Description
5 Pillar Organisation Excellence
A Tooltech Global Engineering Document
by H. James Harrington
Good is no longer good enough. To survive in today's
competitive environment, you need to excel. To excel, a
company needs to focus on all parts of the organization,
optimizing the use and effectiveness of all of its
resources. After years of working with many types of
organizations using various approaches to improve
performance, we have come to realize that there are only
five elements that need to be managed for an
organization to excel. We call these key elements the five
pillars of organizational excellence. All five must be
managed simultaneously. Top management's job is to
keep all of them moving forward at the same time. To
concentrate on one or two of them and let the others slide
is a sure-fire formula for failure.
Organizational excellence is designed for permanent
change by focusing on managing the five key pillars, seen
in the figure on page 64. Each of these five organizational
pillars is not new by itself. The key to organizational
excellence is combining and managing them together.
The five pillars are:
• Pillar 1: process management
• Pillar 2: project management
• Pillar 3: change management
• Pillar 4: knowledge management
• Pillar 5: resource management
By effectively managing these five key pillars and
leveraging their interdependencies and reactions, an
organization can bring about a marvelous transformation
within itself. An organization will come out of its cocoon,
which had been restricting its potential, and become a
butterfly that will float on the winds of success.
Pillar 1: process management
The process management concept certainly isn't new to
management professionals; it's the basis of most
improvement methodologies.
To manage a process, the following must be defined and
agreed upon:
• An output requirement statement between process
owners and customers
• An input requirement statement between process
owners and suppliers
• A process that is capable of transforming the suppliers'
input into output that meets the customers' performance
and quality requirements
• Feedback measurement systems between process and
customers, and between process and suppliers
• A measurement system within the process
These key factors should be addressed when designing a
process. However, the problem facing most organizations
is that many of their support processes were never
designed in the first place. They were created in response
to a need without really understanding what a process is.
There are two basic approaches to managing processes:
• The micro-level approach. Directed at managing
processes within a natural work team or an individual
department
• The macro-level approach. Directed at managing
processes that flow across departments and/or functions
within the organization
Most of the work that quality professionals do is related to
continuously improving our processes. Some of the tools
that we use include design of experiments, process
capability studies, root cause analyses, document control,
quality circles, suggestions, Six Sigma, Walter A.
Stewart’s cycles, ISO 9001, just-in-time manufacturing
and supplier qualification, among many others.
Management in excellent organizations requires each
natural work team (or department) to continuously
improve (refine) the processes that it uses. Refining the
process is an ongoing activity. If the refinement process is
working as it should, the total process efficiency and
effectiveness should be improving at a rate of up to 15
percent a year. In most cases the project team focuses on
the broad problems that reflect across departments and
reaps this harvest within three to 12 months. At that time
the project team can be disbanded and the process
refinement activities turned over to the natural work
teams that are involved in the process.
Pillar 2: project management
Consider this:
• Only 26 percent of all projects are successful.
• 40 percent of all information technology (IT) projects
fail or are canceled.
Processes define how organizations function, and projects
are the means by which organizations improve those
processes.
There are endless examples of poor project management.
Two recent examples that come to mind are:
• NASA's Space Station Freedom was originally budgeted
for $8 billion; it is now up to $32 billion and climbing.
• The 2004 Olympic Games were 300 percent over budget
one year prior to their opening.
A Tooltech Global Engineering Document
Projects in most organizations are mission-critical
activities, and delivering quality products on time is non-
negotiable. For IT projects, benchmark organizations are
completing 90 percent of their projects within 10 percent
of budget and schedule. Information system organizations
that establish standards for project management,
including a project office, cut their major project cost
overruns, delays and cancellations by 50 percent.
Process redesign and process reengineering are two of
the most important projects that organizations undertake.
These types of projects have a failure rate estimated to
run as high as 60 percent. There are two main causes for
these high-cost failures: poor project management and
poor change management. IBM launched eleven
reengineering projects, starting from the way that it
manages internal information systems and continuing to
the way that it develops products and serves customers.
Let's look at why projects fail.
• Failure to adhere to a committed schedule caused by:
- Variances
- Exceptions
- Poor planning
- Delays
- Scope creep
• Poor resource utilization caused by:
- A lack of proper skills
- Poor time utilization
- Misalignment of skills and assignments
• Poor management due to:
- Incorrect project selection
- Misidentifying high-risk projects
- Poor control over interdependencies between projects
• Loss of intellectual capital and/or knowledge capital
caused by:
- Lack of the means for knowledge transfer
- People leaving the organization
- Not preparing the people who will use the output from
the project (change management)
I liken project management to quality management;
everyone thinks that they know what quality is so anyone
can manage quality. This same thought pattern applies to
project management, but just as a quality manager is a
special type of professional with very special skills and
training, so is a project manager. Project managers
require skill, training and effective leadership specifically
related to their fields.
According to the Project Management Institute (
www.pmi.org ), the project management body of
knowledge defines 69 different tools that a project
manager needs to master. Few of the project managers I
have come in contact with during the past 50 years have
mastered all of these tools. In today's complex world,
most organizations have numerous projects going on at
the same time. Many of these projects are interlinked and
interdependent. Their requirements and schedules are
continuously changing, causing a chain reaction through
the organization. As a result, the organization can't afford
to manage each project individually. It has to manage its
portfolio of projects, making the proper trade-off of
personnel and priorities.
Pillar 3: change management
We all like to think of ourselves as change masters, but in
truth, we are change bigots. Everyone in the
management team is all for change. They want to see
others change, but when it comes to the managers
themselves changing, they are reluctant to move away
from past habits that have proven to be successful. If the
organization is going to change, top management has to
be the first to do so.
Change is inevitable, and we must embrace it if we are
going to be successful in our challenging world. The
change management system is made up of three distinct
elements:
• Defining what will be changed
• Defining how to change
• Making change happen
Most of the books written about change management
have been theoretical in nature. They talk about black
holes, cascading sponsorships and burning platforms, but
that is only the last phase of the change process. Most
organizations don't understand or follow a comprehensive
change management system. An effective change
management system requires that the organization step
back and define what will be changed. We are not talking
about reducing stock levels, increasing customer
satisfaction or training people; we are talking about the
very fundamentals. Which of the key business drivers
need to be changed, and how do they need to be
changed? That means that you must develop very crisp
vision statements that define how the key business
drivers will be changed over time. This requires that the
organization have an excellent understanding of what its
business drivers are and how they operate. Then the
organization must define exactly how it wants to change
these drivers over a set period of time. Once the
organization has defined what it wants to change, then it
can define how to change. During this stage the
organization looks at all available improvement tools,
determines which will bring about the required changes to
these key business drivers, and schedules the
implementation of these tools and methodologies. This
schedule makes up a key part of the organization's
strategic business plan.
The last phase in the change management process is
making the change happen. This is the area where the
behavioral scientists have developed a number of
excellent approaches to break down resistance and build
up resiliency throughout the organization. It is this phase
that most change management books have concentrated
on, but it is the last phase in the total change
management system.
Pillar 4: knowledge management
Today more than ever, knowledge is the key to
organizational success. To fulfill this need, the Internet
and other information technologies have provided all of us
with more information than we can ever consume.
Instead of having one or two sources of information, the
Internet provides us with hundreds if not thousands of
inputs, all of which need to be researched to be sure that
you have not missed a key nugget of information. We are
overwhelmed with so much information that we don't
have time to absorb it all.
To make matters worse, most of the organization's
knowledge is still not documented; it rests in the minds
and experiences of the people doing the job. This
knowledge disappears from the organization's knowledge
base whenever an individual leaves an assignment.
A Tooltech Global Engineering Document
Given the almost endless amount of information that
clogs up our computers, desks and minds, a knowledge
management system (KMS) needs to be designed around
the organization's key capabilities and competencies.
There are two types of knowledge: explicit and tacit.
Explicit knowledge is defined as knowledge that is stored
as semi-structured content such as documents, e-mail,
voicemail or video media. I like to call this hard or
tangible knowledge. It is conveyed from one person to
another in a systematic way.
Tacit knowledge is defined as knowledge that is formed
around intangible factors embedded in an individual's
experience. It is personal, content-specific knowledge that
resides in an individual. It is knowledge that an individual
gains from experience or skills that he or she develops. It
guides the individual's actions. I like to call this soft
knowledge. It is embedded in the individual's ideas,
insights, values and judgment. It is only accessible
through direct corroboration and communication with the
individual that has the knowledge.
Knowledge management is defined as a proactive,
systematic process by which value is generated from
intellectual or knowledge-based assets and disseminated
to the stakeholders. The six phases necessary to
implement an effective KMS are:
•Phase 1: requirements definition
•Phase 2: infrastructure evaluation
•Phase 3: KMS design and development
•Phase 4: pilot
•Phase 5: deployment
•Phase 6: continuous improvement
One of the biggest challenges related to implementing a
KMS is transferring knowledge held by individuals,
including processes and behavioral knowledge, into a
consistent format that can be easily shared within the
organization.
The true standard of success for knowledge management
is the number of people who access and implement ideas
from the knowledge networks. These networks bring
state-of-the-art ideas and/or best practices into the
workplace. This allows the organization to develop areas
of critical mass that implement standards and also
provides access to everyone so that they can make
comments to improve them. Even the newest member of
the organization can look at the materials and make
recommendations based upon his or her personal insight,
creativity and experience.
A big challenge related to implementing a KMS is in
transforming knowledge held by individuals, including
process and behavioral knowledge, into a consistent
technology format that can be easily shared with the
organization's stakeholders. But the biggest challenge is
changing the organization's culture from a knowledge-
hoarding one to a knowledge-sharing one.
Pillar 5: resource management
Nothing can be accomplished without resources.
Resources are at the heart of everything that we do. Too
little and we fail, too much and there is waste--making
our organization noncompetitive. Too many organizations
limit their thinking about resources to people and money.
These two are important, but they’re only a small part of
the resources that an organization needs to manage.
When we talk about resource management, we're talking
about it in its broadest sense. It is all the resources and
assets that are available to the organization. This includes
stockholders, management, employees, money, suppliers,
inventory, boards of directors, alliance partnerships, real
estate, knowledge, customers, patents, investors, good
will, and brick and mortar. It is easy to see that when you
consider all of the resources that are available to the
organization, effective resource management is one of the
organization's most critical and complex activities.
To become an excellent organization, each of these
resources needs to be managed in its own special way.
The big question is, "How do you pull all these different
activities and improvement approaches together and
prioritize them?" To solve this question, you must have a
very thorough, total-involvement approach to strategic
planning--one that involves everyone, from the chairman
of the board to the janitor, from sales to personnel, from
development engineering to maintenance. This is a total-
involvement approach to strategic planning; it is both
bottom up and top down. A total strategic planning
process (i.e., a business plan) includes directions,
expectations and actions.
Resource management can't be an afterthought; all
executive decisions must be based upon it. It requires a
lot of planning, coordination, reporting and continuous
refining to do an excellent job at resource management.
Too many organizations manage operations by throwing
more resources into the pot. They may be very successful
with this approach as long as they have very little
competition, but even the giants fall if they don't do an
outstanding job of resource management.
Summary
When we look at the five pillars that must be managed to
achieve excellence, we see common threads that run
across all of them:
• Communication
• Teamwork
• Empowerment
• Respect
• Honesty
• Leadership
• Quality
• Fairness
• Technology
All of the key factors are built into the word
"management." This term represents everything that
turns an employee into an individual who owns his or her
job, thereby bringing satisfaction and dignity to the
individual for a job well done.
In today's worldwide marketplace, customers don' t have
to settle for second best. Overnight mail brings the best
to everyone's doorstep. The Internet lets your customers
shop internationally so it' s easy for them to get the best
quality, reliability and price, no matter who is offering it.
Customers are concerned about the products that they
purchase, but they are equally or more concerned about
dealing with organizations that care, are quick to respond,
and will listen and react to their unique needs. To succeed
in the 21st century, organizations need to excel in all
parts of their business. You must have an organization
that excels at what it is doing but also is recognized by
the stakeholders for its excellence to win today's savvy
customers.
====================
doc_837838931.pdf
5 Pillar Organisation Excellence
A Tooltech Global Engineering Document
by H. James Harrington
Good is no longer good enough. To survive in today's
competitive environment, you need to excel. To excel, a
company needs to focus on all parts of the organization,
optimizing the use and effectiveness of all of its
resources. After years of working with many types of
organizations using various approaches to improve
performance, we have come to realize that there are only
five elements that need to be managed for an
organization to excel. We call these key elements the five
pillars of organizational excellence. All five must be
managed simultaneously. Top management's job is to
keep all of them moving forward at the same time. To
concentrate on one or two of them and let the others slide
is a sure-fire formula for failure.
Organizational excellence is designed for permanent
change by focusing on managing the five key pillars, seen
in the figure on page 64. Each of these five organizational
pillars is not new by itself. The key to organizational
excellence is combining and managing them together.
The five pillars are:
• Pillar 1: process management
• Pillar 2: project management
• Pillar 3: change management
• Pillar 4: knowledge management
• Pillar 5: resource management
By effectively managing these five key pillars and
leveraging their interdependencies and reactions, an
organization can bring about a marvelous transformation
within itself. An organization will come out of its cocoon,
which had been restricting its potential, and become a
butterfly that will float on the winds of success.
Pillar 1: process management
The process management concept certainly isn't new to
management professionals; it's the basis of most
improvement methodologies.
To manage a process, the following must be defined and
agreed upon:
• An output requirement statement between process
owners and customers
• An input requirement statement between process
owners and suppliers
• A process that is capable of transforming the suppliers'
input into output that meets the customers' performance
and quality requirements
• Feedback measurement systems between process and
customers, and between process and suppliers
• A measurement system within the process
These key factors should be addressed when designing a
process. However, the problem facing most organizations
is that many of their support processes were never
designed in the first place. They were created in response
to a need without really understanding what a process is.
There are two basic approaches to managing processes:
• The micro-level approach. Directed at managing
processes within a natural work team or an individual
department
• The macro-level approach. Directed at managing
processes that flow across departments and/or functions
within the organization
Most of the work that quality professionals do is related to
continuously improving our processes. Some of the tools
that we use include design of experiments, process
capability studies, root cause analyses, document control,
quality circles, suggestions, Six Sigma, Walter A.
Stewart’s cycles, ISO 9001, just-in-time manufacturing
and supplier qualification, among many others.
Management in excellent organizations requires each
natural work team (or department) to continuously
improve (refine) the processes that it uses. Refining the
process is an ongoing activity. If the refinement process is
working as it should, the total process efficiency and
effectiveness should be improving at a rate of up to 15
percent a year. In most cases the project team focuses on
the broad problems that reflect across departments and
reaps this harvest within three to 12 months. At that time
the project team can be disbanded and the process
refinement activities turned over to the natural work
teams that are involved in the process.
Pillar 2: project management
Consider this:
• Only 26 percent of all projects are successful.
• 40 percent of all information technology (IT) projects
fail or are canceled.
Processes define how organizations function, and projects
are the means by which organizations improve those
processes.
There are endless examples of poor project management.
Two recent examples that come to mind are:
• NASA's Space Station Freedom was originally budgeted
for $8 billion; it is now up to $32 billion and climbing.
• The 2004 Olympic Games were 300 percent over budget
one year prior to their opening.
A Tooltech Global Engineering Document
Projects in most organizations are mission-critical
activities, and delivering quality products on time is non-
negotiable. For IT projects, benchmark organizations are
completing 90 percent of their projects within 10 percent
of budget and schedule. Information system organizations
that establish standards for project management,
including a project office, cut their major project cost
overruns, delays and cancellations by 50 percent.
Process redesign and process reengineering are two of
the most important projects that organizations undertake.
These types of projects have a failure rate estimated to
run as high as 60 percent. There are two main causes for
these high-cost failures: poor project management and
poor change management. IBM launched eleven
reengineering projects, starting from the way that it
manages internal information systems and continuing to
the way that it develops products and serves customers.
Let's look at why projects fail.
• Failure to adhere to a committed schedule caused by:
- Variances
- Exceptions
- Poor planning
- Delays
- Scope creep
• Poor resource utilization caused by:
- A lack of proper skills
- Poor time utilization
- Misalignment of skills and assignments
• Poor management due to:
- Incorrect project selection
- Misidentifying high-risk projects
- Poor control over interdependencies between projects
• Loss of intellectual capital and/or knowledge capital
caused by:
- Lack of the means for knowledge transfer
- People leaving the organization
- Not preparing the people who will use the output from
the project (change management)
I liken project management to quality management;
everyone thinks that they know what quality is so anyone
can manage quality. This same thought pattern applies to
project management, but just as a quality manager is a
special type of professional with very special skills and
training, so is a project manager. Project managers
require skill, training and effective leadership specifically
related to their fields.
According to the Project Management Institute (
www.pmi.org ), the project management body of
knowledge defines 69 different tools that a project
manager needs to master. Few of the project managers I
have come in contact with during the past 50 years have
mastered all of these tools. In today's complex world,
most organizations have numerous projects going on at
the same time. Many of these projects are interlinked and
interdependent. Their requirements and schedules are
continuously changing, causing a chain reaction through
the organization. As a result, the organization can't afford
to manage each project individually. It has to manage its
portfolio of projects, making the proper trade-off of
personnel and priorities.
Pillar 3: change management
We all like to think of ourselves as change masters, but in
truth, we are change bigots. Everyone in the
management team is all for change. They want to see
others change, but when it comes to the managers
themselves changing, they are reluctant to move away
from past habits that have proven to be successful. If the
organization is going to change, top management has to
be the first to do so.
Change is inevitable, and we must embrace it if we are
going to be successful in our challenging world. The
change management system is made up of three distinct
elements:
• Defining what will be changed
• Defining how to change
• Making change happen
Most of the books written about change management
have been theoretical in nature. They talk about black
holes, cascading sponsorships and burning platforms, but
that is only the last phase of the change process. Most
organizations don't understand or follow a comprehensive
change management system. An effective change
management system requires that the organization step
back and define what will be changed. We are not talking
about reducing stock levels, increasing customer
satisfaction or training people; we are talking about the
very fundamentals. Which of the key business drivers
need to be changed, and how do they need to be
changed? That means that you must develop very crisp
vision statements that define how the key business
drivers will be changed over time. This requires that the
organization have an excellent understanding of what its
business drivers are and how they operate. Then the
organization must define exactly how it wants to change
these drivers over a set period of time. Once the
organization has defined what it wants to change, then it
can define how to change. During this stage the
organization looks at all available improvement tools,
determines which will bring about the required changes to
these key business drivers, and schedules the
implementation of these tools and methodologies. This
schedule makes up a key part of the organization's
strategic business plan.
The last phase in the change management process is
making the change happen. This is the area where the
behavioral scientists have developed a number of
excellent approaches to break down resistance and build
up resiliency throughout the organization. It is this phase
that most change management books have concentrated
on, but it is the last phase in the total change
management system.
Pillar 4: knowledge management
Today more than ever, knowledge is the key to
organizational success. To fulfill this need, the Internet
and other information technologies have provided all of us
with more information than we can ever consume.
Instead of having one or two sources of information, the
Internet provides us with hundreds if not thousands of
inputs, all of which need to be researched to be sure that
you have not missed a key nugget of information. We are
overwhelmed with so much information that we don't
have time to absorb it all.
To make matters worse, most of the organization's
knowledge is still not documented; it rests in the minds
and experiences of the people doing the job. This
knowledge disappears from the organization's knowledge
base whenever an individual leaves an assignment.
A Tooltech Global Engineering Document
Given the almost endless amount of information that
clogs up our computers, desks and minds, a knowledge
management system (KMS) needs to be designed around
the organization's key capabilities and competencies.
There are two types of knowledge: explicit and tacit.
Explicit knowledge is defined as knowledge that is stored
as semi-structured content such as documents, e-mail,
voicemail or video media. I like to call this hard or
tangible knowledge. It is conveyed from one person to
another in a systematic way.
Tacit knowledge is defined as knowledge that is formed
around intangible factors embedded in an individual's
experience. It is personal, content-specific knowledge that
resides in an individual. It is knowledge that an individual
gains from experience or skills that he or she develops. It
guides the individual's actions. I like to call this soft
knowledge. It is embedded in the individual's ideas,
insights, values and judgment. It is only accessible
through direct corroboration and communication with the
individual that has the knowledge.
Knowledge management is defined as a proactive,
systematic process by which value is generated from
intellectual or knowledge-based assets and disseminated
to the stakeholders. The six phases necessary to
implement an effective KMS are:
•Phase 1: requirements definition
•Phase 2: infrastructure evaluation
•Phase 3: KMS design and development
•Phase 4: pilot
•Phase 5: deployment
•Phase 6: continuous improvement
One of the biggest challenges related to implementing a
KMS is transferring knowledge held by individuals,
including processes and behavioral knowledge, into a
consistent format that can be easily shared within the
organization.
The true standard of success for knowledge management
is the number of people who access and implement ideas
from the knowledge networks. These networks bring
state-of-the-art ideas and/or best practices into the
workplace. This allows the organization to develop areas
of critical mass that implement standards and also
provides access to everyone so that they can make
comments to improve them. Even the newest member of
the organization can look at the materials and make
recommendations based upon his or her personal insight,
creativity and experience.
A big challenge related to implementing a KMS is in
transforming knowledge held by individuals, including
process and behavioral knowledge, into a consistent
technology format that can be easily shared with the
organization's stakeholders. But the biggest challenge is
changing the organization's culture from a knowledge-
hoarding one to a knowledge-sharing one.
Pillar 5: resource management
Nothing can be accomplished without resources.
Resources are at the heart of everything that we do. Too
little and we fail, too much and there is waste--making
our organization noncompetitive. Too many organizations
limit their thinking about resources to people and money.
These two are important, but they’re only a small part of
the resources that an organization needs to manage.
When we talk about resource management, we're talking
about it in its broadest sense. It is all the resources and
assets that are available to the organization. This includes
stockholders, management, employees, money, suppliers,
inventory, boards of directors, alliance partnerships, real
estate, knowledge, customers, patents, investors, good
will, and brick and mortar. It is easy to see that when you
consider all of the resources that are available to the
organization, effective resource management is one of the
organization's most critical and complex activities.
To become an excellent organization, each of these
resources needs to be managed in its own special way.
The big question is, "How do you pull all these different
activities and improvement approaches together and
prioritize them?" To solve this question, you must have a
very thorough, total-involvement approach to strategic
planning--one that involves everyone, from the chairman
of the board to the janitor, from sales to personnel, from
development engineering to maintenance. This is a total-
involvement approach to strategic planning; it is both
bottom up and top down. A total strategic planning
process (i.e., a business plan) includes directions,
expectations and actions.
Resource management can't be an afterthought; all
executive decisions must be based upon it. It requires a
lot of planning, coordination, reporting and continuous
refining to do an excellent job at resource management.
Too many organizations manage operations by throwing
more resources into the pot. They may be very successful
with this approach as long as they have very little
competition, but even the giants fall if they don't do an
outstanding job of resource management.
Summary
When we look at the five pillars that must be managed to
achieve excellence, we see common threads that run
across all of them:
• Communication
• Teamwork
• Empowerment
• Respect
• Honesty
• Leadership
• Quality
• Fairness
• Technology
All of the key factors are built into the word
"management." This term represents everything that
turns an employee into an individual who owns his or her
job, thereby bringing satisfaction and dignity to the
individual for a job well done.
In today's worldwide marketplace, customers don' t have
to settle for second best. Overnight mail brings the best
to everyone's doorstep. The Internet lets your customers
shop internationally so it' s easy for them to get the best
quality, reliability and price, no matter who is offering it.
Customers are concerned about the products that they
purchase, but they are equally or more concerned about
dealing with organizations that care, are quick to respond,
and will listen and react to their unique needs. To succeed
in the 21st century, organizations need to excel in all
parts of their business. You must have an organization
that excels at what it is doing but also is recognized by
the stakeholders for its excellence to win today's savvy
customers.
====================
doc_837838931.pdf