Enterprise Strategic Analysis
for Transformation Primer
Dr. Jayakanth Srinivasan
( jksrini@mit.edu )
LAI ANNUAL CONFERENCE
Dana Point CA
http://lean.mit.edu
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 1
Outline
•
Understanding
g the ESAT Context
•
From Lean Now! → EVSMA → ESAT
•
Key elements of ESAT
•
Executing an ESAT
•
Discussion Panel
http://lean.mit.edu
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 2
Enterprise Definition
“A systematic purposeful activity”
- Merriam-Webster.com
One or more persons or organizations that have related
"One
activities, unified operation or common control, and a
common business purpose"
-Blacks Law Dictionary,
y, 1999
“A lean enterprise is an integrated entity which effectively
and efficiently creates value for its multiple stakeholders by
employing lean enterprise principles and practices.”
- Lean Advancement Initiative, MIT, 2008
http://lean.mit.edu
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 3
Understanding Transformation
or
Source: http://www.innovationsinnewspapers.com/index.php/category/news-corporation/
Source: Terry Bryan
Second-order change is a multi-dimensional, multi-level, qualitative,
discontinuous, radical, organization change involving a paradigmatic
shift
- Levy and Merry*
*Levy, A. and U. Merry (1986). Organizational Transformation: Approaches, Strategies, Theories, Greenwood Publishing Group
http://lean.mit.edu
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 4
Strategic Analysis
•
Support
pp
Decision Making
g
• Strategic
• Tactical
• Operational
“We define a strategic decision as one
which is important,
important in terms of the
actions taken, the resources
committed, or the precedents set…
that is,, we focus
f
on those infrequent
f q
decisions made by the top leaders of
an organization that critically affect
organizational health and survival”
– Eisenhardt and Zbaracki
Source: Eisenhardt K. M. And Zbaracki M.J., “Strategic Decision Making”,
Strategic Management Journal, 13, 17-37, 1992
http://lean.mit.edu
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 5
What are we trying to transform?
“A minimal defining characteristic of a formal organization is the
distinction between members and non-members, with an organization
existing to the extent that some persons are admitted, while others are
excluded, thus allowing an observer to draw a boundary around the
organizations
organizations”
- Thompson
Source: Thompson, J. "Organizations and Output Transactions," American Journal of Sociology, Vol. 68 (1962), 309- 325.
SPO
SPO
DCMA
DCMA
9
6
1
2
9
5
10
8
1
7
The “Current
State” C-17
Enterprise
7
6
10
2
Boeing
5
8
The “New” C-17
Enterprise
4
(Notional Process Flow)
(Notional Process Flow)
3
3
AMC
Boeing
4
AMC
Process 1
AMC
AMC
Weaap
Syss
Rqm
mt
Boeing
Boeing
Prod
Process 2
Boeing
Prod
Process 3
Boeing
Prod
Process 4
Boeing
Prod
Process 5
Boeing
Prod
Process 6
Boeing
Prod
Process 7
Boeing
Prod
Process 8
Boeing
Prod
Process 9
Prod
Boeing
SPO
Process 10
Process 1
SPO
Prod
Process 2
Boeing
Prod
Process 3
Boeing
Prod
Process 4
DCMA
Prod
Process 5
DCMA /
Boeing
DCMA
Prod
Process 6
Prod
Process 7
SPO / Boeing
Prod
Process 8
DCMA / SPO /
Boeing
DCMA / SPO
Prod
Process 9
Prod
Process 10
Source: Wolfenbarger and Bowman (2004), C-17 Journey towards a Lean Enterprise, LAI Executive Board Presentation,
http://lean.mit.edu
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 6
Who is the enterprise creating value
for?
In strategic decisions, many of the most important
assumptions deal with the behaviour of groups or individuals
who are important to the success of the strategy and who have
a stake in the outcome of the strategy
- Schwenk
Source: Schwenk, Charles R. 1988. THE COGNITIVE PERSPECTIVE ON STRATEGIC DECISION MAKING. Journal of
Management Studies 25 (1):41-55.
Shareholders
Customers
End-user
Society
Suppliers/
Partners
http://lean.mit.edu
Leadership
Enterprise
Employees
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 7
Understanding Value
“How various
stakeholders find
particular worth,
utility, benefit, or
reward in exchange
for their respective
p
contributions to the
enterprise.”*
Develop and
Agree to the
Find
Approach
Stakeholder
Value
Value
Identification
* Source: Murman et al.,
al Lean Enterprise Value,
Value Palgrave 2002
http://lean.mit.edu
Value
Proposition
Execute
on the
Promise
Value
Delivery
Dynamic
and
Iterative
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 8
How does the enterprise create and
deliver value?
Enterprise Leadership Processes
Strategic, high level,
cross-functional
activities decisions
activities,
decisions,
and interfaces
involved in creating
and delivering value
to one or more
enterprise
stakeholders
http://lean.mit.edu
 Conduct Strategic Planning
 Define Business Models
 Manage Growth
 Foster Strategic Partnering
 Define and Integrate Organizational Structure
 Manage Transformation
Life Cycle Processes
 Manage Acquisition and Programs
 Define Requirements
 Develop Product/Processes
 Manage Supply Chain
 Provide Products and Services
 Distribution and Support Products
Enabling Infrastructure Processes
 Program and Budget Enterprise Activities
 Provide and Maintain Information Technology
 Manage and Support Human Resources
g Quality
Q
y Assurance
 Manage
 Provide Facilities and Services
 Ensure Health, Safety, and Environmental Protection
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 9
How does the enterprise manage
performance?
“You are what you measure”
- Hauser & Katz
http://lean.mit.edu
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 10
ESAT
Strategic
g Objectives
j
Enterprise
Boundaries
Performance
Management
Systems
Enterprise
Definition
Process
Architecture
Enterprise Analysis
Stakeholder
Analysis
Process
Interaction
Analysis
Enterprise
Alignment
Analysis
Future
State
Analysis
Future State Vision
Deployment Development
Actionable Transformation Plan
http://lean.mit.edu
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 11
Enterprise Transformation Roadmap
STRATEGIC
CYCLE
Determine •
Strategic
•
Imperative •
Articulate the Case for
Transformation
Focus on Stakeholder Value
Leverage Transformation Gains
Pursue &
Sustain
Enterprise
Transformation
Transformation Council
Strategic Implications of Transformation
• Monitor & Measure the Outcomes
• Nurture Process & Embed
Nurture
Process & Embed Enterprise Culture
• Capture & Diffuse Lessons
Enterprise
Learned
Thinking
• Synchronize Strategic
Planning & Execution Cycles
• Convey Urgency
Engage
• Cultivate Enterprise Thinking
Leadership in • Obtain Executive Buy-In
Transformation • Establish Executive
Long-Term
Corrective
Action
PLANNING CYCLE
A Committed Leadership Team
Understand
Current
State
• Perform Stakeholders Analysis
• Analyze Processes & Interactions
• Perform
P f
Enterprise
E t
i Maturity
M t it
Assessment
• Assess Current Performance
Measurement System
Implementation Results
Implement &
Coordinate
Transformation
Plan
• Develop Detailed Project
I l
Implementation
i Pl
Plans
• Synchronize Detailed Plans
• Commit Resources
• Provide Education & Training
• Implement Projects and
Track Progress
Capabilities & Deficiencies Identified
Short-Term
Corrective
Action
Envision &
Design
Future
Enterprise
• Create Vision of Future State
• Architect “To-Be” Enterprise
Value Stream
• Perform Gap Analysis Between
Current and Future States
EXECUTION CYCLE
Enterprise Vision
Create Transformation Plan
•
•
•
•
Identify Improvement for Focus Areas
Determine Impact On Enterprise Performance
Prioritize, Select and Sequence Project Areas
Publish Communication Plan
http://lean.mit.edu
http://lean.mit.edu
Alignment
Requirements
Identified
Align
g
Enterprise
Structure and
Behaviors
• Rationalize Systems & Policies
• Align Performance Measurement
System
• Align Incentives
• Empower Change Agents
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 12
Source: Nightingale, Srinivasan and Mize – Updated 3/05/10 – Version 005
© 2010 Massachusetts Institute of Technology 12
EVOLUTION TO ESAT
http://lean.mit.edu
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 13
http://lean.mit.edu
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 14
Lean Now!
Source: lean.mit.edu [publications – lean now]
http://lean.mit.edu
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 15
Enterprise Value Stream Mapping and
Analysis (alpha)
Outcomes
•
•
•
Current and Future State
Value Stream Maps
Enterprise vision 2
2-5
5 years out
Implementation Plan
"EVSMA provided our management team with several insights
about how our enterprise actually functions. It also provided a
way to identify improvement activities that support our total
enterprise strategic objectives and optimize functional
i t
integration
ti in
i the
th value
l stream.”
t
”
- Site Director
http://lean.mit.edu
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 16
Enterprise Value Stream Mapping and
Analysis – V1
Define and Characterize
the
Current State
Create
the
Future State
Enterprise Boundaries
Enterprise
E
t
i
Interactions
LESAT
Strategic
Objectives
Stakeholder
Values
Enterprise
Wastes
http://lean.mit.edu
Enterprise
Processes
Close the Gap
Prioritized
Improvement
Plan
Lean Enterprise Vision
5-10 years in the future
• Enterprise goals
• Vivid description
• Focus areas
• Revised system of
metrics
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 17
1
• Enterprise
Commitment
• ESAT Team
• Facilitators
• Enterprise Lean
Training
• Current Enterprise
Goals
2
• Prioritized Stakeholder
Values
• LESAT Scores
• Enterprise Resource
Allocation Based on
Processes
ocesses
• Current Metric Values
• Team Charter
• Enterprise
Description:
Boundaries,
Stakeholders,
Processes
Define the Enterprise
Collect Data
3
4
• Stakeholder
Values Analysis
• Current State
Process Map
• Process
Interactions
Leadership Processes
Material Value Stream - ŅShop FloorÓ
Product(s)
&
Service(s)
Life Cycle
Processes
High
Information
Value Stream - ŅOffice FloorÓ
Product /
Service
Quality
Current Performance
Enabling Processes
Cost of
Ownership
• Alignment of Goals,
Values, Processes,
Metrics
• List of Wastes
• List of Opportunities
Cycle
Time
Relationship
with Corp.
Low
Relative Importance to Stakeholder
High
Construct Current State
Perspectives
Identify Enterprise
Opportunities
5
6
• 5 - 10-yr Goal
• Focus Areas
• Mid-point
Mid point Goals
Leadership
Project A
People
Project B
Processes
Project E
Information
Flow
Project C
Project K
Project J
Project D
Customers
http://lean.mit.edu
Describe Future State
Vision
Suppliers
Project H
Project F
Project I
Project G
• Strategic
Transformation Plan
• Governance
G
Model
M d l
• Revised System of
Metrics
• Communication Plan
© 2010 Jayakanth
Massachusetts Institute of Technology March 25, 2010 - 18
CreateSrinivasan/
Transformation
Plans
Source: www.dilbert.com
www dilbert com
http://lean.mit.edu
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 19
1
Enterprise Strategic •
•
Analysis for
•
Transformation
2
Enterprise
Commitment
ESAT Team
Current
Enterprise Goals
• Team Charter
• Enterprise
Description:
Boundaries,
Stakeholders,
Processes
Collect Data
Define the Enterprise
4
3
• Prioritized
Stakeholder Values
• LESAT Scores
• Enterprise Resource
Allocation
• Processes Data
• Current Metric
Values
5
Leadership Processes
• Stakeholder Value
Analysis
• Current State
Process Map
• Process Interactions
Material Value Stream - ŅShop Floor Ó
Product(s)
&
Service(s)
Life Cycle
Processes
High
Information
Value Stream - ŅOffice Floor Ó
Product /
Service
Quality
Current Performance
Enabling Processes
Cost of
Ownership
Cycle
Time
Relationship
with Corp.
Low
Relative Importance to Stakeholder
Construct Current
State Perspectives
High
Identify Enterprise
Opportunities
6
Project A
People
Project B
Processes
Information
Flow
Project C
Project K
Project E
Project J
Project D
Project F
Customers
Suppliers
Project H
Project G
Project I
Create Transformation
Plans
http://lean.mit.edu
• Strategic
Transformation
Plan
• Governance Model
• Revised System
of Metrics
• Communication
Plan
• 3 - 5-yr Goal
• Transformation
Focus Areas
• Waypoint Goals
Describe Future State
Vision
8
7
9-block Initial Planning Template
Project Name
• Integrated
Project Portfolios
Transformation
• Detailed
Plan
Descriptions
• Recommended
Metrics
Create Deployment
•
Resources
Create Actionable
Plans
Required
Project Descriptions
by Project
Project Srinivasan/
Benefits Massachusetts Institute of Technology March 25, 2010 - 20
© 2010 •Jayakanth
JDI
X
Kaizen
Impact
Leadership
• Alignment of
Goals, Values,
Processes,
Metrics
• List of Wastes
• List of
Opportunities
X
Estimated Event Date(s):
XXX
Recommended Process Owner:
XXX
Project
Difficulty
Event Description: Describe the task in sufficient
detail. (one or two sentences)
Reason for Event: Describe the problem the team
is addressing and answers the Òwhy nowÓ
question.
Recommended Team Leaders &
Members:
XXX
Estimated Implementation Costs:
None
Estimated Savings:
XXX
ESAT Differentiators
•
Enterprise Perspective
• Enables a clear definition of the enterprise as a whole
• Fosters enterprise thinking and system-wide improvement
•
Stakeholder Centricity
• Process focuses on maximizing value delivery to all key
enterprise stakeholders
•
Data Driven
• Qualitative data through stakeholder interviews
• Quantitative data from performance against key processes
and
d strategic
t t i goals
l
http://lean.mit.edu
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 21
KEY ELEMENTS
http://lean.mit.edu
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 22
Inputs
Process
Outputs
1
• Enterprise
Commitment
• ESAT Team
• Facilitators
• Enterprise Lean
Training
• Current
Enterprise Goals
• Team Charter
• Enterprise
Description:
Boundaries,
Stakeholders,
Processes
Define the Enterprise
 Identify enterprise goals/strategic objectives and motivate
change
 Identify and empower ESAT participants
 Create team charter
 Describe enterprise
 Identify key stakeholders
 Identify major enterprise processes
 Identify high-level metrics related to strategic objectives
 Create communications plan and initiate communication
about ESAT effort and its purpose (internal/external)
 Summarize insights and document progress
http://lean.mit.edu
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 23
Stakeholder Analysis
•
Identification & Grouping
•
Prioritization
•
Value Elicitation
•
A l i
Analysis
http://lean.mit.edu
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 24
Stakeholder Identification
Source: Stoyanov and Srinivasan 2010
MyOrg
Customer
Level of Analysis
Networks
MyOrg
Customer
Cust_Facing
Team
Supplier
pp _Facingg
Team
Supplier_Facing
CCA_Team
http://lean.mit.edu
© 2008 Massachusetts Institute of Technology Presenter MM/DD/YY 25
Supplier Value Exchange
Value Expected from
the Enterprise
•
•
•
•
•
•
Stable Drawings
On-Time Payment
Clear requirements
q
Ordering Effectiveness
Communications
Collaboration
http://lean.mit.edu
Stakeholders
Suppliers
• Murray Engineering
• Lammingg Composites
p
• Romance Specialty
Materials
Value Contributed to
the Enterprise
•
•
•
•
Quality Product
On-Time Delivery
R&D support
pp
Sustainability
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 26
Stakeholder Values
Stakeholder Group:
Stakeholder Name:
Ask the stakeholder what they value. What do they expect to get from their
involvement with your enterprise? What are the things that would make your
enterprise highly thought of by them?
http://lean.mit.edu
On a scale of 1 to 5
how important is
this value to the
stakeholder?
On a scale of 1
to 5 how well is
the enterprise
delivering this
value?
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 27
Understanding Value Exchange
Person to Project
Dev1 Dev2
Software engineering skills
5
Problem solving skills
3
Build
u de
effective
ect e work
o e
environment
o e ta
and
d tea
team
5
Timely decisions
4
Timely deliveries
4
Policy enforcement
5
Communication
4
Task p
planning
g
4
Working process best practices
4
Customer satisfaction
5
Creativity
0
Project planning
0
Process and resource management
0
Dev3 PM
4
3
4
2
3
0
4
2
0
3
3
3
3
4
0
0
0
0
0
0
3
0
0
0
0
0
Source: Stoyanov and Srinivasan 2010
Dev4 Dev5 Expected
5
3
4
5
4
0
4
4
3
3
5
4
5
0
0
5
2
0
2
4
0
0
3
4
4
0
2
4
0
0
0
5
0
0
0
4
4
0
0
5
4
0
0
4
3
0
2
4
4
0
0
5
Dev1
Application of best practices(process)
Application of best practices(engineering)
Learning opportunities
Multiplatform portable development
Flexible working time
Research and Analysis
Technology trends
Communication opportunities
Gain experience in real project
F il
Failure
ttolerance
l
OOAD
Innovation opportunities
Estimation & planning improvement
http://lean.mit.edu
Dev2
4
4
3
5
5
4
4
0
0
0
0
0
4
Project to Person
Dev3
2
2
5
4
0
4
0
3
3
0
4
0
0
PM
2
5
5
5
3
0
0
0
0
0
0
3
0
Dev4
3
4
5
5
2
4
0
3
0
3
0
3
3
Dev5
4
4
0
3
5
0
3
3
5
0
3
0
4
4
4
4
4
5
0
5
4
5
4
5
0
4
Expected
4
5
5
5
4
4
4
3
5
3
5
3
4
© 2008 Massachusetts Institute of Technology Presenter MM/DD/YY 28
Stakeholder: Employee
High
g
Currentt Perform
mance
Fair Wages
Benefits
Job
Satisfaction
Security
Rewards
Career
C
Growth
Training
Facilities
Low
Low
http://lean.mit.edu
Relative Importance
Tools to
Do Job
High
i
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 29
Inputs
Process
Outputs
2
• Team Charter
• Enterprise
Description:
Boundaries,
Stakeholders,
Processes
Collect Data
• Prioritized
Stakeholder
Values
• LESAT Scores
• Enterprise
Resource
Allocation Based
on Processes
• Current Metric
Values
 Identify enterprise costs
 Define value exchange between each stakeholder and
enterprise
 Conduct LESAT
 Collect enterprise process headcount data
 Collect enterprise performance data, based on
enterprise metrics
http://lean.mit.edu
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 30
Inputs
Process
Outputs
3
Leadership Processes
• Stakeholder Value
Analysis
• Current State
Process Map
• Process
I
Interactions
i
Material Value Stream - ŅShop Floor Ó
Life Cycle
Processes
Product(s)
&
Service(s)
High
Product /
Service
Quality
Information Value Stream - ŅOffice FloorÓ
Enabling Processes
Current Performance
C
• Prioritized
Stakeholder
Values
• LESAT Scores
• Enterprise
R
Resource
Allocation Based
on Processes
• Current Metric
Values
Cost of
Ownership
Cycle
Time
Relationship
with Corp.
Low
Relative Importance to Stakeholder
High
Construct Current
State Perspectives
 Analyze stakeholder value delivery
 Analyze LESAT results
 Review enterprise process data
 Assess process interactions
 Review
R i
current enterprise
i performance,
f
based
b
d
on high-level metrics
 Summarize insights and document progress
http://lean.mit.edu
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 31
Inputs
Process
Outputs
4
• Stakeholder Value
Analysis
y
• Current State
Process Map
• Process
Interactions
• Alignment of
Goals, Values,
Processes,
Metrics
• List of Wastes
• List of
Opportunities
Identify Enterprise
Opportunities
 Assess alignment of enterprise
goals, metrics, processes, and
stakeholder
t k h ld values
l
 Identify enterprise-level waste
 Summarize opportunities for
improvement
http://lean.mit.edu
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 32
X-Matrix Assessment Process
•
http://lean.mit.edu
The grids in each corner of the
matrix represent potential
interaction between the row
and column they
y connect:
•
Strategic objectives
•
Enterprise metrics
•
Enterprise processes
•
Stakeholders values
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 33
X-MATRIX Template
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0 0 0
Strategic Objective
0 0 0
Strategic Objective
0 0 0
Strategic Objective
0 0 0
Strategic Objective
0 0 0
Strategic Objective
0 0 0
Strategic Objective
0 0 0
Strategic Objective
0 0 0
Strategic Objective
0 0 0
Strategic Objective
0 0 0
Strategic Objective
0
0
0
0
0
0
M ti
Metrics
Stakeholder
Values
Key Processes
0 0 0
Enterprise Process
0 0 0
Enterprise Process
0 0 0
http://lean.mit.edu
Stakeholder Value
e
Strategic
Objectives
Enterprise Process
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 34
X-Matrix Completion Process
Move around the matrix in a counter-clockwise direction
The following questions will help fill in the matrix with either,
strong, weak, or no interaction.
http://lean.mit.edu
1.
Is this strategic objective measured by this metric?
2.
Does this metric measure performance of this
process?
3.
Does this process contribute to delivering this
stakeholder value?
4.
Is this stakeholder value represented by this strategic
objective?
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 35
Example: Filling in the X-MATRIX
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0 0 0
0 0 0
0 0 0
0 0 0
0
0
0
0
0
0
0
0
0
Strategic Objective
Is this strategic objective
measured by this metric?
Strategic Objective
Strategic Objective
Strategic Objective
0 0 0
Strategic Objective
0 0 0
Strategic Objective
0 0 0
Strategic Objective
0 0 0
Strategic Objective
0 0 0
Strategic Objective
0 0 0
Strategic Objective
M ti
Metrics
Stakeholder
Values
Key Processes
0 0 0
Enterprise Process
0 0 0
Enterprise Process
0 0 0
http://lean.mit.edu
Stakeholder Value
e
Mettric
Mettric
Mettric
Mettric
Mettric
Mettric
Mettric
Mettric
Mettric
Mettric
Strategic
Objectives
Enterprise Process
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 36

processes
– Transfers to inpatient
– Program referrals
s
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11 011w
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s
s
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Quality Improvement
Complience -VA Code of
Patient Concern & JCAHO
Evidence Based Care (inc
(inc.
Through Educational
Residencies)
Become World Class
Research Hospital
Accessible Care
s
Residential Program (REACH)
s s
s
s
Tobacco Measure
Mental Health Access
Waiting Times - Clinic
Mental Health Measure
Enterprise
Metrics
Strong alignment with areas
in service, care, & research
Mental Health Outpatient
Impatient Service

0 5 6
0 0 0
0 0 0
values such as:
– Operating within budget
– Well‐documented monetary
transactions
1 0 1
w
0 0 0
0 1 1
0 1 1
s
s
0 0 0
0
0
3
0
0
0
1 1
0 0
811s
0 0
0 0
1 1
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w
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0 0 0
Processes vs. Values

0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
w
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s
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s
s
s
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s
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Stakeholder
Values
Key Processes
w
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1
0 4 0 1 1 1
0 0 0 0 1 1
0
1 0 1 0 0 0
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13 5 8
ws s
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12 8 4
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8 4 4
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5 1 4
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ws
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Stakeholder
Values
15 6 9
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4 2 2
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4 2 2
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4 2 2
w
6 3 3
4 2 2
s
w
w
s
w
s
w
Residential Treatment
s
Transfer from Residential to
Inpatient
w
s
s
w
Discharge from Residential
s
Transfer to Outside Facility
s
s
Outpatient Treatment
s
w
Referral to Inpatient
s
w
R f
Referral
l tto R
Residential
id ti l
s
w
s
s
w
w
5 2 3
6 3 3
s
w
4 2 2
w
s
w
w
s
w
s
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s
w
Patient Data Management s
w
Research
w
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s
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s
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sw
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4
4
6
4
4
4
w
w
s
s
13 8 5
w
w
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w
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w
s
Walk-in to Outpatient
Purchasing (Supplies &
Services)
w
s
s
Discharge from Inpatient
w
s
w
Human Resources
1 1 1 1 0 0
w
w
Payroll
1 4 1 1 1 1
w
s
s
Quality Assurance
1
s
s
s
w
Inpatient Treatment
Transfer from Inpatient to
Residential
Facilities and Maintance
1 1 1 1 1 1
w
13 9 4
Transfer from VA ER to
Inpatient
Transfer from Urgent Care
to Inpatient
Transfer from Outside ER
to Inpatient
0 0 0
s
s
w
Strategic
Objectives
Metrics
s
s
Upstanding member of local community
s
s
s
Efficient Resource Management
Accurate and well-documented monetary
transactions
s
s
s
12 2 3 1 5
23 1 1 0 1
35 3 4 1 6
Reasonable expectations and respectful
treatment of employees
Research Advancement
Knowledge Transfer
Communication and Implementation of VA
C
culture and values
01313s
s
Operating within budget
s
s
1
3
4
Fair Wages for services
Sufficient Inpatient and Outpatient Capacity
S
s
Clean, High Quality Facility
s
s s
Accurate Patient Records
Availability of medications, supplies, and
equipment
s
s s
ss
Safety/Security of premises
s s
ss
s
Timely and accurate information flow
ss
s
s
Timeliness of diagnosis and treatment
Quality of patient experience (minimal
discomfort respectful etc )
s
s
s
MH: SMI - MHICM Capacity
Values vs. Goals
Strong alignment with
outpatient treatment and
clinic wait times
 Missing metrics for key
s
s
s
2 1 1 1 4 4 2 2 2 1 3
5 6 4 3 0 1 5 3 0 2 1
7 7 5 4 4 5 7 5 2 3 4
Serve Boston Healthcare
System
s
Team Oriented - Integrated
Care
s
12 012
 Gap lies in aligning goals to
Metrics vs. Processes
s
s
01313s
MHICM Program - Day Program
Methadone Clinic
documented
 Research is a goal but not
measured locally
s
01212s
Vocational Industry Program
 Goals are not formal or
2 1 2 0 2 2
5 5 4 4 5 4
7 6 6 4 7 7
Correctness of diagnosis and treatment
Very strong alignment with
most metrics on target
2
5
7
01313s
Substance Abuse Outpatient Program
Substance Abuse Intensive Outpaitent
Program

2 2 2 2 2 2
4 4 4 4 4 4
6 6 6 6 6 6
Keey Processes
Metrics vs. Objectives
Strrategic
Goals
G
VA X-Matrix Analysis
s
s
ss
s
w
w
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s
w
w
w
w
s
s
1
9 16 15 7 1 3 3 2 9 2
3
1
7 9 5 5 1 1 3 2 5 1
0
2 7 10 2 0 2 0 0 4 1 3
2
2
3
3
3
2
4 3 1
s
ss
s
w
2
2
3
1
1
2
s
s
w
3
3 21 2 3
1
1 4 2 1
2
2 17 0 2
9
10
10
9
5
7
6
5
7
5
2
5
3
5
3
4
3
2
Strong alignment in areas of
service, research, & quality
 Processes addressing the
least stakeholder values are
primarily patient movement
 Strong Alignment
Source: ESD.61J / 16.852J: Integrating the Lean Enterprise Class Project,
http://lean.mit.edu
Czaika, Tomlinson, Kopp, Verdugo-2008
 Weak Alignment
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 37
Enterprise Level Wastes
Waiting Delays
Idle time due to late decisions, cumbersome and excessive approvals, and
unsynchronized enterprise processes
E
Excessive
i Transportation
T
t ti
Unnecessary movementt (i
U
(including
l di electronically)
l t i ll ) off administrative
d i i t ti
information and people; multiple approvals and handoffs
Inappropriate Processing /
Ineffectual Effort
Effort expended that does not increase value to any of the enterprise’s
stakeholders; can occur within the workforce, within management ranks, or
across the
th entire
ti enterprise
t
i
Inventory
Unnecessary levels of any enterprise resource: capacity, space,
workforce, suppliers, information/data
Excessive Motion
Any
y human effort that does not increase stakeholder value.
Defects/Rework
Erroneous results from defective enterprise processes and decisions
Over Production
Any creation of enterprise outputs that does not increase stakeholder
value
Structural Inefficiencies
Waste resulting from inappropriate organizational structure, policies,
business model structure, alignment, or strategies
Opportunity Costs
Wastes resulting from lost opportunities, e.g., untapped talent in the
workforce
http://lean.mit.edu
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 38
Enterprise Opportunities
•
•
Begins the transition to the future state
•
Dependent on… and a summary of all previous
work
This will capture the insights…the “ah-has”,
issues and opportunities
•
•
Will d
documentt the
th currentt insights
i i ht and
d
opportunities
What opportunities do we want to address in
our future state vision?
http://lean.mit.edu
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 39
Inputs
Process
Outputs
5
• Alignment of
Goals, Values,
Processes,
Metrics
• List of Wastes
• List of
Opportunities
• 5-10 year Goal
• Focus Areas
• Mid-point Goals
Describe Future State
Vision
 Develop lean enterprise vision, including 5-10
year goal and future enterprise description
 Develop future state metrics that are aligned
with “BHAG”
 Identify focus areas to move towards vision
 Collect and analyze data on gaps between
current state and future vision to make
recommendations for prioritized improvements
http://lean.mit.edu
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 40
Inputs
Process
Outputs
6
• 5-10 year Goal
• Focus Areas
• Mid-point Goals
Leadership
Project A
People
Project B
Processes
Project
j
E
Information
Flow
Project C
Project K
Project
j
J
Project D
Project F
Customers
Suppliers
Project H
Project G
Project I
Create Transformation
Plans
• Strategic
Transformation
Plan
• Governance Model
• Revised System of
Metrics
• Communications
Plan
 Develop strategic transformation
plan
 Prepare hand-off packages for
subsequent
b
t improvement
i
t teams
t
 Develop an on-going governance
model
 Update enterprise metrics
 Provide input to communication
plan
http://lean.mit.edu
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 41
Inputs
Process
7
Individual Project portfolios
9-block Initial Planning Template
Project Name
JDI
X
Kaizen
Impact
• Strategic
Transformation
Plan
• Governance Model
• Revised System of
Metrics
• Communications
Plan
X
Estimated Event Date(s):
XXX
Recommended Process Owner:
XXX
Project
Difficulty
Event Description: Describe the task in sufficient
detail. (one or two sentences)
Outputs
Recommended Team Leaders &
Members:
XXX
• Actionable project detail
descriptions
• Recommended Project Metrics
• Resource draw by project
• Pre-event data requirements
Reason for Event: Describe the problem the team
is addressing and answers the Òwhy nowÓ
question.
Estimated Implementation Costs:
None
Estimated Savings:
XXX
Create Actionable
Project Descriptions
• Projects Benefits
• Recommended project teams and
Project duration
 Develop individual actionable projects
 Prepare project portfolios
 Develop resource and project duration descriptions by
project
 Develop project metrics
 Develop pre event data collection matrix by project
 Develop expected benefits matrix
 Develop inputs to initial transformation communications
Plan
 Develop exit strategy for each project proposed
http://lean.mit.edu
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 42
Inputs
Process
Outputs
8
Individual Project portfolios
• Actionable project detail
descriptions
• Recommended Project Metrics
• Resource draw by project
• Pre-event data requirements
• Projects Benefits
Create Deployment
Plan
• Prioritized list of
actionable projects
• Project timelines
established
• Resource commitments
received
• Tracking metrics in place
• Project tracking schedules
 Prioritize projects
 Develop timelines for each
prioritized project
 Establish resource commitment
for top 3-5 projects
 Develop metrics for tracking
projects to completion
 Develop top level governance for
project
j t mentoring
t i
and
d tracking
t
ki
http://lean.mit.edu
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 43
EXECUTING ESAT
http://lean.mit.edu
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 44
Goals and Expected Outcomes
• Create a vision of the enterprise five to ten years in the
future which optimizes enterprise value creation and
delivery
• Provide enterprise executives with a balanced decision aid
to:
•
•
•
•
Identify barriers to the creation/delivery of value to each
stakeholder
Specify
p
y a vision of their future enterprise
p
Determine significant gaps between current and future states
Prioritize opportunities for eliminating waste and increasing
value delivery for the maximum benefit of the total enterprise
http://lean.mit.edu
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 45
Estimated Resources Required
•
Small execution team including:
g
• Enterprise leader as champion or sponsor
• Team lead, one of the enterprise leaders direct reports
• Facilitator,
Facilitator with background in lean and ESAT method
• Enterprise process owners on an ad hoc basis as
needed to provide information
•
Following the ESAT methodology can take up to
two to three months total time
• Down from six months
http://lean.mit.edu
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 46
Enterprise Strategic Analysis for Transformation (ESAT) Process Flow
Source: Dr. Eric Rebentisch
Workshop 1
Collect Data
Workshop 2a
15-16 January
23-25 February
Team Charter
Conduct
LESAT
Identify
Id
tif
Enterprise
Boundaries
Analyze LESAT
Results
Identify
Stakeholders
Collect
Stakeholder
D
Data
Stakeholder
Value Analysis
Identify
Processes
Collect
Process Data
Current State
Process Map &
Interactions
Collect
Enterprise
Metrics Data
Review
Enterprise
Metrics &
Performance
Identify
Enterprise
Metrics
Workshop 2b
Workshop 3a
Workshop 3b
10-12 March
14-15 April
28 April-1 May
Enterprise
Goals
Enterprise
Alignment
(X-Matrix)
Enterprise
Wastes
Enterprise
Opportunities
Project Hand
HandOff Packages
Vivid
Description
of Future
State
Identify
Enterprise
Architecture
Gaps &
Opportunities
Actionable
Project
Descriptions
Enterprise
Metrics
Governance
Framework
Integrated
Deployment
Roadmap
Communication
Strategy
Identify &
Prioritize
Enterprise
P j t
Projects
ESAT Steps
Individual project portfolios
• Actionable project detail
descriptions
• Recommended project
metrics
• Resource draw by project
• Pre-event data requirements
• Projects benefits
• Recommended project
Create Actionable teams and project duration
Project Descriptions
7
Impact
9-block Initial Planning Template
Project Name
JDI
X Kaizen
Estimated Event Date(s):
XXX
X
Recommended Process Owner:
XXX
Project
Difficulty
Event Description: Describe the taskin sufficient
detail. (one or two sentences)
Reason for Event: Describe the problem the team
is addressing and answers theÒwhy nowÓ
question.
1
Define the Enterprise
• Team charter
• Enterprise
description:
Boundaries,
Stakeholders,
Processes
• Homework
assignments
understood and
accepted
http://lean.mit.edu
© 2009 Massachusetts Institute of Technology
2
Collect Data
• Prioritized
stakeholder values
• LESAT scores
• Enterprise resource
allocation based on
processes
• Current metric
values
3
Material Value Stream - ŅShop FloorÓ
Life Cycle
Processes
Product(s)
&
Service(s)
High
Product /
Service
Quality
Information Value Stream - ŅOffice FloorÓ
Enabling Processes
Cost of
Ownership
Cycle
Time
Relationship
with Corp.
Low
Relative Importance to Stakeholder
High
Construct Current
State Perspectives
Identify Enterprise
Opportunities
6
5
4
• Stakeholder
value analysis
• Current state
process map
• Process
interactions
Leadership Processes
Current Performance
• Enterprise
commitment
• ESAT team
• Facilitators
• Enterprise lean
training
• Current
enterprise goals
• Alignment of
Goals, Values,
Processes,
Metrics
• List of wastes
• List of
opportunities
Describe
Future State
• 3- to 5-year
Goal
• Focus
areas
• Waypoint
goals
Leadership
Project A
People
Project B
Processes
Project E
Information
Flow
Project C
Project K
Project J
Project D
Customers
Project H
Project F
Project G
Create Transformation
Roadmap
Suppliers
Project I
• Strategic
transformation
roadmap
• Governance
framework
• Revised system of
metrics
• Communications
strategy
Recommended Team Leaders &
Members:
XXX
Estimated Implementation Costs:
None
Estimated Savings:
XXX
8
47
• Prioritized list of
actionable projects
• Project timelines
established
• Resource commitments
received
• Tracking metrics in place
• Project tracking
schedules
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 47
Create Deployment
Roadmap
Enterprise Transformation Principles
1.
2.
3.
Adopt a
holistic approach
t enterprise
to
t
i
transformation.
Secure leadership
commitment to drive
and
d iinstitutionalize
tit ti
li
enterprise behaviors .
Identify relevant
stakeholders
and
dd
determine
t
i th
their
i
value propositions.
4.
5.
6.
7.
Focus
on enterprise
effectiveness before
efficiency.
Address
internal and external
enterprise
interdependencies
Ensure
stability and flow
within and across the
enterprise
Emphasize
organizational
learning.
http://lean.mit.edu
Source: D. Nightingale and J. Srinivasan, MIT 2009 © 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 48
Contact
Dr. Jayakanth Srinivasan (jksrini@mit.edu)
P f Debbie
Prof.
D bbi Nightingale
Ni hti
l (dnight@mit.edu)
(d i ht@ it d )
http://lean.mit.edu
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 49
TEMPLATES
http://lean.mit.edu
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 50
Stakeholder Values
Stakeholder Group:
Stakeholder Name:
Ask the stakeholder what they value. What do they expect to get from their
involvement with your enterprise? What are the things that would make your
enterprise highly thought of by them?
http://lean.mit.edu
On a scale of 1 to 5
how important is
this value to the
stakeholder?
On a scale of 1
to 5 how well is
the enterprise
delivering this
value?
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 51
Value Exchange Template
Value Expected from
the Enterprise
Stakeholders
• List the data collected
about value expected
here
NAME
• List the enterprise
Stakeholders here
http://lean.mit.edu
Value Contributed to
the Enterprise
This list is a starting
place, tailor it as
appropriate.
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 52
Stakeholder: ____________
Currentt Perform
mance
High
g
Low
Low
http://lean.mit.edu
Relative Importance
High
i
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 53
FOUNDATIONS
http://lean.mit.edu
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 54
“Classical” Lean Thinking
Specify value from the
standpoint of the end customer
by product family
Identify all the steps in the value
stream for each product family,
eliminating whenever possible
those steps that do not create
value
As flow is introduced, let
customers pull value from the
next upstream activity.
http://lean.mit.edu
Make the value-creating steps
occur in tight sequence so the
product will flow smoothly
toward the customer.
As value is specified, value
streams are identified, wasted
steps are removed, and flow
and pull are introduced, begin
the process again and continue
it until a state of perfection is
reached in which perfect value
is created with no waste.
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 55
Lean Enterprise Principles
Create lean value by
doing the job right and
by doing the right job
Deliver value only
after identifying
stakeholder value and
constructing robust
value propositions
Address the
interdependencies
across enterprise
levels to increase lean
value
http://lean.mit.edu
Fully realize lean
value only by adopting
an enterprise
perspective
People, not just
processes, effectuate
lean value
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 56
Toyota Way
Problem
Solving
People and
Partners
Process
Philosophy
http://lean.mit.edu
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 57
Theory of Constraints
“Every real system, such as a business, must have within it at least one
constraint. If this were not the case then the system could produce unlimited
amounts of whatever it was striving for, profit in the case of a business...”
- Eli Goldratt
Step 1: Identify the system’s
constraints.
Defined System
Step 2: Decide how to exploit
the system’s constraints.
System Goa
Goals
Syste
s Defined
e ed by
Owners
Step 3: Subordinate everything
else to the decisions of Step 2.
Step 4: Elevate the system’s
constraints.
Step 5: If a constraint is broken
go back to Step 1
http://lean.mit.edu
in Step 4,
Constraints on the System
Defined
Measurements in line with the
Goal and Constraints
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 58
Benefits of ESAT
•
•
•
•
•
•
Focuses at total enterprise level
Provides a cohesive method for diagnosing an
enterprise in order to expose sources of waste and
to identify
y barriers to value delivery
y
Gives consideration to the needs/values of all
stakeholders
Focuses on enterprise-wide processes
Identifies process interfaces, disconnects and
delays
Id tifi iimprovementt opportunities
Identifies
t iti that
th t will
ill
benefit the entire enterprise
http://lean.mit.edu
© 2010 Jayakanth Srinivasan/ Massachusetts Institute of Technology March 25, 2010 - 59