Best Practices Q & A - Part 5

Question: “Isn’t it true that with effective systems, good products, and proper training that a company can dominate its market and make good profit margins – even without good leadership, a “best practice culture” and all of that stuff?”

Answer: “Yes, it is true. However, remember that competition in an industry, within a given time frame, may turn out to be who is ‘least worse.’ The old saying ‘in the land of the blind, the one-eyed man is king’ applies in this context. The reality is that there are many, many factors that make a company successful – many areas where top—notch Best Practices that lead their industry can be in use, all while other aspects of the organization are way behind the ‘power curve.’

The point that we’d like to make here is that any area that is not being worked on with innovation and improvements, remains a vulnerability, through which a competitor, or an external factor can come to cause trouble. The true world-class (that over-used phrase) companies pursue excellence in every aspect, every area of their business on a relentless, never-ending basis. This gives them a degree of predictability, of business and financial security that others simply do not have.”
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Improve the Improvement Process - Education

Article Summary

• Education – key to Best Practices
• How to get the most value from your program.
• Improving your “improver-ers” – greatest leverage.

Once one understands the value of on-going (continuous) improvement processes, it may occur to you that upgrading the effectiveness of the improvement itself affords potentially huge leverage.

Our considerable experience with education and training programs strongly supports this view, while explaining why many education and training (E&T) efforts produce little in the way of visible results.

The improvement spectrum runs from no improvement process at all through companies like Toyota. Most are somewhere between these two poles.

In this article we will explore how to make sure your E&T program supports the improvement of the improvement process (and people) itself, and as a result, moves the company towards the positive end of this spectrum.

Education – Key to Best Practices

Why have an E&T program at all? Any continuous improvement team will eventually “run out of gas” at least to some extent. This is simply because of the inherent human tendency to settle into a stable way of perception. Waste in a process may be blindingly obvious to one person, yet completely invisible to another. Why? A difference in perceptions.

Similarly, one group of people may just accept a given quality level of a process as normal, acceptable, and not something any action could or should be taken. Another perception may regard the same process quality level as completely unacceptable and an occasion for high-priority action. Same cause – a difference in perceptions.

At the very leading edge of Best Practice generation are highly innovative companies who have mastered the improvement process, such as Toyota and Honda, who steadily generate new, never-seen-before ways of doing things. Honda, for example has an annual celebration for the most spectacular failure during the previous year. This sounds completely insane to many more traditionally minded managers, who think failure is to be identified and punished – the bigger the more severely. But who is gaining market share over whom in this industry?

Most of us must start from where we are – by study, internal growth, by putting more tried and true Best Practices into use – gained from education, case studies, benchmarking, hiring and other methods. Innovation, trial and error can be added to the mix at an appropriate time.

This learning takes the form of education and training. Done properly, on-going education provides the “fuel” for evolving, widening perception processes among improvement program participants, and provides specific, direct information about Best Practices that have a successful track record, and the thinking they are based on.

How to Get the Most Value from Education and Training

Your E&T program should generate a measurable return on investment, not just become part of some nebulous benefit to employees that essentially just increases indirect costs. So, how do we get this to happen?

The overarching key is to closely and integrally connect the E&T process to an effective continuous improvement process which utilizes what is taught.

Our view is that not having a continuous improvement program is a luxury your company cannot afford. If your company is not improving consistently over time, it is in essence, living on borrowed time. It is just a matter of time before a competitor or new entrant to your primary market pushes your company out. In the meantime, though, it can seem stable and comfortable – seducing management and employees into a complacent mind-set – until it’s too late.

We urge you to get started now to get an effective continuous improvement process under way in your company, and to provide the “fuel” for it with an effective, appropriate E&T program. These have the following characteristics:

• Regular, on-going – the E&T program has regularly scheduled sessions, with content appropriate to what the participants are working on. Someone at the company is responsible for managing the content, schedule and participants.

• Part of everyone’s job – professions such as nursing, real estate, CPA’s and many others require Continuing Education Units at specific levels. The same reasoning applies to everyone at your company as well, as nothing stands still in this world. Your people are either growing in their ability, or diminishing – smart money is on the growth path.

• Small, incremental – large, intensive seminars are occasionally appropriate. Generally, though, learning is best done in smaller, “digestible” increments. Ideally, a class is the “lecture” portion of the learning, while actual improvement and job work is the “lab.”

• Closely related to current improvement efforts and work – new conceptual education, or proficiency training in new tools or methods need to be reinforced by real-world use either concurrently with the courses, or very soon thereafter. Otherwise the learning is soon lost.

• Distinguish between education and training – course content should always be clearly understood as providing either new ideas, a new viewpoint, a case study of a similar company’s practice in a given area – which we term “education” from “how-to” work such as operation of a specific software function, or applying a technique such as statistical process control (SPC).

• Practical, lecture and lab orientation – the objective here is to produce improvements in the performance of the business. Accordingly, each section of content should be presented with how the learning will be applied kept in mind. This can be accomplished by “homework” questions or projects, by bringing the work content into discussion during the course itself or other ways. Otherwise, it’s just “info-tainment.”

• Measure results – some form of measurement of relevancy and support for specific performance improvement goals should be maintained over time for all education and training content.

Properly done, an effective E&T program fuels the improvement process that will enable the company to not only just survive, but to prosper and grow over the long haul.

Greatest Leverage – Improve the “Improv-ers”

The most reliable way to improve performance is via a strong continuous improvement program – right? Well, with that in mind, consider the enormous leverage that comes from improving the improvement process itself. And how does one do this? By constantly upgrading the perceptions, knowledge, and skills of those who ARE the improvement process – the participants.

First, remember that the improvement process is only as good as the people participating in it. Secondly, bear in mind that it is very, very easy for heavy handed management to derail even the best improvement process. Teams with many successes can come to a complete halt when a new senior manager arrives who likes the “command and control” method, and hands out punishments to those who make mistakes, or worse, does so publicly.

In summary, then we can see clearly that it is only through a well integrated program of education, training, and “lab” or practical, real-world work that people become progressively more proficient at the improvement process itself. The process is both sturdy and resilient, yet fragile and very easy to stop or reduce.

Short-cutting or stepping on any aspect of the continuous improvement process in your company is like eating your seed corn – these are the seeds of future success, that must be planted, nurtured, and encouraged to reach full bloom over time. Education and training, as we have briefly summarized above, is the means by which an effective performance improvement process is itself improved over time, and works best in a context of supportive, wise leadership.

Subsequent PROACTION Best Practice e-Newsletters will continue the discussion of the 4 Essential Factors on the Path to Best Practices in more detail as well as other closely related topics. Also, you can, at no charge, participate in a Get Started Webinar, and receive free White Papers on various topics of interest to you. We encourage your to explore these paths today.

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Best Practices Q & A - Part 4

Question: “Why does my company regard attendance at educational seminars and classes as a “perk, something you earn the privilege to?”

Answer: “This common situation evolves from misunderstanding of the purpose of an education and training program. Typically, these are not connected to an organized, systematic improvement program, and so accomplish very little in the way of measurable results. Many companies have a long history of command and control cultures, in which changes are something that managers direct, not something the hands-on employee participates in.

Also, while the industry seminars at annual conventions can provide real insight and value (we think attendance at these should be an organized project to glean the most benefit by members of improvement teams), often they are just a form of vacation, which is unfortunate. There are other factors that can cause education and training programs to be a waste of money, of course, but this is the most common.”
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Continuous Improvement Processes

In this article we’ll explore the “holy grail” of performance improvement – continuous improvement processes or programs that are so well established that their cost improvements, productivity enhancements, and quality improvements occur at a sufficiently predictable rate as to be included in business planning for the company. Highlights:

• Key features of successful continuous improvement programs.
• Action steps – how to get quick forward progress going to establish a successful continuous improvement program in your company.

Background

It needs to be said at the outset that only a very, very few companies actually have an improvement process in place that meets this criteria. As we explore the requirements for a successful continuous improvement process, the reasons for this will become clear. Fortunately in business as elsewhere in life, noting the absence of some condition, also allows clarity as to the actions needed to remedy that absence.

In stark relief is the contrast between the Detroit Big 3, and Toyota and Honda. In the news in the last few days have been announcements of huge losses by Ford and Chrysler, accompanied by statements from Daimler-Benz that “small cars can’t be made profitably in North America,” in stark contrast to the Toyota and Honda small cars that ARE being profitably made in the US.

Every sale by the two Japanese giants, both of which are now large US operations, has been made, essentially, at the expense of the Big 3. We should all be asking – “how did this happen; what are the differences in how these companies think?” The what of what they do is well known, lean, pull systems, etc., i.e., techniques done in the factory. Mastering these will put one, at best, less far behind, with no hope of equaling or surpassing them. It is the thinking, the organizational habits, reward system, that creates these kinds of techniques and how to apply them that one should strive to master or improve on.

The key features of a continuous improvement program include:

• Universal; everyone participates – the process of developing improvement suggestions, ideas, is part of everyone’s job, at all levels. In many traditional factories, by contrast, only manufacturing engineers were supposed to be the ones coming up with improved methods. However, most of the expenses in a company are for non-direct functions that often have a greater impact on performance than just cheaper products.

• Fact-based, objective – the value or benefit of any performance improvement absolutely MUST be verifiable by objective measurements, at a minimum, or better by financial measurements. If a “cost savings” doesn’t appear in reduced expenditures, it is what we call “funny money” savings, like Monopoly money. A quote from a Hughes Aircraft executive long ago comes to mind “If we have any more of these ‘cost savings,’ we’ll be out of business.” The company had a suggestion program that didn’t require objective/financial validation, and so the program was swamped with hundreds of good sounding, but useless ideas that did not actually save a nickel.

• Included in employee evaluations – since developing improvements is part of everyone’s job, it must therefore be included in regular performance evaluations. Many people will object to this. Question – do you want these folks on your team? Whose clear intention is to just show up and do the minimum? Think about it.

• Job security is handled – for real savings to occur within a company, often someone’s job has to at least partly, go away, or be reduced in content. No one in their “right” mind will suggest something that will put them on the street. Remember number 8 of Edwards Deming’s 14 points – “Management must drive out fear so that everyone can work FOR the company.” Not AT the company. What are people afraid of the most? Being put on the street. If leaders do not address and ensure that in people’s minds they are secure in their jobs (within reason), there will be no improvements, no matter how much training is given or pep talks made.

• Example – some years ago during a tour of a Toyota plant, our group was told that the plant had 22 production workers sitting at home where they had been for the last 6 months. This resulted from their very successful productivity improvement process, and so were people that the company would have been paying anyway, had the improvements not occurred. Some people we have told this story to looked somewhat physically ill at the thought of paying production workers to not work.

• The management at the plant, though, was very, very clear that had these people been laid off, the results would prove fatal in the long run, as the improvement process would stop in its tracks. Fatal, because the way that Toyota paid the plant for its subassemblies was based on a yearly 10% reduction in production cost.

• Multiple teams – improvement work is largely a team process in any combination of several ways:
  

1. Work group teams – these are one’s immediate work associates who work with the processes every day that are the target of the improvement effort.
2. Lateral teams – work group teams may organize meetings with other work group teams in related, lateral or different areas to collaborate on improvements.
3. Vertical teams – work group teams may organize meetings with work groups at “higher” or “lower” levels in the organization to collaborate on improvements.
4. Cross-functional teams – these are teams organized from multiple functional areas to accomplish specific objectives such as select an ERP system, implementation, bring a new facility into operation.

• Scheduled – improvement teams generally need to meet and work on a regular, scheduled basis to maintain consistent, predictable results. Otherwise, the effort is fragmented, scattered, and crowded out by the press of daily work priorities. Predictable, consistent results requires equally predictable, consistent participation and input.

• Education and training – improvement team members need to be educated in different concepts so they see things differently, a new view / vantage point, not only initially, but at intervals. Training is needed to generate proficiency in use of tools and techniques, such as statistical methods. An erroneous assumption, widely made, is that education and training alone will generate improvements. This is simply not true – it is the fuel for a process, and if the process is not running effectively, its like an auto engine that is not in gear. Lots of fuel consumed, noise generated, but no forward movement.

• Collaboration skills – with teamwork of various sorts at the center of continuous improvement processes, it is vital that those on improvement teams have good communication and social skills, that they be able to get along and work well with others. Those, for example, who need to dominate every situation have difficulty on improvement teams, however bright they may be.

• Leadership – the short version of leadership is leading by example. Accordingly, it is imperative that top management themselves participate personally in their own improvement processes and teams, and exempt no one and no functional area from organized, systematic efforts to improve processes throughout the company. Just “backing” the efforts of others results in a perception of lip service; its cheap talk. Further, top management is a team also, with specific processes, effective or ineffective, that have far-reaching impact on a company. If these processes don’t, themselves, improve over time, the stockholders will be eventually looking for new leadership, as it is certain that performance of the company will come up short sooner or later.

The good news is that some improvements are better than no improvements, and a slow-moving, or intermittent improvement program is still better than none at all. Further, remember the power of improving the improvement process itself – the ultimate leverage.

Action Steps

To get your company’s improvement process moving forward we suggest the following action steps:

1. Assess current status – use the above described characteristics of continuous improvement programs as a checklist. Compare each to your company’s characteristics; do an assessment, honestly and objectively as to where the company stands on each one. For example, there may be intermittent education and training classes, even periodic, or informal improvement projects, but they are not scheduled.
2. Rank your findings – make a list of your results, putting the areas where the initial payoff from efforts would be the greatest at the top. This will tell you where to start.
3. Enroll others – you can make an impact no matter where you are in the company. If you can’t, your company is very likely among those that is living on borrowed time, so to speak, as the success being enjoyed, (or perhaps the survival) is due to external or chance factors. One word of caution, though – many people take even the very idea that the current situation could be improved as a direct criticism of their ability. This defensive posture is one of the hurdles that any company must overcome to transform themselves from wherever they are now into a dynamic, continuously improving company. Everyone must, sooner or later, confront the truth that every process in every organization can be improved – a lot, and indefinitely.
4. Educate yourself and others – inform yourself and your associates on Best Practices, the 4 Essential Factors, and in particular, each of the characteristics we have identified above as being an integral part of a successful on-going continuous improvement process that consistently produces substantial, clearly measurable performance improvements. Enroll in our free Get Started Webinar, “Understanding and Generating Best Practices.”
5. Get top management support – of those you enroll in the continuous improvement process, the most important is top management. Suggestion as to how to get the dialog started – we see companies regularly that have something about “we are committed to continuous improvements” or similar words, yet there is no process at all in place to generate them. If this is the case, at least you have buy-in for the idea – it just needs “legs.”
6. Start in your own work group – the best proof that improvements can be made is to make some. Within your own work group you can find improvements and implement them. No one will complain that your group is working better, more efficiently, doing more with the same resources, even defensive disbelievers.
7. Consider outside support – most companies find that some degree of external support is essential in transforming key processes within a company. How much, and in what way, depends on a variety of factors within the company. PROACTION can arrange for a summary-level assessment with a team from your company that may prove helpful. Our view is that if you are going to do your own brain surgery, which is required in this case, having an independent facilitator or coach will narrow the path and avoid detours.

Conclusions

The subject of continuous improvement teams, processes and how to make them work well is literally a book-sized topic. In our forthcoming book, Understanding and Generating Best Practices, it is a sizeable chapter. Improvement teams are the most effective way to generate the level of process ownership required for consistent, high-level successful performance. If people doing the work don’t have any authority to change anything, even glaringly dumb things, there will be no ownership.

It is a simple, basic human fact that one cannot order people to emotionally take ownership of something. Each person has to make up his/her mind, and decide in his/her heart what they will take on for themselves. Absent this, one ends up with “I’m just doin’ my job” as the attitude.

Finally, if you are still unclear as to why continuous improvements are a necessary fact of even mere survival in most industries, consider this: even if you have a patent-protected, highly profitable monopoly in your market, just the fact that you are not moving forward leaves you vulnerable to being beaten out of your business by a smarter, faster moving, continuously improving competitor. Just ask Xerox Corporation, which at one time had just this situation – a patent-protected, highly profitable monopoly.

Getting an effective continuous improvement program up and running is one of the most essential steps you can take to move your company along the Path to Best Practices.

Subsequent PROACTION e-Newsletters will continue this exploration of the various steps on the Path to Best Practices, and related topics, focused on increasing business performance.

You can also receive free White Papers on various topics of interest. For sale at reasonable prices are the PROACTION education and training courses which are designed to support your on-going education program.

We welcome your feedback and comments. Send us your questions and we’ll answer them in a future Newsletter.

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Best Practices Q & A - Part 3

Question: “Aren’t continuous improvement programs, like Lean methods, something you do in the factory? We don’t make anything, so what do we work on; everything we do is an intangible or just paperwork and documents.”

Answer: “This is a widespread, nearly universal myth. The primary reason that the Toyotas of the world are beating their competitors is only partly due to their lower cost, higher quality products. GE made the concept of “process excellence” a management buzzword by applying the lean-thinking and process variation control (“6 Sigma”) concepts to every, and I mean every aspect of their business. These lead to shortened, more effective, more efficient design processes, better ways to handle route, but essential things like vendor invoices and payments, and how top management teams handle their own processes. If you can understand a process well enough to document it, you can improve it.

Simple example: A leading memory chip supplier achieved serious, high levels of commitment from their suppliers by paying for deliveries the next day, and without an invoice. As soon as the incoming shipment is confirmed as received, their internal process queues up a check for the material using the PO pricing, with no invoice being required. The check is printed and sent the next day, or an e-transfer processed.

Saved – all of the work required to handle vendor invoices (on both ends of the transaction), payment approvals, the matching process, etc. Benefit? Cash flow is the one thing that a vendor typically will appreciate the most, and if supported, you will have his highest possible priority and attention. There is competition among customers for product and delivery terms in many industries, certainly in computer memories.”
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Effective Enterprise Systems & Processes

In our second article on the 4 Essential Factors that comprise the Path to Best Practices we focus on the first Factor – Effective Enterprise Systems and Processes. Having an effective software system coupled with functioning business processes is the starting point, the foundation for performance improvement efforts.

If those who operate the company’s internal processes must daily struggle with what the process is, because it is so riddled with “exceptions,” must constantly be seeing a supervisors approval, or perform a do-it-yourself computer process with a spreadsheet, to name a few examples, it is almost impossible to achieve consistent, substantial, predictable forward progress. These are Basic Best Practices that must be established.

To form a solid foundation, a company’s enterprise systems and business processes, (work flow), must meet several basic criteria:

• Support the Business Strategy – how well does the defined work flow, information systems, and processes support specific elements of the company’s articulated strategy and objectives? Are there numerous disconnects or workarounds? Are the steps so generic that there is no obvious support for the business strategy? Is the strategy itself articulated clearly?

• Be the System of Record – today, in 2006, the enterprise system’s software functionality must encompass enough of the business process to form the primary repository of information for the company. It is the main source of auditable, dependable, coherent data about specific sales, customers, vendors, products and other company-critical information. With Sarbanes-Oxley, FDA, FAR, and other audits of information, it is essential that it “all be in one place.”

• Established Work Flow – the overall work flow for the company must be coherent, not riddled with “exceptions” or depend on individual “hero” performance to work reliably. Just as critical is that it must be documented, and the documentation must match reality. Then, and only then can continuous improvement processes be initiated that can work well. If each improvement effort must start with a “what is going on here?” step, there will be little no forward progress.

• Facilitate Communication – we have found that in simple terms, information + work flow equals communication, between people in the overall sequence that comprises the business process. Information about an order, for example, moves through various stages until it is shipped, with people at each step informed as to what, specifically needs to be done.

Embedded Best Practices – A Reality?

Many ask us about Best Practices that “come with software” – this means that if they buy a certain software package, and implement it, the company will benefit by adopting better information and work flow methods. Or at least this is the idea.

We have found that while there is certainly a very good portion of truth to this concept, in reality there is a lot more to it than just “buy and install.” Some variables:

• Fit the company? – there may be unique aspects to your company that make utilizing a “standard” business process difficult, or require “force-fitting” to get implemented. While it may make a “tough” manager feel powerful to order something to be “force-fitted” into use, we have been the follow up to these all too often, and found that something altogether else results. People just end up working around the process they don’t believe will work, weren’t involved in up front, don’t understand, and above all, don’t feel any ownership for.

• "Not invented here syndrome" – the opposite of the fit issue is that the proposed best practice may actually be a major improvement, but people don’t want it because they didn’t think of it themselves. We have found this is simply another variation on the ownership issue. If those who are “resisting change” have the responsibility and are meaningfully rewarded for achieving these improvements, change will be their best friend. So, if this is going on, dig beneath the surface to identify the real issue, and you’ll usually find it is ownership of the processes.

• "Standard" is too generic – some so-called Best Processes are so generic as to confer no real advantage for the user. An example might be a generic sales order entry process that doesn’t take into account any of the uniqueness of the company’s product offering. Yes, you can implement it, but will it improve anything? Would something now captured by the current method be lost in the process?

There are other factors, of course, such as the fact that you will, at best, achieve only parity with competitors or others by adopting the practices created by others.

Selecting Enterprise Software

The decision to replace a company’s existing system is one of the most difficult, failure-ridden exercises that can be undertaken for a company. We have never met a CEO or senior manager who did not regard this effort as ridden with “landmines.” Some of the Landmines:

• Focusing only on software cost
• Focusing only on detailed functionality.
• Not conducting a formal requirements and issues study up front.
• Undocumented business processes (no “before” picture).
• Using a selection processes that is promoted as largely automated.
• Buying too much complexity.
• Decisions based on biased advice (from either internal or external sources).
• Decisions based on limited information. Emotionally based decisions.
• Not considering ability to implement and “live with” what is acquired.

And my personal number one landmine – lack of ownership. A selection team that does not have ownership of the decision, either for the selection or the successful implementation of what is selected. If someone else makes the decision – “corporate”, a consultant, the IT director, a very loud-mouthed, dominant team member, The CEO, a Board member, investor, the CFO, or anyone other than those who must, in the end, succeed in their jobs with the new capabilities, the chances for failure to hit budget and schedule targets, as well as never realizing the imagined benefits, go through the roof.

Numbers vary, but between 50 and 75% of all enterprise software implementation projects encounter serious difficulties in implementation – large delays, cost overruns, and of course the worse, is just never realizing significant benefits from the effort. The downside is truly frightening to some – outright failure, bankruptcy of companies, or at least serious, major disruption of their ability to function – these have all happened often enough to be very real possibilities for anyone.

Conversely, if you get the ownership right, the risks are not trivial, but at least reasonable success is almost assured, because the team members will make absolutely sure they can succeed with, and will clearly envision how they will fulfill their responsibilities with what they are selecting.

Best Practice – Software Selection

Since having an effective enterprise system and processes that utilize the software properly are the foundation of the Path to Best Practices, the question that follow would be “what is the Best Practice way to select and manage enterprise software? While this is the subject for another Best Practice article in and of itself, here are the basic elements of the selection activity that, when present, form a Best Practice:

• Team ownership – (we’re getting redundant, again) Only the team should perform the selection process, and make each step in the decision process.

• Objective, fact, based, step-by-step process – instead of one big, hairy decision, break it down into a series of understandable steps. Develop the appropriate level of detail for each sequential decision. Focus just on each step, ignoring for the moment, those prior and to follow. Insist on objective, independent data to support each step.

• It’s a business decision, not a technical one – best made by business process owners. Use business due diligence thinking at all key steps, especially toward the end.

• Business strategy driven – understand where your company is going, how it will get there; use this to define the critical success factors that the software must be ableto support well.

• Similar company long list - Generate a long list of established, stable vendors that have a large portion of their installed base in companies similar to yours – size, characteristics, business model.

• Focus on differentiators – decisions between alternatives are not made by reams of data points where all options are the same. Eliminate these and pay all of your attention to the truly vital few – the major, key functions that must go well for the business strategy to work well, and push the detail functions and factors into the background.

• Utilize outside help – at least to some degree. The best role for outside support is in the role of a facilitator, a coach in the process, to keep the team on track, out of the “weeds”, and support the objective, fact-based process. Not having a coach is a lot like a baseball team that is “self-directed.” You cannot do something and simultaneously observe how well you are doing it with any accuracy.

• The process is what generates the result – establish it, stick to it rigorously, and you’ll be standing on solid ground with the final decision.

In conclusion, getting your enterprise software and process foundation in place and on solid ground is essential to moving along the Path to Best Practices. The PROACTION web site has additional information on enterprise software selection, and about the SoftSelect methodology that we use which supports these Selection Best Practice details we have articulated here.

In subsequent PROACTION Best Practices e-Newsletters we will continue this discussion, exploring each of these 4 factors in more detail, and other closely related topics.

Also, you can, at no charge, participate in a Get Started Webinar, and receive free White Papers on various topics of interest to you. We encourage you to explore these paths today.

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Best Practices Q & A - Part 2

Question: "What is the role of newer techniques such as Business Process Mapping (BPM) in getting our arms around how our business is actually working?"

Answer: "We recommend that this key step be done before any new software or major changes are contemplated. If it isn’t documented, you simply don’t know what you have. Document it first, then you can work to improve it effectively. There are a variety of BPM tools on the market, ranging from simple Visio charts to powerful, highly integrated systems that link closely with the enterprise software itself. We recommend that you explore the field and select the right one for your company and available resources. Also, in the process of mapping your business work flow/processes, identifying those that add value and those that are extra baggage will provide a good starting point for making improvements."

The Path to Best Practices

What IS a “Best Practice?” The most common definition is that these are the practices used by the most admired, most successful, or most profitable corporations. Another is that a given Best Practice is the “best way” that has been developed thus far to do something.

There are various limitations with each of these and other similar definitions, we have long since found.

Our view is the answer to the question of “what do we need to do to insure sustained, consistent high performance levels” – regardless of market or other external forces.

How do we fix things so we are assured of “being in the driver’s seat” of the company, not just a passenger in the boat, subject to forces beyond our effective control?

In reality, most companies are not in full control of their destiny. This is why they are eventually merged, absorbed, or otherwise disappear from the landscape. Meanwhile, there seem to be some companies that overcome all odds against them, and continue to survive, thrive and grow consistently over long periods of time. Why? How?

Merely having everyone involved in “improvement” programs along doesn’t do it either. Example – A large Litton division (remember them?) had gotten everyone so involved in all kinds of improvement projects that they lost control of several major contracts, and as a result, of the business as a whole, which was acquired by Northrop Grumman. Lots of meetings, documents, but no substantial, measurable performance improvements.

More recently, witness the simultaneous reports earlier this year - “GM reports $9 Billion loss” and “Toyota reports $9 Billion profit.”

Consider that 30 years ago Toyota’s US sales were the rounding error in GM’s financial statements, they were so small. Then there is Honda, which 35 years ago didn’t even make cars at all, yet is now competition for even Toyota.

It is not so much the “what do they do” that we have come to regard as Best Practices, although this is vitally important also, but “how do they think” that is so critical. Obviously, these companies, and others, just look at things differently, set different processes in motion inside their companies than most others.

So what is this difference? How can the “rest of us” get moving towards this goal of sustained, high level performance?

We have identified four essential factors that MUST be present in a highly effective way to generate sustained, consistent high performance levels. These are:

• Enterprise systems and processes
• Continuous improvement process
• Education and training
• Leadership and culture

These we call the “Path to Best Practices” – which is the path to consistently improving performance in every area of the business, without end, indefinitely, never stopping.

Our first point here is that in order to improve something you must first know what it is. Stated in business terms, this means that:

• All processes must be documented adequately. This is the “DNA” of the company and keeps everyone from re-solving problems previously solved.
• Within a given area, such as sales management, everyone must follow the established process. Results can then, and only then, be consistently and objectively measured without ambiguity. If everyone is doing their own thing, no meaningful information is possible.
• With a consistently followed, documented process, it now becomes possible, and is an imperative, to continuously improve that process over time – without end. There is no “there” there, so to speak. It is not a place one arrives at more than temporarily.

In the meantime, though, one has, in that area, a Best Practice – for now. So, in conclusion, it is the relentless search for better methods that creates a Best Practice for an industry, somewhere within some company. The question is, how can we improve our own companies, starting from where we are now?
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Best Practices Q & A

Question: “Won’t the use of Best Practices stifle innovation within the company by requiring the use of what another company is using?”

Answer: If management decrees that a certain process is to be used, regardless of whether it originates from another company (one definition of Best Practice), without the meaningful ownership of those who perform the process, it will, indeed be stifling of innovation. But it is not the process itself that is stifling – it is the management by decree that stifles innovation. The “holy grail” of the Best Practice Path is ownership of processes by those performing them in a well-led culture of continuous improvements. When this is present, then innovation becomes possible, and even major changes such as implementation of a new system are accomplished without problems.