Needs and Measures
Most operations face challenges that require them to make improvements. This chapter describes what these challenges can look like and where they come from. It also introduces the structure for sustainable performance improvement and enhanced goal achievement that is the main subject of the book.
Operational Challenges
An operation’s challenges are often identifiable from its goals. Goals are derived from the demands of those whom the operation affects as well as from those who work for the operation—i.e., from both inside and outside the organization. Here are some common types of goals: • Increased security • Reduced environmental impact • Improved quality • Shorter delivery times • Shorter process times • Increased profitability
Reflection/Discussion
• What are the biggest demands or challenges facing your operation? • Are any of these demands contradictory or difficult to reconcile? - If so, which demands present this problem and why?
Different demands come from different areas of the operation or from different stakeholders. In this book, we distinguish an operation’s stakeholders into four groups:
• Society in general • Owners • Employees • Customers or patients
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Figure 1-1. The four stakeholder groups.
To achieve long-term sustainable improvement, there must be a balance between the demands and needs of all four stakeholder groups. This means that all stakeholders need to benefit somehow from the improvement for them to have a common interest in making it happen.
Society in general is the one stakeholder whose influence is least obvious or direct. However, every operation both affects and is affected by society to some extent. The relationship between the organization and society has many aspects, of which we will mention a few here.
Both companies and operations in the public sector are taxpayers. They pay wages, which requires the payment of employment tax and income tax. When for-profit companies are successful, they are taxed on their profits, and when goods and services reach the customer, they must collect a value-added tax (VAT) or sales tax on the purchases.
There is also a reciprocal relationship between society and the realm of education. Many operations act as both customer of and supplier to the education system, and both roles are important for the development of society. The private sector and the public sector are both customers, in the sense that they employ people whom the education system has trained and produced. They can also be seen as suppliers, as they offer internships, apprenticeships, or project opportunities to help in raising training programs to the highest standard possible.
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A third area where operations and society impact each other concerns environmental issues. This area is becoming increasingly apparent, acknowledged, and taken seriously. Society places environmental demands on operations through changes in policy and legislation. Moreover, how an operation impacts the environment is of great significance in determining how it is perceived by society. An operation’s environmental profile can have consequences in terms of its ability to attract capital or recruit and retain employees, and in many other ways.
Part Development AB
Figure 1-2. An operation’s environmental profile can affect its ability to sell its products, attract capital, or recruit and retain employees. ©
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Owners (or funders and donors in the case of public-sector or nonprofit entities) usually have a major influence in an operation. This can be seen in several ways. In some cases, the demands of owners or funders dominate an operation’s goals, meaning that most goals primarily benefit them. Often, these goals center on increasing profits or cutting costs. These are of course important goals, but they can lead an operation in the wrong direction if they are not balanced with other goals that provide better indicators of how good financial results can be achieved. Without satisfied employees and customers or patients, it will be difficult to 1 Needs and Measures
achieve financial goals. A proper balance between an operation’s goals is needed to avoid a subconscious bias toward achieving one set of goals to the detriment of another.
Customers or patients are of course an important stakeholder and are the very reason for an operation’s existence. Without customers or patients, the operation would not be required. Therefore, this stakeholder group, along with the owners or funders, normally receives the most focus. Demands from customers or patients are often linked to quality, time, and delivery. However, a one-sided focus on satisfied customers or patients can be problematic. The interests of the customers or patients need to be balanced with those of the owners and employees. The operation should be seeking to understand and consider what is most important for the customers or patients while also keeping costs under control and minimizing negative impacts on personnel.
Companies that supply goods, services, or personnel to an operation are also an important stakeholder group. Among the stakeholder groups illustrated in Figure 1-1, suppliers could be put in the same category along with customers and patients, as in some respects they are a type of customer. Suppliers need to be given the right information at the right time so that they can deliver the right thing at the right time. Furthermore, you must treat them well if you expect them to continue to be high-quality suppliers.
Figure 1-3. In a customer/supplier relationship, in some respects, the supplier could be considered the customer’s customer, such as when the end customer is involved in determining the right information about what should be supplied.
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© Part Development AB
Employees are obviously an essential stakeholder group. Committed, contented employees are an important factor in success, but to achieve this, the operation must meet, to some extent, the demands that employees place on the employer. These demands could involve, for example, the working environment, development opportunities, compensation, benefits, or work hours. In most cases, the employees’ demands are reasonable, but to achieve sustainable long-term solutions without negatively affecting another stakeholder, employee demands need to be balanced against the interests of others.
One example of a demand presenting such tensions might be a request for excessively high wages that would cause a substantial reduction in profit. This wage demand would of course affect the owners, but in the long run, it would also affect employees and society. If the owners do not receive the revenues they want, the operation may ultimately shut down or relocate, which would have direct consequences for the employees. It could also damage the local community in many respects. Another example could be employee demands for flexible work hours. If an operation fails to manage this situation properly, productivity (a key goal of the owner) and deliveries (a main concern of the customer) could be unfavorably affected.
All the stakeholders described here exist in both private-sector and public-sector operations. Being aware of and focusing on these stakeholders is central to achieving what is most important for the operation, as well as to long-term sustainability. Therefore, our reasoning in this book is closely linked to how we can best satisfy all stakeholders in a balanced way.
Reflection/Discussion
• What do your stakeholders demand?
• Is there any stakeholder you consider more important than another? If so, which one(s) and why?
Structure for Performance Improvement
To succeed in meeting stakeholder demands in the long term through achieving set goals requires some form of system or structure. This is because the results an operation achieves are a consequence of what the
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operation was doing when the results were achieved. This way of looking at how good results are achieved is called management by means. Good and sustainable results require systematic ways of working. In real terms, this means the leaders must focus on ensuring that what is agreed upon is also applied and improved over time.
Figure 1-4. Management by means involves the leaders focusing on what has been agreed upon—for example, methods and ways of working—and ensuring that they are applied and improved over time.
To control an operation through means entails getting everyone to comply with the agreed-upon ways of working. This can be about following defined methods or processes, completing set tasks, or living up to the operation’s values through desired behaviors.
To successfully control an operation by means requires follow-up. Furthermore, if some unexpected outcome, usually referred to as a deviation, occurs, it needs to be analyzed and addressed in some way. When everyone is following agreed ways of working, results are predictable and sustainable. If results are not deemed satisfactory, the methods, processes, and behaviors will need to be improved and new ways of working devised and agreed upon. In this way, sustainable performance improvement can be achieved in small and controlled steps.
Successful management by means requires a structure to enable frequent follow-up on agreed-upon ways of working. But it also needs a structure that allows for making improvements based on the knowledge acquired during follow-up. Every deviation from what was expected provides an opportunity for learning something new and implementing improvements that can impact results.
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© Part Development AB
This book describes a structure for systematic management that can help an operation achieve sustainable performance improvement and enhanced goal achievement. The structure supports the practice of management by means and comprises the following components:
• Values
• Goals
• Pulse meetings
• Continuous improvement
This first chapter provides a brief discussion of each of these components and the links between them. Each one will be described in more detail later in the book.
Values
Shared core values and a clear vision of where an operation is heading are important when one is responding to challenges. Together, they enable the operation to maintain a steady course when navigating, in the short term, between the demands of different stakeholders.
© Part Development AB
Figure 1-5. Shared core values and a clear vision make it easier to hold a steady course when an operation is navigating between demands from different stakeholders.
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A vision should be forward-looking and should describe a desired future state. It should state clearly the direction the organization should take and what it ultimately aspires to. A good vision is concise, easy to communicate, and easy to internalize. It should embody an ideal state that everyone in the organization is motivated and inspired to reach.
At an overarching level, shared core values articulate how people in the organization should relate to their stakeholders. This is because values are indicators of desirable behaviors. Values are therefore crucial for an organization if it is to reach a state from which it can improve performance results.
Goals
Values and vision set the framework for desired behaviors and the direction in which the operation wants to go. However, to make this framework clearer, the operation also needs to set tangible goals that provide everyone with the same picture of what it wants to achieve and how all can contribute. Additional ways of working will then be needed to help improve goal achievement. The ways of working recommended in this book are pulse meetings and continuous improvement. In combination, these four components form the structure shown in Figure 1-6.
Goals
Specify what the operation prioritizes to achieve
Way
Way
Figure 1-6. The connection between values, goals, pulse meetings, and continuous improvement.
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of working to follow up on goals and identify deviations
of working to enhance goal achievement
Pulse meeting Continuous improvement Values - Contribute to properly functioning waysofworking
© Part Development AB
To be specific about where the organization is heading requires well-balanced overall goals. These goals should be at the highest level of the organization and should create a balance between the different stakeholders and their respective interests. Each stakeholder must benefit to some extent for desired and sustainable results to be achieved. Carefully considered and selected goals are vital in getting the entire organization to move systematically in the right direction.
Overall goals are important as a starting point, but to enable the entire organization to contribute toward these goals, they need to be broken down at each organizational level. This process provides each employee and leader with the prerequisites for working toward goals they understand and can achieve. Each person should perceive how they can contribute to achieving the organization’s overall goals, such as profitability, reduced emissions, or shorter patient waiting times. This understanding also increases people’s motivation to achieve goals.
Working toward these goals systematically requires a structure that guides implementation. This is where pulse meetings and continuous improvement come into play. These are two distinct ways of working, but they are also linked and contribute together to improved goal achievement. Both ways of working should be applied at all levels of the organization.
Pulse Meetings
Pulse meetings are held at agreed intervals to do the following:
• Follow up on the operation’s performance since the previous meeting
• Review the plan until the next meeting
• Make decisions on corrective measures
• Identify deviations, i.e., unexpected outcomes
• Share information
We have chosen to call these meetings pulse meetings. Sometimes the term “daily management system” is used to express the same content. We prefer “pulse meeting” to avoid implying that the meeting frequency must be daily. The most appropriate meeting frequency will be determined by the needs of the operation.
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In operations where employees work in shifts, or where the nature of the work causes things to happen rapidly, meeting once a day may not be enough to have the desired effect. Some operations have even evolved to hold pulse meetings every hour.
At higher levels in an organization, such as the group management, a pulse meeting frequency of less than once a day is common. It may be because the long-term nature of work at this level does not require such frequent adjustments. However, at other times, such as in a crisis, the management team may need to increase pulse meeting frequency. Therefore, the actual need should drive the frequency of meetings, and that will depend on what is most appropriate for the circumstances.
An effective pulse meeting will follow up on an operation’s performance related to the established goals since the last pulse meeting. It will also determine whether the plan until the next meeting is achievable. For example, it may be necessary to consider factors that could impact performance, such as staffing levels, patient status, inventory, or equipment. In addition, pulse meetings are an important forum for making decisions about corrective measures and sharing information that needs to be disseminated quickly.
Following up on goals at pulse meetings tends to have a positive effect on performance. In general, any follow-up is good because it reinforces the message that the issue is important. This tendency, along with any corrective measures decided on at the pulse meeting, is the reason for the upward arrow between pulse meetings and goals in Figure 1-6. An effective pulse meeting has a positive effect on performance.
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Figure 1-7. Anything followed up on is almost always improved. Follow-up influences behaviors in the short term and allows for prompt corrective measures.
Another purpose of pulse meetings is to bring up deviations that have occurred in the operation. A deviation is an unexpected outcome. It can be a negative deviation; perhaps an equipment item has failed or is not working properly. Deviations can also be positive, such as when something takes less time than anticipated. In both cases, lessons can be learned that can lead to improvements in the operation.
However, an effective pulse meeting should deal with deviations only in the short term. In other words, it should discuss fast interventions to minimize the consequences of a deviation. A long-term solution to solve the deviation requires more time and a deeper analysis. Therefore, continuous improvement is needed to complete the structure for performance improvement.
Continuous Improvement
Improvement work takes on many different forms. It can be anything from larger improvement projects undertaken over several years to the small improvements implemented daily in the course of your work. A common feature of all improvement work is that it should help to achieve goals. This requires first and foremost that any improvements an operation chooses to implement need to be aligned with its goals. It also means that any improvement needs to be lasting and built into ways of working so that they remain over time. In contrast to pulse meetings, improvement work should tackle deviations in such a way that they do not reoccur.
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Lasting Improvements Example
Part of an operation was deemed so dirty as to be considered a deviation from the operation’s standard for keeping areas clean. The standard had been created to ensure that dirt did not find its way into the product and negatively affect quality.
When a group of employees discussed how to solve this deviation, someone suggested cleaning the area. Obviously, cleaning the area would make it clean, at least briefly, but this is only a way to deal with the deviation, not a way to prevent the deviation from occurring again. If the ways of working continued unchanged, the area would simply get dirty again in a short time.
After some debate, the group decided to establish why the area was becoming so dirty. They concluded that dirt came largely from the air circulating in the premises. It was not feasible to filter the air or to enclose the area. Instead, the group settled on introducing a daily cleaning routine. Based on what the cleaning routine would include and its new daily frequency, they believed the deviation would not occur again.
After implementation and evaluation, this became the new standard, and it provided lasting results by preventing the area from becoming too dirty between cleaning intervals.
Improvement work can be either challenge-driven or deviation-driven. Challenge-driven improvement is about achieving a goal that has been established to deal with a specific challenge—for example, reducing environmental impact or reducing the time for a particular patient category or type of product to pass through a flow. In contrast, a deviation-driven improvement is driven by a specific deviation; in other words, an unexpected outcome is the driving force for improvement. For example, perhaps a deviation in quality needs to be solved so that it does not happen again.
Continuous improvement is ongoing, employee-driven improvement work that involves everyone. Improvements are implemented in small steps and people are organized into so-called improvement teams. Such teams should exist at all levels of the organization.
Continuous improvement work is employee-driven because the improvement team that discovered the deviation, or that proposed an
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improvement not derived from a deviation, is responsible for deciding the next step to take. This gives the team ownership of improvements made and of subsequent goal achievement. Improvement teams at the employee level should primarily make small, relevant, and simple improvements. This is because many small improvements can, in combination, make a big difference without a huge time investment. Other improvements that require more work or are harder to implement can be sent to another improvement team that may be better placed or equipped to tackle them.
Top
management
Figure 1-8. Working with continuous improvement means that improvement teams “own” their deviations or improvement proposals, but they can send them to another team if necessary.
Regardless of the complexity of the improvement, it will need to be dealt with in a structured way. An underlying framework to guide improvement work is required. This is important to ensure that any improvement work actually leads to improvement and not just change. Any deviation caught is a symptom and shows that something needs improvement. But to enable real improvement to happen, it is essential to find out what caused the deviation to occur and solve it. What caused the deviation is termed the root cause.
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The need to identify and resolve the root cause of the deviation is something we are familiar with from our medical visits. If we only received medicine to alleviate our symptoms, without tests or an examination to find the root cause, this would not lead to long-term sustainable improvement.
© Illustrator AB
Figure 1-9. Without a thorough analysis of the problem, we risk taking the wrong measures.
In chapter 5, we will present a structured method or process to support improvement work. Chapter 6 then suggests methods that can be useful in the analysis of deviations.
Examples of Achieved Results
The structure for sustainable performance improvement and enhanced goal achievement described in this book have proved to be successful in all types of operations. The examples given in Part II of the book provide illustrations, showing how this structure can be applied in administration, sales operations, local government, project work, healthcare, support functions, and manufacturing.
The structure contributes to improvements on many levels. It is of course about measurable improvements in an operation’s performance, but it is also about improvements in terms of other values such as well-being, communication, job satisfaction, and commitment.
Which operational results are improved will of course depend on the goals the operation chooses to prioritize. The selected goals are then followed up in pulse meetings and can lead to new improvement
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proposals or the identification of new deviations. These will then lead to improvements within the improvement framework. The examples in Part II show that improving results by up to 50% within just a few months is possible. The keys to success are clear expectations, committed leaders and employees, and a suitable structure for follow-up and improvement.
Achieving sustainable long-term improvements, as mentioned earlier, requires everyone to benefit in some way. It is not enough simply to focus on concrete and measurable operational goals, because other values are equally important. From the employees’ point of view, examples of valuable improvements include the following:
• Clear and shared performance expectations
• Better support between individuals in the team
• Reduced stress levels
• A greater sense of being noticed and appreciated in the operation
• Improved communication and cooperation across organizational boundaries
• Increased interest in contributing to improvement
• Making it easier to ask for help without feeling awkward
• Employees and managers being better prepared for daily work
• Improved understanding of the operation
These are just some of the many gains possible when pulse meetings and continuous improvement are well-developed and fully functioning. How well these ways of working will work in practice depends heavily on the behaviors that permeates the organization. The next chapter will begin to describe the structure for sustainable performance improvement and enhanced goal achievement by taking an in-depth look at values and how they relate to behaviors.
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