The Lean Enterprise Institute’s webinar “Strategy Deployment in Action:
One Executive’s Perspective” drew over 500 questions from the Lean Thinkers who attended.
They heard David Brule, II, of Northern Star Industries, and Pascal Dennis, author of Getting the Right Things Done and an LEI faculty member, discuss a real-world application of strategy deployment as the “nervous system” of a lean business system.
We selected questions directed to David and Pascal that represented the major topics you wanted to know more about. Here are their replies:
Q: What is the organizational structure of the shop floor? Are you a union shop?
A: We have approximately 260 shop-floor employees between the two businesses. We are unionized with IBEW Local 2221, dedicated to our company.
Q: A key measure of success is the number of recordable (OSHA) injuries. How has the plant performed since the adoption of lean?
A: Our safety record has improved steadily since implementing lean. We had a 1.3 frequency for 2008. We had no recordable injuries in the Boss snowplow plant in 2008.
Q: Do you review value-stream maps for improvement opportunities and these improvements become strategic in nature?
A: We review value-stream maps regularly. They are often incorporated into the A3 process.
Q: How do you quantify “improving moral?”
A: Morale is measured by an annual survey. We also measure absenteeism (< 2%) and turnover (~ 1.5%) as indicators of morale. Productivity measures can be an indicator of morale but much less direct.
Q: I do not see the financial benefits listed on the A3. Generally what is a reasonable value of financial benefit for each of the A3 projects and also a time scale for each A3 project?
A: This varies by the nature of the project. For the paint project, we had a customer mandate to fix the problem. The question was not so much of return but rather the most cost-effective method relative to results. Traditional project ROI’s are based on a hurdle rate derived from our return on invested capital.
Q: David, did the difference in salt spray resistance between your product and your competitor play the biggest role in getting your team fired-up? How does the present economy fit in?
A: This played a huge role in our team getting excited. They saw this solution as a major success and the manufacturing and design engineering teams’ way of giving us a competitive advantage, especially when we realized how many more salt-spray hours we might get. The present economy makes this process even more valuable. Competitive pressures are as high as ever with cost pressure as well. We also see less capital available. Therefore, the A3 process and thinking are more critical now than ever.
Q: Is the paint problem A3 an active A3 which continues to improve?
A: When the work was completed and results were verified, we moved on to other projects.
Q: Did all your departments benefit equally from the success of this strategy deployment activity? This is just to find out if all departments were interested in participating.
A: All departments are required to develop an annual A3 strategic plan. Some are better developed than others and the benefits are proportional. Important note: this is not easy to learn as an organization but we are getting better each year.
Q: What is the key to sustaining improvements?
A: Create key measurements that the team members understand. Celebrate the successes! In my opinion, a culture of positive recognition for success breeds more success. Our top management attends every kaizen report out.
Q: Did David’s team ever deviate from the initial hypothesis on the A3? How did you ensure alignment to the strategy?
A: Exploration of alternatives is part of the PDCA cycle. We explored several alternative solutions but the focus was always on the desired outcome which was coverage, salt-spray hours, and adhesion.
Q: Was there formal training of all employees? Or just certain employees with the rest being trained ‘on the job’ as they used lean? Looking back what strategy would you recommend?
A: We trained about 20 employees right away and started using the process. One of the early A3’s was deployment of the A3 training. All employees are required to be trained in practical problem solving using the PDCA cycle. A3’s are generally done at a higher level. Everyone needs to recognize what they are and how to read them but not everyone is required to develop them.
Q: How many kaizens events do you run per month?
A: Average two per business unit.
Q: How do you develop problem-solving skills in your working force? What is the training?
A: Everyone is trained in practical problem solving using PDCA, fishbone diagram, Five Why analysis, etc. We are also trying to get our entire workforce to have participated in at least one kaizen event. We recognize participation in events with T-shirts, jackets, etc.
Q: What sort of things did you do to embed a lean culture across your organization and how did you overcome resistance to change?
A: See the answer about problem-solving above. Also, senior management (including owners) are involved and always talking about the improvements. We did a lot of training with all levels of employees. We also started sending floor-level employees out to benchmark other companies and learn ideas.
Q: Is the A3 document a static document or do you go back and revisit and refine, and if the latter, how do you do that?
A: Once you’ve written and confirmed the A3 with your colleagues (which will likely take many iterations), the Plan phase is done. You don’t have to go back and rewrite the strategy A3. It’s done. Focus on Deploy/Do by building a necessary planning & execution tree. If you find that you’re initial hypothesis was way off, record and reflect on it at your year-end review. Why did we fail to grasp the situation? What are the learning points, etc.?
Q: How do you de-select or prioritize strategy items?
A: Reflect on True North. Not everything is a priority. Often we equate priority to urgency — but they’re different.
Q: Is the A3 process really appropriate for “white space” strategy development? If so, how?
A: I don’t understand what you mean by “white space” strategy deployment. In any event, I’ve found that A3 Thinking applies wherever there are problems or unmet needs.
Q: in today’s economy, employee reductions are common. Current employees are doing more than one job, so how is it possible for “thin” companies to have the resources to apply to performing SD (strategy deployment)?
A: As you get good, SD will free up time, e.g. we no longer have to put together, and sit through that 50 slide deck which nobody understood anyway.
Q: In what ways is A3 complementary to six sigma?
A: Both apply the scientific method.
Q: What is the interaction/relationship, if any, between strategy deployment and project management?
A: Projects are often “Baby A3’s” connected to a “Mother A3.” Moreover, project management, at its best, employs the scientific method upon which A3 Thinking is based.
Q: I would like to understand what are the links among an A3 that can deploy your strategy, kaizen events, and value-stream mapping?
A: Kaizen events are usually linked to “Baby A3’s” and ultimately to a broad business goal expressed in a “Mother A3.” Value-stream maps help us to “grasp the situation” — so that we can identify the critical few kaizens, etc., that will help us achieve the needed breakthrough.
Q: How can Strategy Deployment link up with Balanced Scorecard?
A: Balanced scorecards are an effective measurement method (though not as good as dashboards, in my experience). Thus, Balanced Scorecards support the Check and Adjust phases of SD
Q: When do you create an A3? Do you use A3’s for every problem or just major problems?
A: You create an A3 when there is a critical business or tactical problem, or an unmet need. Normally, you wouldn’t use an A3 for, say, a day-to-day problem. These are usually amenable to a problem solving one-pager that reflects your problem solving methodology in a simpler way.
Q: What advice would you give to a company that is introducing the A3 process, which area should have a trial first — safety, quality, delivery, people?
A: I’d suggest introducing the A3 Thinking process in the context of Strategy Deployment to ensure that the areas and problems you focus on are important ones.
Q: In large, global corporations catchball can take a considerable amount of time. By the time we are done, business conditions might have changed. Are there alternatives to this, or what would you recommend?
A: Catchball, like all elements of SD must be quick. I have seen multi-billion dollar companies focus and align their activities in a few weeks.
Q: If you had to pick a number, how many companies, as a percent, in North America do you think utilize A3 and/or the Socratic methodology?
A: My guesstimate: ~ 10 %
[The Lean Community finds webinars to be helpful resources long after the original broadcast, as demonstrated by the following series of questions that we received from a Lean Thinker nearly two years after the program aired. The answers are from presenter Pascal Dennis.-Ed.]
Q. I read with great interest the questions and answers that followed your 2009 webinar on Strategy Deployment. I would appreciate some amplification as I did not understand everything you commented on in your answers.
One of the questions was about scorecards. You responded that scorecards are useful, but not as powerful as dashboards. I want to make sure that I understand your terminology. Are you referring to generic dashboards? Or is there some specific dashboard that you are referring to. It seems that any group of KPIs can be presented in dashboard format. ERP vendors all seem to have this feature available with standard and customizable dashboards. Clarification on this would be helpful.
A. I define dashboard as follows: a set of charts on one page; each chart has a target line, red/yellow/green designation, and a text box explaining what’s happening. The charts on the page are necessary and sufficient to tell the story — no more, no less. As a rule, I default to simplicity and am wary of ERP “dashboards,” which, in my experience, are overly complex and fail to tell a story.
Q. In another question you compare the A3 report and the X-matrix. I confess that the X-matrix has baffled me in the past, though after going through a four hour webinar on hoshin planning, I think I now “get it.” I realize that being a novice, it is dangerous for me to think I “get it”
A. The X-matrix is indeed confusing, which is why I wouldn’t recommend it. If we follow the process outlined in Getting the Right Things Done, we might consider using an X-matrix to summarize our activities. The risk with X-matrices is that the team might jump to countermeasures without grasping the situation, identifying root causes, developing and testing countermeasures.
Q. I am in the process of taking my team through Hoshin Planning for the first time. I see the X-matrix as an integral tool to prioritize and assign resources well. I understand your comment that the X-matrix does not tell the story (where we are and why are we here). Also it can easily become a top down directive. I am not able to see how the A3 report can replace that. My use of the A3 report is very tactical. I find it very helpful for tasks and projects. I thought the A3 report filled the gap between daily management and strategic deployment. I don’t see how the A3 can be used to tie together all of the improvement objectives that are developed through Hoshin Planning.
A. There are four kinds of A3s — some strategic, some tactical. The right side of the strategy A3 has countermeasures to the strategic problem defined on the left side of the A3. If we have three mother A3s each with, say four core countermeasures — that’s 12 key activities for the year. Pretty straight-forward. You’ve highlighted a critical point — strategy is story-telling (narrative, Henry Mintzberg calls it).