Strategy Deployment

1
Strategy Deployment

• A discussion of both methods and challenges
• Chris Yockey
• Clipper Windpower
• cyockey_at_clipperwind.com

2
Discussion Outline

• Intro and Background
• Clipper Windpower
• Definitions
• Deployment Methods
• Management by Objective
• Hoshin Kanri
• Balanced Score Card
• Quality Management Systems that Support Strategy
  Deployment
• ISO
• Baldrige
• Discussion Points
• The Mind of the Lean Manager by Jim Womack
• Resources and References

3
My Background and Experience

• Education
• B.A. in Business Management from UNI
• Working on Masters of Manufacturing Operations at
  Kettering
• Work Experience
• Human Resource Intern at Beef Products Inc.
  (Waterloo)
• Department Manager for Pella Windows and Doors.
  (Clear Lake)
• Developed interest and passion for Continuous
  Improvement
• Quality Supervisor for Beef Products Inc.
  (Waterloo)
• Assembly Supervisor for Clipper in March 2007
  (Cedar Rapids)
• Continuous Improvement Manager for Clipper in
  November 2009

4
Clipper Windpower

• Company Incorporated in 2001
• Manufacturing began at Cedar Rapids in 2006
• 2006 - 8 units produced
• 2007 - 137 units produced
• 2008 - 289 units produced
• 2009 projecting 117 units (no orders cancelled,
  only delays)
• Approximately 280 employees in Cedar Rapids
• Approx. 190 assembly
• Others include Engineering, Quality, RMDC,
  Clipper Fleet Service, etc.
• The Facility is 330,000 sq. ft.
• Manufacturing the 2.5 MW Liberty Wind Turbine
• Gearbox, Hub, Machine Base, Rectifiers, Parts
  Containers Assembled
• Nacelle, Towers, Generators, Transformers, etc.
  outsourced

5
Clipper Windpower Continued

• As a whole, Clipper is in the Energy Business
• The Cedar Rapids Operations is generally
  considered a Heavy Manufacturing facility
• The process is entirely assembly based
• no material processing or fabrication work
• The company is in the process of developing a 7.5
  to 10 MW offshore wind turbine
• Projected Capacity of the Cedar Rapids facility
  is approx. 550-600 turbines per year

6
The Disclaimer

• Not an Strategy Deployment expert
• Interest in Learning about Strategy Deployment
• That interest all too quickly transformed into an
  opportunity to lead this IQC network meeting
• Ive been dedicating extra time to this
  particular topic
• Ive collected and condensed some SD information
• Many of you probably have relevant experience
• Please, stop me at any time for discussion or if
  youd like to contribute by further clarifying a
  particular item.

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Focus of Todays Discussion

• When suggesting that we discuss strategy
  deployment, I was most interested in the
  transition from planning to action.
• Effectively moving from Plan to Do in the PDCA
  cycle.
• My Approach
• Basic Overview of the different Methods
• Tools associated with those methods
• Open Discussion
• Thought Provoking Article

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Why Focus on Strategy Deployment?

• The feeling of many good but unaligned goals
• The need for a consistent top-to-bottom message
• The importance of management effectively
  communicating directives in a way that all can
  engage with and implement.
• The importance of knowing what activities align
  with goals.
• Its a Criteria for Performance Excellence
  (Baldrige)
• Strategic Planning and Business Results are two
  key criteria for performance excellence
• The transition away from command and control, and
  the frustrating that may accompany it.
• Bottom line, its a necessary part of realizing
  success.

9
Definitions

• Strategy
• Is a plan of action designed to achieve a
  particular goal.
• The word strategy has a strong military
  connotation.
• Strategy is different from tactics.
• Deployment
• To arrange in a position of readiness, or to move
  strategically or appropriately.
• Again, deployment has a strong military
  connotation
• In business, it stands for a methodical procedure
  of introducing an activity, process, program, or
  system to all applicable areas of an organization
  
• Strategic Management
• Developing, evaluating and making decisions that
  will enable an organization to achieve its
  long-term objectives

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What is Strategy Deployment?

• The nervous system of a business system
• Guides planning and action across an
  organizations total value stream
• Provides a closed circuit between an
  organizations business needs and day-to-day
  activities.

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Pre-requisites to Deployment

• Company Philosophy and Quality Policy
• Basic Strategic Planning
• Vision and Mission
• Values Statement
• SWOT Analysis
• Strengths, Weaknesses, Opportunities, and Threats
• Any others?

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Discussion Points

• Questions we should be asking as strategic
  planners.
• How widely understood is our companys mission
  and/or vision and the companys top strategy
  among our employees?
• Are certain industries better at this than
  others? If so, why?
• Does your company have a published set of values
  or beliefs?
• How widely known are they?
• Do they make a difference?
• The answers to these simple questions will serve
  as indicators of the companys ability to
  effectively deploy a strategy.
• A commander cant effectively deploy troops
  without each of them clearly understanding the
  mission.

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Methods of Deployment

• Management by Objectives
• Cascading Objectives and Goals
• SMART Goals
• Specific
• Measurable
• Achievable
• Relevant
• Time bound
• Hoshin Kanri
• Catchball, A3-X, and A3-T
• Balanced Score Card

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Management By Objective (MBO)

• The Principles of Management by Objective
• Cascading of organizational goals and objectives
• Mission Critical Objectives at the CEO Level
• Mission Critical Objectives at the Plant Level
• Specific objectives for each member
• Cascaded Goals through Success Factors
• Performance evaluation and provide feedback
• Performance Evaluation System

15
Management By Objective

• Important features and advantages of MBO are
• Motivation
• Involving employees in the whole process of goal
  setting and increasing employee empowerment
  increases employee job satisfaction and
  commitment.
• Better communication and Coordination
• Frequent reviews and interactions between
  superiors and subordinates helps to maintain
  relationships within the enterprise and also
  solve many problems faced during the period.
• Clarity of goals
• The concept of SMART goals

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Limitations and Arguments Against

• Over-emphasizes setting of goals, as opposed to
  the working of a plan
• Could lead companies to evaluate employees by
  comparing them to the ideal employee
• What gets measured gets done
• W. Edwards Deming
• argued that a lack of understanding of systems
  commonly results in the misapplication of
  objectives

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Discussion Points

• When done properly MBO ideally
• improves motivation and communication
• involves employees in goals setting
• provides frequent feedback on performance
• Is this typically what would be found if a
  companys MBO process were reviewed?
• Does MBO provide an opportunity for all employees
  to provide their input and understand their
  importance?
• Any other challenges or short comings experienced
  by those who have utilized or been a part of MBO?

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Definitions

• Hoshin direction, a course, a policy, a plan,
  an aim
• Kanri management, administration, or control
• Hoshin Kanri A method of implementing strategy
  to get the right thing done.
• Often referred to as
• Policy deployment, Strategic Initiatives,
  Management By Policy, Hoshin Planning, Policy
  Management, Managing for Results, Strategic
  Deployment and Goal Deployment.

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Hoshin Kanri

• Purpose and Usage
• Long term strategic planning for systems
• Developing shared strategic goals (compare
  Balanced Score Card)
• Continuous organizational improvement
• Cascading or deploying top management policies
  and targets down the management hierarchy

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Hoshin Kanri

• Steps and Skills Required
• Planning and Communication
• Get Involvement
• Set the course
• X-Chart
• Project Initiation and Execution
• Two Deployment Styles or Target Top-down and
  Bottom-up
• Catch Ball Target Deployment
• Project Charter
• Standard Process for follow through
• Reflection
• Review of what worked and what didnt work

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Hoshin Kanri

• Hoshin Kanri can be thought of as the application
  of Deming's Plan-Do-Check-Act (PDCA) cycle to the
  management process.
• The PDCA cycle represents a generic approach to
  continual improvement of activities and
  processes.
• PLAN a plan of action is developed to address a
  problem.
• DO the plan is implemented.
• CHECK information is collected on the control
  parameters.
• ACT the results are analyzed. Corrective action
  is identified.

22
Hoshin Kanri

• Three key elements
• Catchball
• Project Charter (A3-T)
• X-Charts (A3-X)

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Catchball

• A participative approach to decision-making.
• Used in policy deployment to communicate across
  management levels when setting annual business
  objectives.
• The analogy to tossing a ball back and forth
  emphasizes the interactive nature of policy
  deployment.
• Used when establishing the terms of the
  organizational contracts or project charters.
• Provides employees with an opportunity to review
  the plan and objective and to respond with their
  thoughts and ideas.

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Project Charter (A3-T)

• Boil things down to one page
• Clarifies that no one person can accomplish a
  strategy
• Very reminiscent of PDCA and DMAIC

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X-Charts (A3-X)

• A bundle of contracts called team charters
• A visual tool for planning
• Can appear complex at first
• Becomes simple quickly
• The key is the Linkage of high and low level
  action with people and results
• Mostly an aid to communication

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• Strategy Area
• Contains the highest level mandates
• Start here
• Should link directly to corporate strategy, one
  level above the group for which you are planning.

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• Metrics Area
• Fill this in second
• Put in standard and/or mandated operational
  figures your group needs to meet

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• Tactics Area
• Work on this third
• Will lay out specific projects
• Will become the basis for managing implementation

31

• Team Members Area
• Work on this fourth
• List Names of the people who will be responsible
  for implementing the tactics
• Use proper names, not titles

32

• Connectional Areas
• The absolute key to making this work
• Forces reflection, debate and conversation in an
  open manner.
• Do these last, in a back-and-forth manner, with
  others on your team and in your company

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• Strategy-to-Tactics Correlation
• Does a tactic really support one or more
  strategies?
• Is there a more effective tactic?
• Is there a non-necessary tactic?
• Do you really understand the individual strategy
  statements?

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• Tactics-to-Metrics Correlation Contribution
• Does a tactic improve a specific metric's)?
• Will it move the metric adequately?
• Does each metric have some tactic to improve it?
• Do you really understand the individual metrics?

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• Tactics-to-Team Member Accountability
• Does each tactic have a skilled person to lead
  it?
• Does one individual have too many tactics to
  lead?
• Are there other people who need to be listed?
• Does each individual understand his/her
  accountability?

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• Metrics-to-Results Correlation/Contribution
• Does each metric contribute to one or more
  financial results which we value?
• How much does each metric contribute?
• Are we measuring the right things in our results?
• Can we compare plan to actual over the period
  covered by the plan?

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• Strategy-to-Results Correlation
• Does each strategy contribute to one or more
  financial results which we value?
• How much does each strategy contribute?
• Is a strategy for show or for results (e.g. a
  Super Bowl ad)?

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Hoshin Kanri

• Strengths
• Focuses organization on the vital few
• Communication of a shared vision
• Creates alignment through participation
• Encourages cross functional cooperation
• Planning is systematic

• Limitations
• A rigid implementation is necessary
• Requires a long term commitment
• Relatively Static the breakthrough objective
  must be stable during a 5 year period

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Discussion Points

• How many currently use or have experience with
  this method of planning and deployment utilized?
• Where HK has been utilized, was it well
  structured and routine or informal and possibly
  haphazard?
• In what ways was its use effective or
  ineffective?
• Would you recommend this system to others? Why?

41
Balanced Score Card

• A Strategic planning and management system
• May mean different things to different people
  (the BSC spectrum)
• From a Performance Measurement Framework
  Dashboard
• To a Robust Organization-wide Strategic Planning,
  Mgmt, and Communication System
• Originated by Drs. Robert Kaplan and David Norton
  as a performance measurement framework
• Added strategic non-financial performance
  measures to traditional financial metrics to give
  managers a balanced view of performance.
• The new balanced scorecard transforms an
  organizations strategic plan from a document
  into marching orders.

42
Balanced Score Card

• View the organization from four perspectives
• Develop Metrics
• Collect Data
• Analyze Data to each perspective
• PDCA

43
Balanced Score Card Continued

• Why Implement a Balanced Scorecard?
• Increase focus on strategy and results
• Improve organizational performance by measuring
  what matters
• Align organization strategy with the work people
  do on a day-to-day basis
• Focus on the drivers of future performance
• Improve communication of the organizations
  Vision and Strategy
• Prioritize Projects / Initiatives

44
Balanced Score Card Continued

• Scorecards simply for organizing measures arent
  justified.
• Start with the end in mind, focus on the desired
  results
• Stephen Covey People and their managers are
  working so hard to be sure things are done right
  , that they hardly have time to decide if they
  are doing the right things.
• Developing a balanced scorecard system is like
  putting a puzzle together
• The pieces are strategic components
• They have to be checked for fit

45
Recall Lou Novikoff, a.k.a.The Mad Russian,
Chicago Cubs, 1940s

• Stole third base with the bases loaded
• I got a good jump he explained.
• Unfortunately, there is no point in being fast at
  doing the wrong thing.

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BSC Continued

• The major system components
• Engaged Leadership
• Interactive Communications and Change
• Management
• Vision and Mission
• Core Values
• Organization Weaknesses and Strengths

• Customers and Stakeholders
• Customer Value Proposition
• Strategy, Strategic Objectives, and Initiatives
• Performance Measures
• Performance Information Reporting
• Rewards and Recognition
• Evaluation

47
Questions and Discussion?

• How many currently use or have experience with
  the BSC method of planning and deployment?
• Do you notice any added benefits or disadvantages
  of Hoshin Kanri vs. Balanced Score Card?
• If we arent using either method, what else is
  being done in order to fill this need?

48
Quality Measurement Systems that Support Strategy
Deployment

• Baldrige Criteria
• 1. Leadership
• 2. Strategic Planning
• 3. Customer and Market Focus
• 4. Measurement, Analysis, and Knowledge
  Management
• 5. Human Resources
• 6. Process Management
• 7. Results
• 2.2 Strategy Deployment
• How do you deploy your strategy? Describe how
  your organization converts its strategic
  objectives into action plans. Summarize your
  organizations action plans, how are they
  deployed, and KEY action plan performance
  measures or indicators. Project your
  organizations future performance relative to KEY
  comparisons on these performance measures or
  indicators.

• ISO Standards
• 1. Customer Focus
• 2. Leadership
• 3. Involvement of People
• 4. Process Approach
• 5. Systems Approach to Management
• 6. Fact Based Decision Making
• 7. Mutually Beneficial Supplier Relationship
• With ISO-
• The concentration is on the quality systems
• Takes an adoption of process approach
• With Baldrige-
• Performance excellence for entire organization
• Focus upon business results

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Discussion Topics

• How many have experience working for companies
  that utilize either ISO and/or Baldrige?
• Does it seem that one system is utilized more
  often or more commonly accepted? Why?
• Does the industry affect which system is
  utilized?
• What else might affect which system is selected?
• Is there a need for the use of both systems?

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Discussion Points

• All methods seem to have a distinct tie back to
  Plan-Do-Check-Act
• Are we informally utilizing these methods on a
  daily basis, in some cases without realizing it?
• If so, would it be beneficial to formalize and
  document the process?
• If so, what ways can we go about that or how have
  you seen it done in the past?

51
The Mind of the Lean Manager Thoughts from Jim
Womack

• Finding companies with X-Charts, completed A3
  analysis, and all the elements of standardized
  work.
• Whats missing?
• Success in Achieving the Goals
• Inability to actually read and interpret A3
• No standardized work or not following it
• Lean management techniques are quickly becoming
  tools (which are necessary).
• Every manager loves a tool because it seems to
  provide a short cuts to doing a better job.
• They cant achieve their potential results or
  even any results without managers with a lean
  state of mind to wield them.

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What is a lean state of mind?

• The Lean manager embraces the role of problem
  solver
• The Lean manager realizes the no manager at a
  higher level can or should solve a problem at a
  lower level.
• Instead assign responsibility to the manager at
  the lower level
• The Lean manager believes that all problem
  solving is about experimentation by PDCA
• The Lean manager knows that no problem is ever
  solved for ever

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Other Sources of Information

• Books In IQCs Library
• Hoshin Kanri Policy Deployment for Successful
  TQM - Yoji Akao
• The Balanced Score Card Translating Strategy
  into Action
• Kaizen Sketch Book
• http//www.kaicomm.com/KaizenSketchbook.html
• And Multiple Others.

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Hoshin Kanri for the Lean Enterprise

• Technical description of Hoshin
• Has a CD with all forms
• Good resource tough reading

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Getting the Right Things Done

• Novel style, a la The Goal
• Author has terrific experience
• Has excellent examples

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Leadership and Self-Deception

• Deals with root cause of people problems
• Novel style
• You can use it instantly
• Outside the Box Thinking

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Resources and References

• Balanced Scorecard and Hoshin Kanri by Marketing
  Partners, Inc.
• http//www.mpicompanies.com/PDFs/Balanced20Scorec
  ard20and20Hoshin20Kanri.pdf
• Management Coaching and Training Services
• http//www.mcts.com/Hoshin-Kanri.htm
• Hoshin Kanri Lean Strategic Planning by Joe Ely
• Director of Operations for Cook Biotech
• Baldrigeplus.com
• http//www.baldrigeplus.com/Exhibits/Exhibit20-2
  0Catchball20processes.pdf
• Strategy Deployment in Action One Executives
  Perspective
• http//www.lean.org/Events/WebinarHome.cfm (Lean
  Enterprise Institute)
• Pascal Dennis and Dave Brule II
• Balanced Score Card Institute
• http//www.balancedscorecard.org/BSCResources/Abou
  ttheBalancedScorecard/tabid/55/Default.aspx
• Management By Objective
• http//www.12manage.com/methods_smart_management_b
  y_objectives.html
• The Mind of the Lean Manager
• Jim Womack Founder and Chairman of Lean
  Enterprise Institue