The Leadership Roadmap

People, Lean, and Innovation, Second Edition

Dwane Baumgardner, Russell Scaffede

• Editorial: Productivity Press
• Año: 2019
• ISBN:
  9781000011692
• Edición: 1
• Categoría: Betriebswirtschaft
• Categoría: Operations

For more than 60 years, a few organizations have followed what is known as the "Scanlon Plan" for employee engagement. Some early benefits were achieved and employee satisfaction was high in these companies, such as Donnelly Corporation and Herman Miller Office Furniture. Likewise, for more than 30 years now, US and European companies have been studying and adapting the Toyota Production System (TPS), which has been dubbed as "Lean." Again, some long-term benefits have been achieved, but many have not transformed their workplace culture or achieved operational excellence.

The Leadership Roadmap combines the two philosophies of both employee engagement and Lean into one concise and understandable system for leaders to follow. If leaders truly want success like Toyota, they must understand it is the combination of TPS with total employee engagement that made this company a sustaining industry leader. By following the outlined system, leaders will not only make a more successful organization for all stakeholders but will truly enhance their employee satisfaction with their daily work.

This book is not just for CEOs, CFOs, and others at the executive level – it is for employees in human resources or project development, the plant manager or first line supervisor. Essentially, it is for anyone in the organization who shares a strong commitment to the foundational premise of integrating the leadership of people, Lean transformation, and innovation systems. The Leadership Roadmap is a practical resource that will foster a new generation of roving leaders -- committed team members who are willing to step up and fill a void and who lead by asking questions that trigger positive change rather than simply giving orders. These new leaders will understand that while the framework for achieving success is simple, the implementation can be complex and daunting, requiring a firm and enduring dedication to renewal, and a step-by-step guide to show them the way.

1

Defining the Journey

The Premise

This book is based on the belief that within every board member, every CEO, every executive, and every employee is a deep-seated desire to make a difference in work and life. People want to be part of a winning team. Those at the top of organizations—board members, CEOs, and executive leaders—can help that desire become reality by creating structures and policies that foster successful organizations.

But it isn’t their task alone. Everyone involved in the organization must accept a share of responsibility. The modern, fast-paced, global, knowledge-intensive, and highly competitive market pushes organizations to new limits, while communication technology inundates leaders with a constant stream of information. The Leadership Roadmap is an attempt to cut through the clutter by offering a hands-on, comprehensive guide to the most effective methods for developing leaders, perpetuating organizational success, and becoming a winning team.

Here’s our premise in a nutshell:

In order to become a winning team, an organization needs a competitive advantage, plus the will and the ability to use this advantage to achieve total organizational success.

We define total organizational success as the ability to meet the critical needs of all major stakeholder groups (customers, employees, investors, suppliers, and communities) consistently and over long periods of time. In other words, in order to achieve total organizational success, your organization must provide:

• Best value for customers
• Best financial returns for investors
• Best opportunities for employees
• Best partnership relationship for suppliers
• Best support for the community

Success begins with the basics. The best is built on a foundation of attentiveness to rudimentary business requirements—including profitability. Profits support all business activities and are inextricably important. The following equation is seared onto the brains of all first-year business students. We include it as a reminder and the first critical step in our logical approach to achieving success.

FIGURE 1

It is clear that the vitality of any business depends on its profitability. The goal is not mere existence, but rather success. To meet that goal, your organization must realize the best profit possible. The BEST profit is realized when revenues increase and costs decrease, as in the following equation:

FIGURE 2

The BEST way to increase revenue is to offer innovative, high- quality products or services that customers want. The BEST way to minimize costs is to eliminate waste.

All stakeholders are important, but your sharpest focus must remain on your customers, because they drive revenues that ultimately support the critical needs of all the other stakeholders. Without satisfied customers, no business can turn a profit. Without satisfied customers, no business can exist.

Every person, every team, and every organization has customers, and the terms of customer–supplier relationships are vital to an organization’s success. Customers only want to deal with the suppliers who provide the best value. Customers within the organization, dealing with internal suppliers, may have few alternatives. They become frustrated if they are not receiving the best value, and conflict often follows. On the other hand, external customers may have several supplier options available. They could easily decide to purchase products or services only from the suppliers who offer them the highest value. In the rapidly expanding global market, those suppliers can come from almost anywhere.

So, what is value? What is BEST value? We define value as the total satisfaction registered by the customer, in regard to product, service, and interaction, divided by the total cost incurred by the customer in the transaction.

But we must take our definitions a step further. To understand value completely, we must also define what we mean by satisfaction and cost.

Satisfaction contains three main components: performance of the product or service; quality and delivery of the product or service; and the overall customer experience.

Cost to the customer is the price paid for the product or service as well as the internal costs incurred as a result of doing business with the supplier.

This definition of value is shown in the following equation:

FIGURE 3

To gain or maintain a competitive advantage, your organization must provide the BEST value to customers. The BEST value is one that provides the highest possible level of customer satisfaction at the lowest possible cost to the customer (while maintaining a healthy margin), as depicted in the following equation:

FIGURE 4

Your organization achieves total success—the pinnacle goal—when it holds a solid competitive advantage. A competitive advantage is only realized when your organization offers the BEST value relative to competitors. Subsequently, by paying constant attention to minimizing costs, as well as to improving your products and services through innovation and lean techniques, your organization can also turn the BEST profit.

Total organization success is therefore a function of value, which is driven by lean techniques and innovation, as shown:

FIGURE 5

While the concept of value may be intuitively, perhaps even painfully, obvious, few organizations or teams within organizations take the time to raise the following questions and then develop answers as part of the business plan.

• Would our customers recommend us to others?
• How does the performance of our products and services measure up to the competition?
• How does the quality and delivery of our products and services compare to the competition?
• How do the total costs incurred by our customers compare to those of the competition’s customers?

We have been expressing concepts in simple fractional form, and it is mathematically true that in order to increase the value of a fraction, you have to maximize the numerator and minimize the denominator. So it is with our BEST VALUE equation (see earlier). How to do this—how to increase total customer satisfaction while decreasing total customer cost—is the concern of this book.

We contend that there are three linked commonalities that drive an organization toward providing the best value that results in a strong competitive advantage and a winning organization. These three linked commonalities are people , lean , and innovation . They are the three critical factors in an organization’s success.

We cannot stress enough the importance of integrating the leadership of people, lean, and innovation. To those who are familiar with recent business wisdom, this might seem intuitive, but, often, intuitive truths are not applied explicitly and systematically. Our experience has taught us that low success rates over long periods of time stem from one of these two pitfalls, or sometimes both: failure on the part of CEOs and board members to institute a solid foundation in policy for integrating the three overarching critical success factors; or a lack of familiarity with, or acceptance of, responsibility for the integration of these three critical factors among all team members.

We now turn to take a closer look at each of the three critical factors for success.

People are the source of all social and intellectual capital, and, as a result, are the fundamental drivers of both lean and innovation. For this reason, people are the most important asset of any organization. The top priority of the organization’s leaders must be to lead in such a way that people enthusiastically apply their full energy, creativity, and commitment to their work every day. Remember, doing tomorrow as you do today yields the same results. If you desire sustained best value, the organization must develop a people participation system integrated with continuous improvement and lean enterprise. This must also have capability to integrate the system of process innovation and product innovation with total involvement within the circle of influence for both.

Lean enterprise is best known for helping minimize the denominator by systematically eliminating waste. But lean enterprise also helps maximize the numerator with many small and sustaining product, service, performance, and quality improvements. It can provide a cultural foundation for achieving operational excellence through a series of constant improvements as an integral part of the long-term strategy. Note that lean enterprise is not a manufacturing system or first-line service improvement system. This requires the entire organization to be a part of developing, implementing, and operating in the system of continuous improvement through teamwork and functional supports.

Innovation is best known for helping maximize the numerator by means of product and service changes so significant that they frequently redefine the playing field and dominate the competition. But innovation can also help minimize the denominator with major process or business model changes, thereby lowering costs substantially. An innovative culture encompasses a passion for identifying, implementing, and sustaining quantum changes with products, services, processes, and business models that are fast to market and provide both superior value for the customer and superior financial returns for the organization.

It is exceedingly difficult for any organization to achieve total success. In today’s rapidly changing environment in which business is becoming global and knowledge more intense, it is more challenging than ever. Each passing year marks an increase in the difficulty of the task. Observed financial return rates, as reported by thousands of companies and cited in the book The Innovator’s Solution, indicate that only about 10 percent of all publicly held companies will achieve growth and above average returns for more than a decade. ¹ That historical trend implies that only one-third of today’s organizations will survive, in an economically significant way, 25 years from now. In more personal terms, the threat to any single organization’s survival is very real.

People

Highly motivated, skilled, and committed people operating in a lean and innovative environment are at the heart of building a competitive advantage. It is no secret that modern organizations face unprecedented challenges that demand first-rate leadership. But leaders often struggle to perform up to expectations and to build confidence among all their constituents.

By definition, leaders need followers. It is the leader’s role to help people understand where they need to...