23, February 2017
For the Lean Enterprise, What's Next? Strategic Systems Planning
Can you imagine yourself behind the wheel of a new luxury SUV? It’s hard not to spend $50,000-plus in this day and age of high tech vehicles. Of course you purchased it with certain performance, styling and comfort requirements in mind, but, at the end of the day your ultimate objective was to provide a reliable means to take you from point A to point B. What if, after the first few miles, your pride and joy started running rough? The capacity to achieve that ultimate goal is severely diminished. Naturally, you’ll take it back to the dealership, they plug it in to the computer and they diagnose a simple fix—just one spark plug was defective. That small piece of material costs about $19 (100,000 mile platinum, of course), but it essentially transformed your $50,000 SUV into a piece of junk. It doesn’t matter at all if it has the finest fuel delivery system and transmission that money can buy. If just one component is malfunctioning, then the performance of the whole machine is limited to the performance of that component.
Your organization is very much like a machine. Each component is expected to work in harmony with the others as a system. Systems thinking focuses on how individual changes within that machine affect the whole. It continually evaluates performance of the whole in order to identify and eliminate obstacles in the way of achieving your goals. In a nutshell, systems thinking recognizes that the organization, or machine, is only as good as its poorest performing components, and provides an optimized and strategic path to achieving the organization’s goals by identifying and eliminating those constraints.
We hear much about the need for continuous improvement (CI), but what are we striving to improve? And how well do we manage the CI process? Is a requirement for, say, two kaizen events a month a relevant strategy?
Developing successful strategies involves answering four questions. Those familiar with A3 thinking know that the questions fundamental to problem solving are:
1) Where are we now? Our current state.
2) Where do we want to be? Our desired future state.
3) How do we get there? Our plan to close the gap between 1 and 2.
4) What obstacles stand in our way?
In the context of systems thinking at the enterprise level we need to swap questions 1 and 2, i.e.:
- Where do we want (need) to be? What is our three- to five-year vision for the organization?
- Where are we currently at as an organization, in relation to that vision?
- How do we achieve our vision, or purpose? What strategies and associated tactics do we need to close the gap between our current situation and our goals?
- What are the obstacles that need to be removed to be able to sustain our results?
These questions are foundational to all strategic planning, at least I hope so.
The tactics identified are the steps necessary to execute the plan, or strategy. This is where the lean tools and principles may come to bear as part of the overall strategy; laser-focused projects and kaizen activities, at all levels of the organization in order to:
» Identify the tactics necessary to eliminate the targeted obstacles
» Assign responsibilities for those tactics: key performance indicators (KPI), persons and dates
» Monitor and measure the degree of success of those tactics in as close to real time as possible
This last bullet point means we closely monitor expected versus actual performance and react to divergences as they happen--keeping you in the game, so to speak. I have dubbed this critical practice “Managing in Real Time”, although my personal experiences show that this is a rare practice. Many organizations still prefer to manage performance via rear-view-mirror measures and metrics such as the standard end-of-period financial reports, e.g., balance sheet, profit-loss, etc. Interesting information, but too little and too late to do anything about it.
It’s Hard to be Easy
Too often, the strategic planning process is lengthy with the deliverable being a correspondingly lengthy tome, what we call a credenza binder, that no one really has time to read, much less execute. Responsibilities, goals and objectives are unclear, making progress tracking difficult, if done at all—refer back to the rear-view-mirror performance measures.
Jazz performer Charles Mingus once stated, “Making the simple complicated is commonplace; making the complicated simple, awesomely simple, that's creativity”. As a caveat to that statement I would add that complex solutions provide the most direct route to failure. They are just not sustainable.
Enter Strategic Systems Planning. Strategic Systems Planning is an extremely effective, but simple process for creating your unique roadmap to fulfilling your vision and achieving your goals. It provides a simple, standardized approach to strategic planning and, just as importantly, execution management. Don’t mistake this for an IT initiative. This is a facilitated process that is owned and driven down throughout the organization by senior leadership, and executed from the bottom up, again, in a very standardized format. As the various components of your “machine” are mapped, optimized and aligned around achieving the goals, then, and only then, are the information systems designed around, and in support of relevant enterprise performance, and only if justified. As my esteemed colleague preaches, if you are doing things wrong, computers will help you do the wrong things much faster.
Strategic Systems Planning really is about building a roadmap to world-class status for the enterprise. The roadmap is unique to your organization, not a direct copy-and-paste of the Toyota Production System. It is simple in that a vision, with associated annual goals are communicated successively down each functional area. Each person within those areas provides a specific strategy and associated tactics in support of those goals, with a single sheet of formatted 11”x17” piece of paper (A3-sized). Within each A3 document are contained the Responsibilities of the owner, the Objectives specific to that function and level, the KPIs, or numeric Indicators that best describe progress towards the goals, and the tactics and expected completions dates of those tactics--notice the cool acronym, ROI. Progress monitoring is accomplished via real-time score boards and immediate follow-up actions. Alignment is assured and conflicting goals and strategies eliminated since the Objectiveslisted on the senior A3 documents become the Responsibilities of the subordinates, and so on down the ladder.
And finally, and most importantly, simplicity lies in the process of separating out the “vital few” from the “critical many” strategies and tactics. No boiling the ocean here. Each A3 will ultimately contain strategies and tactics that can be counted on one hand, give or take. Slow and steady wins the race.
For more information about the Strategic Systems Planning process, click here.