Enterprise Strategic Analysis for Transformation Primer

Transcription

1 Enterprise Strategic Analysis for Transformation Primer Dr. Jayakanth Srinivasan ( jksrini@mit.edu ) LAI ANNUAL CONFERENCE Dana Point CA Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

2 Outline Understanding the ESAT Context From Lean Now! EVSMA ESAT Key elements of ESAT Executing an ESAT Discussion Panel Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

3 Enterprise Definition A systematic purposeful activity - Merriam-Webster.com "One or more persons or organizations that have related activities, unified operation or common control, and a common business purpose" -Blacks Law Dictionary, 1999 A lean enterprise is an integrated entity which effectively and efficiently creates value for its multiple stakeholders by employing lean enterprise principles and practices. - Lean Advancement Initiative, MIT, Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

4 Understanding Transformation or Source: Source: Terry Bryan Second-order change is a multi-dimensional, multi-level, qualitative, discontinuous, radical, organization change involving a paradigmatic shift - Levy and Merry* *Levy, A. and U. Merry (1986). Organizational Transformation: Approaches, Strategies, Theories, Greenwood Publishing Group Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

5 Strategic Analysis Support Decision Making Strategic Tactical Operational We define a strategic decision as one which is important, in terms of the actions taken, the resources committed, or the precedents set that is, we focus on those infrequent decisions made by the top leaders of an organization that critically affect organizational health and survival Eisenhardt and Zbaracki Source: Eisenhardt K. M. And Zbaracki M.J., Strategic Decision Making, Strategic Management Journal, 13, 17-37, Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

6 ap s mt What are we trying to transform? A minimal defining characteristic of a formal organization is the distinction between members and non-members, with an organization existing to the extent that some persons are admitted, while others are excluded, thus allowing an observer to draw a boundary around the organizations - Thompson Source: Thompson, J. "Organizations and Output Transactions," American Journal of Sociology, Vol. 68 (1962), SPO DCMA SPO DCMA AMC Boeing The Current State C-17 Enterprise (Notional Process Flow) AMC AMC Boeing The New C-17 Enterprise (Notional Process Flow) AMC Wea Sys Rqm Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing SPO SPO Boeing Boeing DCMA DCMA DCMA / Boeing SPO / Boeing DCMA / SPO DCMA / SPO / Boeing Process 1 Prod Process 2 Prod Process 3 Prod Process 4 Prod Process 5 Prod Process 6 Prod Process 7 Prod Process 8 Prod Process 9 Prod Process 10 Process 1 Prod Process 2 Prod Process 3 Prod Process 4 Prod Process 5 Prod Process 6 Prod Process 7 Prod Process 8 Prod Process 9 Prod Process 10 Source: Wolfenbarger and Bowman (2004), C-17 Journey towards a Lean Enterprise, LAI Executive Board Presentation, Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

7 Who is the enterprise creating value for? In strategic decisions, many of the most important assumptions deal with the behaviour of groups or individuals who are important to the success of the strategy and who have a stake in the outcome of the strategy - Schwenk Source: Schwenk, Charles R THE COGNITIVE PERSPECTIVE ON STRATEGIC DECISION MAKING. Journal of Management Studies 25 (1): Shareholders End-user Customers Society Enterprise Leadership Suppliers/ Partners Employees Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

8 Understanding Value How various stakeholders find particular worth, utility, benefit, or reward in exchange for their respective contributions to the enterprise. * Find Stakeholder Value Value Identification * Source: Murman et al., Lean Enterprise Value, Palgrave 2002 Develop and Agree to the Approach Value Proposition Dynamic and Iterative Execute on the Promise Value Delivery Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

9 How does the enterprise create and deliver value? Strategic, high level, cross-functional activities, decisions, and interfaces involved in creating and delivering value to one or more enterprise stakeholders Enterprise Leadership Processes Conduct Strategic Planning Define Business Models Manage Growth Foster Strategic Partnering Define and Integrate Organizational Structure Manage Transformation Life Cycle Processes Manage Acquisition and Programs Define Requirements Develop Product/Processes Manage Supply Chain Provide Products and Services Distribution and Support Products Enabling Infrastructure Processes Program and Budget Enterprise Activities Provide and Maintain Information Technology Manage and Support Human Resources Manage Quality Assurance Provide Facilities and Services Ensure Health, Safety, and Environmental Protection Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

10 How does the enterprise manage performance? You are what you measure - Hauser & Katz Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

11 Strategic Objectives ESAT Enterprise Boundaries Enterprise Analysis Performance Management Systems Enterprise Definition Stakeholder Analysis Process Interaction Analysis Enterprise Alignment Analysis Future State Analysis Process Architecture Future State Vision Deployment Development Actionable Transformation Plan Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

12 Enterprise Transformation Roadmap STRATEGIC CYCLE Determine Strategic Imperative Articulate the Case for Transformation Focus on Stakeholder Value Leverage Transformation Gains Pursue & Sustain Enterprise Transformation Engage Leadership in Transformation Convey Urgency Cultivate Enterprise Thinking Obtain Executive Buy-In Establish Executive Transformation Council Strategic Implications of Transformation Monitor & Measure the Outcomes Nurture Nurture Process & Embed Enterprise Culture Process & Embed Capture & Diffuse Lessons Enterprise Learned Thinking Synchronize Strategic Planning & Execution Cycles Implement & Coordinate Transformation Plan Implementation Results Develop Detailed Project Implementation Plans Synchronize Detailed Plans Commit Resources Provide Education & Training Implement Projects and Track Progress EXECUTION CYCLE Long-Term Corrective Action Short-Term Corrective Action PLANNING CYCLE A Committed Leadership Team Perform Stakeholders Analysis Understand Analyze Processes & Interactions Perform Enterprise Maturity Current Assessment State Assess Current Performance Measurement System Capabilities & Deficiencies Identified Envision & Design Future Enterprise Enterprise Vision Create Vision of Future State Architect To-Be Enterprise Value Stream Perform Gap Analysis Between Current and Future States Create Transformation Plan Identify Improvement for Focus Areas Determine Impact On Enterprise Performance Prioritize, Select and Sequence Project Areas Publish Communication Plan Alignment Requirements Identified Align Enterprise Structure and Behaviors Rationalize Systems & Policies Align Performance Measurement System Align Incentives Empower Change Agents Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, Source: Nightingale, Srinivasan and Mize Updated 3/05/10 Version Massachusetts Institute of Technology 12

13 EVOLUTION TO ESAT Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

14 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

15 Lean Now! Source: lean.mit.edu [publications lean now] Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

16 Enterprise Value Stream Mapping and Analysis (alpha) Outcomes Current and Future State Value Stream Maps Enterprise vision 2-5 years out Implementation Plan "EVSMA provided our management team with several insights about how our enterprise actually functions. It also provided a way to identify improvement activities that support our total enterprise strategic objectives and optimize functional integration ti in the value stream. - Site Director Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

17 Enterprise Value Stream Mapping and Analysis V1 Define and Characterize the Current State Create the Future State Enterprise Boundaries Enterprise LESAT Interactions Stakeholder Values Enterprise Wastes Strategic Objectives Enterprise Processes Close the Gap Prioritized Improvement Plan Lean Enterprise Vision 5-10 years in the future Enterprise goals Vivid description Focus areas Revised system of metrics Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

18 1 2 Enterprise Commitment ESAT Team Facilitators Enterprise Lean Training Current Enterprise Goals Define the Enterprise Team Charter Enterprise Description: Boundaries, Stakeholders, Processes Collect Data Prioritized Stakeholder Values LESAT Scores Enterprise Resource Allocation Based on Processes Current Metric Values 3 4 Leadership Processes Material Value Stream - ŅShop FloorÓ Life Cycle Processes Information High Value Stream - ŅOffice FloorÓ Enabling Processes Current Performance Product(s) & Service(s) Product / Service Quality Cost of Ownership Cycle Time Stakeholder Values Analysis Current State Process Map Process Interactions Alignment of Goals, Values, Processes, Metrics List of Wastes List of Opportunities Relationship with Corp. Low Relative Importance to Stakeholder Construct Current State Perspectives High Identify Enterprise Opportunities yr Goal Focus Areas Mid-point Goals Leadership People Processes Information Flow Customers Project A Project C Project B Project E Project D Project J Project H Project F Project K Project G Strategic Transformation Plan Governance Model Revised System of Metrics Communication Plan Suppliers Project I Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, Describe Future State Vision Create Transformation Plans

19 Source: Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

20 High Low Relationship with Corp. Product(s) & Service(s) Cost of Ownership Relative Importance to Stakeholder Product / Service Quality Cycle Time High Impact 1 2 Enterprise Strategic Analysis for Transformation Enterprise Commitment ESAT Team Current Enterprise Goals Define the Enterprise Team Charter Enterprise Description: Boundaries, Stakeholders, Processes Collect Data Prioritized Stakeholder Values LESAT Scores Enterprise Resource Allocation Processes Data Current Metric Values Leadership Processes Material Value Stream - ŅShop Floor Ó Life Cycle Processes Information Value Stream - ŅOffice Floor Ó Enabling Processes Current Performance Construct Current State Perspectives Stakeholder Value Analysis Current State Process Map Process Interactions Identify Enterprise Opportunities Alignment of Goals, Values, Processes, Metrics List of Wastes List of Opportunities Describe Future State Vision 3-5-yr Goal Transformation Focus Areas Waypoint Goals Leadership Project A Project C 9-block Initial Planning Template Project Name Integrated People Project B Project K Strategic Estimated Event Date(s): Project Portfolios JDI X XXX Transformation X Kaizen Processes Project E Project J Transformation Recommended Process Owner: Project Detailed XXX Difficulty Plan Recommended Team Leaders & Information Plan Event Description: Describe the task in sufficient Members: Project D Project H detail. (one or two sentences) XXX Descriptions Flow Governance Model Customers Project F Project G Recommended Estimated Implementation Costs: Revised System Reason for Event: Describe the problem the team None is addressing and answers the Òwhy nowó Metrics Suppliers Project I question. Estimated Savings: XXX of Metrics Create Transformation Create Actionable Resources Create Deployment Communication Plans Project Descriptions Required Plans Plan by Project Jayakanth Project Srinivasan/ Benefits Massachusetts Institute of Technology March 25,

21 ESAT Differentiators Enterprise Perspective Enables a clear definition of the enterprise as a whole Fosters enterprise thinking and system-wide improvement Stakeholder Centricity Process focuses on maximizing value delivery to all key enterprise stakeholders Data Driven Qualitative data through stakeholder interviews Quantitative data from performance against key processes and strategic t goals Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

22 KEY ELEMENTS Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

23 Inputs Process Outputs Enterprise Commitment ESAT Team Facilitators Enterprise Lean Training Current Enterprise Goals 1 Define the Enterprise Team Charter Enterprise Description: Boundaries, Stakeholders, Processes Identify enterprise goals/strategic objectives and motivate change Identify and empower ESAT participants Create team charter Describe enterprise Identify key stakeholders Identify major enterprise processes Identify high-level metrics related to strategic objectives Create communications plan and initiate communication about ESAT effort and its purpose (internal/external) Summarize insights and document progress Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

24 Stakeholder Analysis Identification & Grouping Prioritization Value Elicitation Analysis Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

25 Stakeholder Identification Source: Stoyanov and Srinivasan 2010 MyOrg Customer Level of Analysis MyOrg Customer Cust_Facing Networks Supplier _ Facing Team Team Supplier_Facing CCA_Team Massachusetts Institute of Technology Presenter MM/DD/YY 25

26 Supplier Value Exchange Value Expected from the Enterprise Stable Drawings On-Time Payment Clear requirements Ordering Effectiveness Communications Collaboration Stakeholders Suppliers Murray Engineering Lamming Composites Romance Specialty Materials Value Contributed to the Enterprise Quality Product On-Time Delivery R&D support Sustainability Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

27 Stakeholder Values Stakeholder Group: Stakeholder Name: Ask the stakeholder what they value. What do they expect to get from their involvement with your enterprise? What are the things that would make your enterprise highly thought of by them? On a scale of 1 to 5 how important is this value to the stakeholder? On a scale of 1 to 5 how well is the enterprise delivering this value? Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

28 Dev1 Dev2 Dev3 PM Dev4 Dev5 Expected Software engineering skills Problem solving skills Build effective ect e work environment e and team Timely decisions Timely deliveries Policy enforcement Communication Task planning Working process best practices Customer satisfaction Creativity Project planning Process and resource management Understanding Value Exchange Person to Project Source: Stoyanov and Srinivasan 2010 Project to Person Dev1 Dev2 Dev3 PM Dev4 Dev5 Expected Application of best practices(process) Application of best practices(engineering) Learning opportunities Multiplatform portable development Flexible working time Research and Analysis Technology trends Communication opportunities Gain experience in real project Failure tolerance OOAD Innovation opportunities Estimation & planning improvement Massachusetts Institute of Technology Presenter MM/DD/YY 28

29 Stakeholder: Employee High gmance Fair Wages Benefits Current Perform Security Training Rewards Job Satisfaction Career Growth Low Facilities Tools to Do Job Low Relative Importance High Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

30 Inputs Process Outputs 2 Team Charter Enterprise Description: Boundaries, Stakeholders, Processes Collect Data Prioritized Stakeholder Values LESAT Scores Enterprise Resource Allocation Based on Processes Current Metric Values Identify enterprise costs Define value exchange between each stakeholder and enterprise Conduct LESAT Collect enterprise process headcount data Collect enterprise performance data, based on enterprise metrics Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

31 Inputs Process Outputs 3 Prioritized Stakeholder Values LESAT Scores Enterprise Resource Allocation Based on Processes Current Metric Values Leadership Processes Material Value Stream - ŅShop FloorÓ Life Cycle Processes High Information Value Stream - ŅOffice FloorÓ Enabling Processes Current Performance Low Product(s) & Service(s) Relationship with Corp. Cost of Ownership Relative Importance to Stakeholder Product / Service Quality Cycle Time Construct Current State Perspectives Analyze stakeholder value delivery Analyze LESAT results Review enterprise process data Assess process interactions Review current enterprise performance, based on high-level metrics Summarize insights and document progress High Stakeholder Value Analysis Current State Process Map Process Interactions Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

32 Inputs Process Outputs Stakeholder Value Analysis Current State Process Map Process Interactions 4 Identify Enterprise Opportunities Alignment of Goals, Values, Processes, Metrics List of Wastes List of Opportunities Assess alignment of enterprise goals, metrics, processes, and stakeholder values Identify enterprise-level waste Summarize opportunities for improvement Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

33 X-Matrix Assessment Process The grids in each corner of the matrix represent potential interaction between the row and column they connect: Strategic objectives Enterprise metrics Enterprise processes Stakeholders values Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

34 X-MATRIX Template Strategic Objective Strategic Objective Strategic Objective Strategic Objective Strategic Objective Strategic Objective Strategic Objective Strategic Objective Strategic Objective Strategic Objective Strategic Objectives Stakeholder Metrics Values Key Processes Stakeholder Value Enterprise Process Enterprise Process Enterprise Process Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

35 X-Matrix Completion Process Move around the matrix in a counter-clockwise direction The following questions will help fill in the matrix with either, strong, weak, or no interaction. 1. Is this strategic objective measured by this metric? 2. Does this metric measure performance of this process? 3. Does this process contribute to delivering this stakeholder value? 4. Is this stakeholder value represented by this strategic objective? Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

36 Example: Filling in the X-MATRIX Is this strategic objective measured by this metric? Strategic Objective Strategic Objective Strategic Objective Strategic Objective Strategic Objective Strategic Objective Strategic Objective Strategic Objective Strategic Objective Strategic Objective Strategic Objectives tric Met tric Met tric Met tric Met tric Met tric Met tric Met tric Met tric Met tric Met Stakeholder Metrics Values Key Processes Stakeholder Value Enterprise Process Enterprise Process Enterprise Process Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

37 VA X-Matrix Analysis Metrics vs. Objectives Very strong alignment with most metrics on target Goals are not formal or documented Research is a goal but not measured locally Metrics vs. Processes Strong alignment with outpatient treatment and clinic wait times Missing metrics for key processes Transfers to inpatient Program referrals Values vs. Goals Strong alignment with areas in service, care, & research Gap lies in aligning goals to values such as: Operating within budget Well documented monetary transactions Processes vs. Values Strong alignment in areas of service, research, & quality Processes addressing the least stakeholder values are primarily patient movement s s s s s ss s s s s s s Serve Boston Healthcare System s s s w w w w s w ww w s Str rategic Goals s s s s s ss s s s s s Team Oriented - Integrated Care s s s s w s w s wss w s s s s s ss s s s s s s Quality Improvement s s s s w w w w s s s s s ss s s s s s s Complience -VA Code of Patient Concern & JCAHO w s w w w Evidence Based Care (inc Through Educational Residencies) w w w w w ww w w w w w s s s s w s s ws ss w w w w w w w ww w w w w Become World Class Research Hospital w w s s s s ws ss s w w Accessible Care s s s s s s s w s w w s s w w s w w w w Enterprise Metrics Vocational Industry Program Substance Abuse Outpatient Program Substance Abuse Intensive Outpaitent Program Residential Program (REACH) MHICM Program - Day Program Methadone Clinic Mental Health Outpatient Impatient Service Waiting Times - Clinic Tobacco Measure MH: SMI - MHICM Capacity Mental Health Access Mental Health Measure Metrics Strategic Objectives Key Processes Stakeholder Values Correctness of diagnosis and treatment Timeliness of diagnosis and treatment Quality of patient experience (minimal discomfort respectful etc ) Timely and accurate information flow Safety/Security of premises Clean, High Quality Facility Accurate Patient Records Availability of medications, supplies, and equipment Operating within budget Fair Wages for services Sufficient Inpatient and Outpatient Capacity Reasonable expectations and respectful treatment of employees Research Advancement Knowledge Transfer Communication and Implementation of VA culture and values Efficient Resource Management Accurate and well-documented monetary Stakeholder Values Transfer from VA ER to Inpatient s w s w Transfer from Urgent Care to Inpatient s w s w Transfer from Outside ER to Inpatient s w s w w Inpatient Treatment s w s s w w Transfer from Inpatient to Residential s w w s s Discharge from Inpatient w s w s w s Residential Treatment s w s s w w Ke ey Processes Transfer from Residential to Inpatient s w s w s Discharge from Residential s w s w Transfer to Outside Facility s w s w s s s w ws s w s s s Outpatient Treatment s w s s w w Referral to Inpatient s w w w Referral to Residential s w w w s Walk-in to Outpatient s w s w Purchasing (Supplies & Services) w s s s Patient Data Management s w s s w w ss s Research w w w w s s ss s w Facilities and Maintance s s s s s sw w w s Quality Assurance s s w w s s w w s Payroll s w w w s Human Resources s w s s s s w transactions Upstanding member of local community Strong Alignment Weak Alignment Source: ESD.61J / J: Integrating the Lean Enterprise Class Project, Czaika, Tomlinson, Kopp, Verdugo Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

38 Enterprise Level Wastes Waiting Delays Idle time due to late decisions, cumbersome and excessive approvals, and unsynchronized enterprise processes Excessive Transportation ti Unnecessary movement (including electronically) ll of administrative i ti information and people; multiple approvals and handoffs Inappropriate Processing / Ineffectual Effort Inventory Excessive Motion Defects/Rework Over Production Structural Inefficiencies Opportunity Costs Effort expended that does not increase value to any of the enterprise s stakeholders; can occur within the workforce, within management ranks, or across the entire enterprise Unnecessary levels of any enterprise resource: capacity, space, workforce, suppliers, information/data Any human effort that does not increase stakeholder value. Erroneous results from defective enterprise processes and decisions Any creation of enterprise outputs that does not increase stakeholder value Waste resulting from inappropriate organizational structure, policies, business model structure, alignment, or strategies Wastes resulting from lost opportunities, e.g., untapped talent in the workforce Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

39 Enterprise Opportunities Begins the transition to the future state This will capture the insights the ah-has, issues and opportunities Dependent on and a summary of all previous work Will document the current insights i and opportunities What opportunities do we want to address in our future state vision? Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

40 Inputs Process Outputs 5 Alignment of Goals, Values, Processes, Metrics List of Wastes List of Opportunities Describe Future State Vision 5-10 year Goal Focus Areas Mid-point Goals Develop lean enterprise vision, including 5-10 year goal and future enterprise description Develop future state metrics that are aligned with BHAG Identify focus areas to move towards vision Collect and analyze data on gaps between current state and future vision to make recommendations for prioritized improvements Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

41 Inputs Process Outputs 5-10 year Goal Focus Areas Mid-point Goals Leadership People Processes Information Flow Customers Suppliers Project A Project B Project E Project D 6 Project C Project J Project H Project F Project K Project G Project I Create Transformation Plans Strategic Transformation Plan Governance Model Revised System of Metrics Communications Plan Develop strategic transformation plan Prepare hand-off packages for subsequent improvement teams Develop an on-going governance model Update enterprise metrics Provide input to communication plan Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

42 Impact Inputs Process Outputs 7 Strategic Transformation Plan Governance Model Revised System of Metrics Communications Plan JDI X Kaizen Project Event Description: Describe the task in sufficient detail. (one or two sentences) Reason for Event: Describe the problem the team is addressing and answers the Òwhy nowó 7 Individual Project portfolios Actionable project detail descriptions 9-block Initial Planning Template Project Name X Difficulty Estimated Event Date(s): XXX Recommended Process Owner: XXX Recommended Team Leaders & Members: XXX Estimated Implementation Costs: None question. Estimated Savings: XXX Create Actionable Project Descriptions Develop individual actionable projects Recommended Project Metrics Resource draw by project Pre-event data requirements Projects Benefits Prepare project portfolios Develop resource and project duration descriptions by project Develop project metrics Develop pre event data collection matrix by project Develop expected benefits matrix Develop inputs to initial transformation communications Plan Develop exit strategy for each project proposed Recommended project teams and Project duration Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

43 Individual Project portfolios Actionable project detail descriptions Recommended Project Metrics Resource draw by project Pre-event data requirements Projects Benefits Inputs Process Outputs 8 Create Deployment Plan Prioritized list of actionable projects Project timelines established Resource commitments received Tracking metrics in place Project tracking schedules Prioritize projects Develop timelines for each prioritized project Establish resource commitment for top 3-5 projects Develop metrics for tracking projects to completion Develop top level governance for project mentoring and tracking Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

44 EXECUTING ESAT Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

45 Goals and Expected Outcomes Create a vision of the enterprise five to ten years in the future which optimizes enterprise value creation and delivery Provide enterprise executives with a balanced decision aid to: Identify barriers to the creation/delivery of value to each stakeholder Specify a vision of their future enterprise Determine significant gaps between current and future states Prioritize opportunities for eliminating waste and increasing value delivery for the maximum benefit of the total enterprise Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

46 Estimated Resources Required Small execution team including: Enterprise leader as champion or sponsor Team lead, one of the enterprise leaders direct reports Facilitator, with background in lean and ESAT method Enterprise process owners on an ad hoc basis as needed to provide information Following the ESAT methodology can take up to two to three months total time Down from six months Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

47 Leadership Processes Material Value Stream - ŅShop FloorÓ Life Cycle Processes High Information Value Stream - ŅOffice FloorÓ Enabling Processes Low Product(s) & Service(s) Relative Importance to Stakeholder Product / Service Quality Cost of Ownership Cycle Time Relationship with Corp. High Leadership People Processes Information Flow Customers Suppliers Project A Project B Project E Project D Project C Project I Project J Project H Project F Project K Project G 9-block Initial Planning Template Project Name Estimated Event Date(s): JDI X XXX X Kaizen Recommended Process Owner: Project XXX Difficulty Recommended Team Leaders & Event Description: Describe the taskin sufficient Members: detail. (one or two sentences) XXX Impact Estimated Implementation Costs: Reason for Event: Describe the problem the team None is addressing and answers the Òwhy nowó question. Estimated Savings: XXX Enterprise Strategic Analysis for Transformation (ESAT) Process Flow Workshop 1 Collect Data Workshop 2a Workshop 2b Workshop 3a Source: Dr. Eric Rebentisch Workshop 3b January February March April 28 April-1 May Team Charter Identify Enterprise Boundaries Identify Stakeholders Identify Processes Identify Enterprise Metrics Conduct LESAT Collect Stakeholder Data Collect Process Data Collect Enterprise Metrics Data Analyze LESAT Results Stakeholder Value Analysis Current State Process Map & Interactions Review Enterprise Metrics & Performance Enterprise Alignment (X-Matrix) Enterprise Goals Vivid Description of Future State Project Hand- Off Packages Enterprise Metrics Enterprise Wastes Identify Governance Enterprise Framework Architecture Enterprise Opportunities Gaps & Opportunities Communication Strategy ESAT Steps Identify & Prioritize Enterprise Projects Actionable Project Descriptions Integrated Deployment Roadmap 7 Create Actionable Project Descriptions Individual project portfolios Actionable project detail descriptions Recommended project metrics Resource draw by project Pre-event data requirements Projects benefits Recommended project teams and project duration Enterprise commitment ESAT team Facilitators Enterprise lean training Current enterprise goals 1 Collect Data State Perspectives Future State Roadmap received accepted 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, Define the Enterprise 2009 Massachusetts Institute of Technology Team charter Enterprise description: Boundaries, Stakeholders, Processes Homework assignments understood and 2 Prioritized stakeholder values LESAT scores Enterprise resource allocation based on processes Current metric values Current Performance 3 Construct Current Stakeholder value analysis Current state process map Process interactions 4 Identify Enterprise Opportunities Alignment of Goals, Values, Processes, Metrics List of wastes List of opportunities 5 Describe 3- to 5-year Goal Focus areas Waypoint goals 6 Create Transformation Strategic transformation roadmap Governance framework Revised system of metrics Communications strategy 47 8 Create Deployment Roadmap Prioritized list of actionable projects Project timelines established Resource commitments Tracking metrics in place Project tracking schedules

48 Enterprise Transformation Principles 1. Adopt a holistic approach to enterprise transformation. 2. Secure leadership commitment to drive and dinstitutionalize enterprise behaviors. 3. Identify relevant stakeholders dd t i th i value propositions. t t i and determine their 4. Focus on enterprise effectiveness before efficiency. 5. Address internal and external enterprise interdependencies 6. Ensure stability and flow within and across the enterprise 7. Emphasize organizational learning. Source: D. Nightingale and J. Srinivasan, MIT Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

49 Contact Dr. Jayakanth Srinivasan Prof. Debbie Nightingale it d Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

50 TEMPLATES Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

51 Stakeholder Values Stakeholder Group: Stakeholder Name: Ask the stakeholder what they value. What do they expect to get from their involvement with your enterprise? What are the things that would make your enterprise highly thought of by them? On a scale of 1 to 5 how important is this value to the stakeholder? On a scale of 1 to 5 how well is the enterprise delivering this value? Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

52 Value Exchange Template Value Expected from the Enterprise List the data collected about value expected here Stakeholders NAME List the enterprise Stakeholders here Value Contributed to the Enterprise This list is a starting place, tailor it as appropriate Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

53 Stakeholder: High t Perform Current gmance Low Low Relative Importance High Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

54 FOUNDATIONS Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

55 Classical Lean Thinking Specify value from the standpoint of the end customer by product family Identify all the steps in the value stream for each product family, eliminating whenever possible those steps that do not create value Make the value-creating steps occur in tight sequence so the product will flow smoothly toward the customer. As flow is introduced, let customers pull value from the next upstream activity. As value is specified, value streams are identified, wasted steps are removed, and flow and pull are introduced, begin the process again and continue it until a state of perfection is reached in which perfect value is created with no waste Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

56 Lean Enterprise Principles Create lean value by doing the job right and by doing the right job Deliver value only after identifying stakeholder value and constructing robust value propositions Fully realize lean value only by adopting an enterprise perspective Address the interdependencies across enterprise levels to increase lean value People, not just processes, effectuate lean value Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

57 Toyota Way Problem Solving People and Partners Process Philosophy Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,

58 Theory of Constraints Every real system, such as a business, must have within it at least one constraint. If this were not the case then the system could produce unlimited amounts of whatever it was striving for, profit in the case of a business... - Eli Goldratt Step 1: Identify the system s constraints. Step 2: Decide how to exploit the system s constraints. Step 3: Subordinate everything else to the decisions of Step 2. Step 4: Elevate the system s constraints. Defined System System Goals Defined ed by Owners Constraints on the System Defined Measurements in line with the Goal and Constraints Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, Step 5: If a constraint is broken in Step 4, go back to Step 1

59 Benefits of ESAT Focuses at total enterprise level Provides a cohesive method for diagnosing an enterprise in order to expose sources of waste and to identify barriers to value delivery Gives consideration to the needs/values of all stakeholders Focuses on enterprise-wide processes Identifies process interfaces, disconnects and delays Identifies improvement opportunities that t will benefit the entire enterprise Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25,