Unlock Standards: Implement change that matters
The global landscape is increasingly competitive for most decentralized organizations. Companies need to implement change that matters, including deploying advanced techniques such as lean. The three areas that require additional emphasis to implement operational changes—such as lean—in a decentralized organization are: the level of standardization(standards), frontline leadership, and change processes.
Standardized work is a critical element of high-performing, consistent, and predictable operations. The problem is that individual managers tend to resist standards, as some well-intended standards result in additional cumbersome work while not improving operations. However, the true objective is not to standardize hundreds of processes, just a critical few that are in great need of improvement. The right number of processes—and the right balance of standards and site autonomy—varies by industry and organization.
Sustainable standards require leaders, particularly frontline leaders. A lack of frontline-leadership support is the main reason why improvements do not last. Though this may suggest that success is solely a frontline-management issue, it’s not. Frontline leaders need support and reinforcement from their direct managers, and those managers in turn need to be held accountable. Enforcing standards requires rigorous, consistent, and sustained effort over time. Once a company establishes a set of standards, its leaders need to hold teams accountable for working according to those standards and for improving them over the long term. Leaders in successful lean companies spend significantly more time on the front line than do leaders in companies that are not lean.
Not all frontline managers willingly embrace such changes. It is worth noting that frontline managers may lose some of the autonomy they once held, but will likely gain new roles and responsibilities. In many decentralized organizations, units are run as separate fiefdoms whose heads define their respective cultures. As a result, unit heads who are inelastic to change need to be replaced with new leaders who are ready, willing, and able to change. Furthermore, companies need to spread the responsibility for lean as widely as possible, throughout the line organization. Lean managers and other change agents should be strong and well-respected leaders, but should not take ownership of the overall implementation. Companies should use special teams or internal or external consultants to implement lean programs.
Disciplined Change Processes
In addition to standards and frontline leadership, implementation of lean or deployment of a production system in a decentralized company requires a new level of transparency and accountability. While there are many approaches to governance of large decentralized programs, three best practices are worth highlighting:
• Effective governance is critical. Many companies rely on a PMO to follow up on progress and hold unit heads accountable. PMOs must take an activist role, leading the change but empowering rather than usurping the line.
• Milestones and objectives break the initiative into smaller steps. The building blocks of any initiative come together as a roadmap. Roadmaps lay out time frames, financial and operational metrics, lead indicators, interdependencies, and accountabilities. Their fundamental purpose is to help executives understand where things are going wrong and where things need corrections.
• Rigor testing ensures that roadmaps are meaningful. Rigor testing is a formal process that ensures that the roadmaps accurately reflect how the initiative is actually proceeding. In this process, roadmap owners, sponsors, and the PMO, finance, and HR representatives assess each roadmap to ensure that companies capture far greater value than they otherwise could.
Four enabling processes can help create an enhance commitment to the level of rigor that is required to drive successful change in decentralized organizations:
• Performance Governance. A rigorous performance-management and governance system ensures that the company tracks both financial and operational performance at a comprehensive and detailed level. Performance management must be conducted frequently—daily, hourly, or even in real time—in order for managers to be able to react to deviations.
• Continuous Improvement Process. The process needs to ensure that improvements are codified as standards and that there is a mechanism for enforcing and improving those standards. Continuous improvement requires two distinct mechanisms:
o The first is a trigger system that traps deviations in performance and initiates corresponding actions that prevent their recurrence according to a rigorous and systematic problem-solving methodology.
o The second mechanism is ideation, through which the company identifies improvement opportunities, codifies them, and prioritizes them for implementation.
• Organization Structure. The organization structure should support the company’s strategy and competitive environment. In many decentralized organizations, strong and direct reporting lines to operations are needed to support lean programs.
• Capability Building. Capability building means training people to upgrade their skills and capabilities, as well as communicating with them and fully involving them in the change process. When organizations develop the ability to teach new skills, the change effort becomes replicable.