on the same subject.  When choosing your technical mentor, be selfish.  Work to get the best you can in terms of the mentor’s ability to mentor you and the mentor’s time and availability to work with you one-on-one.  Ask others that have been mentored on the same technical skill how they liked their mentor.  Ask them to describe how they interacted and if they think the mentor would be a good one for you.  If you have your mentor assigned by higher management and don’t like the one assigned, speak up.  Management is making an investment in your skills and has an interest in making sure you get the best mentoring.  Lastly, when working with a technical mentor, ask “why” and ask it often.  Many technical mentors are not as experienced as they should be.  Challenge them and make sure they are giving you practical and proven advice.

Ideally, technical mentoring will be a shared responsibility that is part of the culture of paying it forward that exists in an organization.  I recently attended the annual awards dinner for the Maryland World Class Consortium.  The Key Note Speaker was Mr. Richard Sheridan, CEO of Menlo Innovations.  He described their agile, human centric software development approach.  A key component of that approach is the pairing of developers on each task and the rotation of pairs each week.  A great approach to peer review and quality control/assurance, but with the proper assignments and a little measurement, this is also the ideal way to mentor.  Mentoring of this nature would be truly integrated at the task level of business operations and would create a continuously learning and highly aware organization.

Lastly, technical mentoring should be quantified using a consistent set of criteria and reported on numerically to track the progress of all mentees.  A snapshot of corporate skill levels should be developed from mentoring tracking data.  At MSI, we have employ a structured mentoring approach based on Experiential Learning that quantifies individual ability on several dimensions and informs managers of both the progress of employees and the quality of mentoring.  We encourage our clients to manage toward an even distribution of personnel on the learning curve such that the organization always has a flow of people learning and moving on to the next thing as identified below.

Mentoring Pipeline Images

Far too often we see unhealthy personnel capability pipelines where there are gaps in the progression of personnel and somehow trainees mysteriously jump from being a trainee to an expert.  Organizations with an unhealthy capability pipeline typically have no mentoring program or a loosely managed mentoring program at best.  Such organizations benefit greatly from taking internal mentoring and the management of corporate skills more seriously.

Whether or not you work for an organization that takes mentoring seriously, you are wise to do so for yourself.  Even in a corporate mentoring vacuum, you can seek out a capable mentor.  You may have to go outside your organization, but it is critically important to find a good mentor.  Do not let ego or laziness get in your way.  Ironically, many a person that does not seek out a good mentor or resists mentoring ends up frustrated and/or failing.  It is only after they reach post failure catharsis that they are humble enough to seek out the mentoring that could have gotten them on the track to success and kept them there.  It is never too late to start, but why wait until after a series of failures.  Mentoring is a simple and effective practice that will make a huge difference in your career and can transform your organization.

Level Zero Value Stream Maps

This week’s post is about a simple tool any group of managers can use to help clarify relationships and streamline operations among major organizations in a value stream.  Level Zero Value Stream Maps or Phase Maps as they are sometimes called are an excellent tool for gaining consensus on the way things are or should be accomplished at a strategic level across organizations.  The level zero map is a high level overview documenting who owns and who supports each phase of an enterprise value stream.  It communicates things like the major inputs and outputs of each phase, the objectives of each phase, information systems used, and the major tasks associated with each phase.  Something I like to add to my level zero maps is the overall set of objectives for the value stream.  In fact, I like to do this first.  It is a “begin with the end in mind” approach to documenting the value stream and it gets everyone on the team aligned to a common set of goals.  From this start, the first pass is to move backwards defining the inputs and outputs of each phase such that you can pull the string on a single objective and see how it draws on inputs and outputs all the way back to the beginning.  The second, forward pass is to flush out the details.

The minimum set of information a level zero value stream map should include is.

  • A brief description of each phase
  • Who leads, who executes, and who supports each phase
  • Inputs and outputs of each phase (documents, etc. for back office processes)
  • Entry and exit criteria for each phase
  • The objective of each phase
  • High level list of tasks for each phase
  • Information systems used
  • Policy, manuals, or other references
  • Each phase should be numbered
  • Give each phase a meaningful title
  • High level metrics
  • Identify the variants of the value stream, meaning the different ways things enter and flow through (e.g., [micro, normal, large] or [trucks, trailers, spare parts]).  Create level zero at an level where these variants can be generically described, but make it clear that each is actually processed differently.

Creating a level zero value stream map requires some facilitation skill and it is easy to document something a bit myopic if the wrong person is leading the team, but is not rocket science.  The key is to be open minded, focus on the objectives and be willing to ask dumb questions like “Why do we create that document every time when it does not seem to be part of an objective?”

During the process of creating the level zero map, keep the notes on easel pads or a large white board.  Capture lists of the following: Problems Identified; Risks to the Desired Outcomes; Action Items; and Ideas.  When documenting the problems and risks, make a note of where they reside in the process this will be your first indication of where you may want to start working on performance improvement of the value stream.  It usually makes sense to identify the serious problems within the final outputs of the value stream and then perform root cause analysis to find the places in the value stream where those serious problems are starting.  A cluster of problems in a specific area is not enough to decide where to start working.  Make sure the problems being fixed are the ones most important to the final outcomes.

The style of flow chart used at this level varies greatly.  The best advice when it comes to style is to choose a style for your level zero map that will be consistent with lower level detailed process maps and will enable upward and downward integration of the process maps.  An example of a simple level zero is shown below.

If the value stream you work in does not have a value stream map accurately representing how business is done, you need one.  Make the development of one an agenda item at the next executive off site, or pull together a workshop with your value stream stakeholder to build one together. It is a great exercise that brings management together, develops unified vision, and can be the starting point for serious process improvement.

Note: There are formal standards such as BPMN and the Learning to See approach for documenting your value streams.  I have often found these standards are a great starting point, but not the total solution.  Do some research on these standards and come up with an approach that works for you and your stakeholders.

For more information, visit us at http://www.msi6.com

A Simple Strategic Analysis Tool

Table of Strategic Constraints – A simple tool that exposes significant constraints in enterprise processes and value chains

Large organizations often find that the internal and external functions of supply chains and value chains are at odds with each other. They battle over lead times, quality of documentation, requirements, specifications, delivery schedules, pricing, engineering plans, etc.  A common example is the eternal battle between sales and delivery in numerous industries such as telecommunications, medical devices, and construction.  I will pick on telecommunications since I know that industry well.  Sales personnel sell circuits and value added services in various configurations across the globe.  Inevitably, what was sold is reviewed by a sales engineer under tremendous pressure to get reviews done.  Working with limited information and disconnected from the reality of field engineering, he does his best to approve the sale.  Once the sale is done, it ends up in the hands of some provisioning center and assigned to field installation and configuration personnel that immediately reach out to the customer to find out what they actually want and often to tell them they can’t get everything they were promised when it was promised or maybe not at all.  The same scenario plays out over and over in Government, DoD, and numerous industries.  While we all know this exists, it is often difficult to document and communicate.  This week, I am posting about a tool any manager or leader can use to document organizational misalignment and conflicts that cause these inefficiencies.

The tool is what I call the table of strategic constraints.  It is essentially a system analysis and optimization tool that anyone can use to quickly document certain important attributes of each major function in a supply chain or value stream to easily identify where functions, departments, or entire organizations are out of alignment and possibly even working against each other.  In a process, the optimization of a step or sub process places constraints upon related steps.  Sub system optimization creates whole system sub optimization. Yet, in many value streams each phase struggles to optimize itself at the expense of others.  The result is a never ending series of myopic initiatives to reduce costs and improve performance.  To solve this, the entire process must be optimized on the whole at a strategic or enterprise level.  This will ultimately lead to sub optimal performance of the steps within.  This model analyzes the root causes or drivers of sub process optimization and myopia by qualitatively assessing the objectives and incentives of each phase of the process.  An example of a completed table is shown below.

The concept and the process are simple.  Call a meeting of managers from each of the organizations in your supply chain or value stream.  You can make this as broad or narrow as you wish.  Use some common sense.  Explain to everyone that the exercise is to help everyone in the chain, not to point fingers at any one organization.  If they are honest, they will all learn things that can help everyone to better serve the end customer and streamline their relationships.  Starting at the top, list the phases as shown.  You can also list the organizations if desired.  Now continue to work your way down one row at a time with the team.  Identify the Primary Objectives, then the cost, cycle time, and performance objectives.

The motives and incentives is where cold hard honesty is required.  Ask “what are the people in this phase really incentivized to do.”  You should see things like “avoid getting called into the boss”, “earn commissions”, “execute the budget”, “sell the inventory”.  This is an area where you can truly expose a lack of alignment with the needs of the customer.  You can also expose root causes of lingering problems.  There are no hard and fast rules for completing the table, just enter honest and meaningful information that can be compared across the columns.   Use consistent terminology across the columns of each row.  In other words, for cycle time, don’t enter “yes”, “100%”, “per metrics”.  These entries are almost impossible to compare.  Rather, enter useful and comparable information, such as “top priority”, “no concern”, “based on artificial metrics”.  In this example, one can deduce that the first phase makes cycle time a priority with the customer and the rest of the value chain either does not care or has established internal metrics they probably fudge to make themselves look good.

Completing the table will take several iterations.  Once it is complete, simply scan each row, across the columns and identify the areas in which the phases/organizations are out of alignment.  Document these problems and discuss them with the team and brief them to leadership.  The findings can also become valuable inputs for your strategic planning process.

Times are Tough, Stick to Your Strategy

In times like these when new business is hard to find, top employees are weighing their options, and suppliers are begging for help, you must have a clear and concise strategy and you must align all resources and activities to that strategy. This week’s post is to share a tool that will help your organization operate daily in a manner that aligns with strategy, maximizing the effect of your precious resources. If you are like me, you have more great ideas than you do resources to execute. Further, it is natural for managers to see any opportunity as a good opportunity in lean times. The worst thing you can do in these times is chase every opportunity that comes along in the hopes that something good happens. One of my favorite axioms “Focus and Achieve” applies now more than ever. This doesn’t mean you need to be myopic. Not at all. It just means you need to have a good strategy, SMART objectives, and effective initiatives in place. Then you need to track your market and competitors closely, adjust smartly, and do not allow shiny bobbles to distract you away from your strategy.

The tool best suited for keeping your organization’s activities in alignment with strategy is the goal deployment matrix. This tool is from the Japanese Hoshin Kanri body of knowledge and it is used successfully in numerous high performing organizations such as Toyota, Xerox, and Caterpillar. An example of the matrix is shown below.

Goal Deployment Matrix

Typical Goal Deployment Matrix

Using the tool is simple Once you have identified your goals and objectives, enter them in to the left most column. Then work with your internal teams and departments to define the means for accomplishing these objectives and enter them into the top row. This is often accomplished through a back and forth vetting process. Assign ownership and metrics for the objectives and the means. If you are a Lean Six Sigma organization, you will charter the means, assign Black Belts, etc. Then use this tool to review status at least monthly. If you have a large organization, you can cascade these goal deployment matrices to avoid creating one overwhelming document. Now, every great idea and every request for funding must be analyzed against the goal deployment matrix for fit and alignment. Further, if progress on strategic objectives and means is not apparent in monthly reviews, you may have a hidden factory that needs to be exposed.

To learn about the entire body of knowledge for goal deployment or Hoshin Kanri, comment here and I will help you as time permits, or you can find a lot of good information on the Internet.

Effective and efficient operations don’t happen by chance.

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