Sellafield 2nd November 2011 Redefining Quality – accelerating change reducing cost protecting reputation Professor John Oakland Oakland in 30 seconds… Redefining quality Updating & sharing knowledge through research and education Oakland’s Business Model Oakland Consulting plc Oakland Consulting European Centre for Business Excellence CONSULTANCY DIVISION RESEARCH & EDUCATION DIVISION The “Voice of Experience” informs new research Carbon Ready Ltd The “Voice of Research” ensures we employ cutting-edge practices Some of our Private Sector Clients Some of our Public Sector Clients Why ‘Re-define Quality?’ The 21st Century world of business never rests – the speed of flow of information has created global markets in which we all trade. Consumer needs vary widely across time and space creating constant need for alertness and change. If we as managers are not keeping up with the pace, others will – it’s very competitive out there! In the past Quality has become synonymous with control, compliance & cost. Excessive focus on internal capability generated overly bureaucratic approaches that attracted negative perception, particularly in boardrooms Quality must play a wider role in business to meet the challenges of 21st century The requirements are around building a ‘learning organisation’ that is quick to change, avoids excessive costs and reputational impacts of getting it wrong! Key concept – the journey & maturity Quality & Operations Maturity Level 5 4 3 2 Products, services, processes and organisations progress on a change journey, from idea to implementation, where quality maturity increases over time 1 Time Key concept – the journey & cost Quality & Operations Maturity Level 5 4 3 2 As the journey progresses costs accumulate. The rate increases early in the journey and slows as maturity is increased 1 Time Scaling the maturity curve 5 Maturity level Improving – “Industrialized” Quality Maturity Level 4 Reputation In control 3 Gaining control 2 Variable control Net cost of quality 1 Time World class The journey and the key stages Journey Progress 5 Redefine the industry expectations Bust assumptions 4 Link strategy to operations Clearly the best in the industry 3 Adopt best practice As good as competitors 2 Correct Problems Stop “holding back” 1 Time Addressing the sustainability agenda Environmental Sustainability Journey Successfully deploying new technologies, management systems and behaviours for operational excellence Developing the right end-to-end value chain for the lowcarbon economy Understanding the need for change, developing strategy and realistic objectives Addressing increasing energy costs through, low-cost, quick wins Financial & reputational cost of Carbon Emissions What are the risks relating to speed of change, cost and reputation? – failure to manage and avoid risks throughout the change journey Accelerate Change Reduce Cost Protect Reputation Speed related risks Cost related risks Reputation related risks • Projects fail to meet their objectives through a loss of momentum, which leads to stalled progress • Costs get out of control due to poor quality through inadequate specification, excessive rework, or too much waste • Reputation takes years to recover from failure making it harder to do business • Benefits realisation delayed while change is taking too long • Hidden costs don’t get addressed because they don’t feature in financial reports, because they are hard to identify • Going slow puts more pressure on critical resources because key personnel are tied up in projects • Slipping back down the curve due to loss of capability • Carbon emissions cost money – under the Carbon Reduction Commitment many companies will start being penalised for carbon emissions • Perception of poor CSR will damage your reputation – consumers expect modern companies to have strong demonstrable Corporate Social Responsibility • Reputational damage is deeper and quicker now than ever before because information, opinion, and ultimately consumer choice is affected at scale due to communication technologies Accelerating change “We were impressed at how well the techniques applied during the workshops helped us to quickly reach conclusion ” Highways Agency Journey progress By accelerating transformation, significant costs can be reduced or avoided, and the benefits of transformation will start to accrue more quickly Time How do you accelerate change? Oakland figure 8 model of effective change External or internal drivers of change Need for Change Leadership & Direction Need for Change Readiness for Change Leadership & Direction Implementing Change Systems & Controls Result No urgency and no action Never leave the start Planning Processes Organisation & Resources Missing focus Behaviours Planning False starts and wrong directions Processes Effort wasted on non-core Organisation & Resources Paralysis and frustration Systems & Controls Driving blind Behaviours Resistance endangers success Successful change is possible when all 7 key elements are addressed and readiness is achieved before you start changing processes and implementing other changes Reducing costs “The application of the ‘DRIVER’ model to our claims process yielded an audited savings of €1.6m. This is evidence of the what the DRIVER model can deliver” Eurocopter The cost of delivery The cost to deliver products and services is reduced by addressing the causes of poor quality (mainly waste & variation) and busting assumptions about how services are delivered Time How do you reduce cost? Reduce process time Waste Removal Variation Reduction TIME QUALITY Lean VALUE Six sigma outputs • Apply approaches such as “Lean” to remove the nonvalue adding waste from a process, pathway or service Reduce variation • Use techniques such as “SixSigma” to reduce undesirable variation in patient facing and back-office processes Bust assumptions COST £££ Improving customer satisfaction and increasing value for money • Assumption busting leads to paradigm shifts – this can drastically reduce costs and create step changes in quality Protecting reputation “You have taken us light years ahead – great value” Shell Time The development of reputation Journey progress Desired outcome reputation lags by customer response time How do you protect reputation? Protecting reputation starts with understanding performance and risk Use an assessment tool developed across the dimensions of quality management including: Leadership Policy Organisation Manufacturing Supply People management Performance improvement Bringing together your performance measurement across the supply chain will highlight areas of priority, risk and specific improvement actions Reducing Carbon Whether its a recession, competition from the far-east or climate change, your organisation’s success depends on its fit with the external environment As with other complex business problems, we use a structured approach based on many years research and practice coupled with the specific expertise required to address climate change. External Events Leadership & Direction Energy Costs Customers and Consumers Need for Change Developing Strategy Planning Legislation Reputation PROCESSES Physical Environment Organisation & Resources Operational Delivery Systems & Controls Behaviours 1. Evaluate external events 2. Develop a strategy for success in a low-carbon economy 3. Establish 21st Century business processes which will enable performance 4. Support the operational delivery How do you address carbon reduction? • Energy Surveys • Utility Metering • Aligning Costs and Carbon • Targeting Improvements Energy Audit Carbon Footprinting • Qualifying Opportunities to Reduce Costs • Successful Implementation Methodology Implementation Support • Product and Service Footprinting • Reducing Costs and Emissions in Complex Organisations Carbon Stream Mapping • Policy Development • Corporate Social Responsibility Embedding Low-Carbon • Developing a Strategic Approach • Operational Delivery Carbon Management Delivering value in Carbon Linking CO2 with Service Delivery Working with a large local authority we used Carbon Stream Mapping on each service line to identify CO2 hotspots. This enabled the organisation to reduce emissions whilst maintaining service quality, improving delivery time and reducing cost. Reducing Energy Intensity in Heavy Manufacturing We developed and ran a change programme to mitigate energy price rises with minimal capital investment. Reduced site operating costs by £50K per annum and developed internal capability to sell goods in low-carbon markets. Carbon reduction strategy There are four key areas that our carbon services address 1: Understanding the need for change, developing strategy and realistic objectives Success depends on fit with external environment External Events Energy Costs Customers and Consumers Legislation Carbon management factors: Leadership & Direction Need for Change Developing Strategy Planning Reputation PROCESSES Physical Environment Organisation & Resources Operational Delivery Behaviours Systems & Controls 2: Successfully deploying new technologies, management systems and behaviours for operational excellence 3: Developing the right endto-end business processes for the low-carbon economy 4: Bringing 1, 2 & 3 together to address specific nondiscretionary needs – the CRC (Carbon Reduction Commitment) Redefining Quality • Redefining Quality with understanding and applying what quality means in the 21st century • How are you going to accelerate change, reduce costs and protect reputation? • You need to: Transform Understand Business Customers • Understand your customers • Set your strategic direction • Diagnose the problems in your business • Improve your efficiency and effectiveness • Transform the way you do business • Help change happen in your organisation so that it is sustained • Collaborate with your partners much more effectively Improve Performance Diagnose Problems Set Direction www.oaklandconsulting.com “No great improvements in the lot of mankind are possible, until a great change takes place in the fundamental constituting of their modes of thought” – John Stuart Mill Oakland Consulting plc 33 Park Square West Leeds LS1 2PF Tel 0113 234 1944 Professor John Oakland; Executive Chairman, Oakland Consulting plc Emeritus Professor, Leeds University Business School John is Chairman of Oakland Consulting plc and Head of its Research and Education Division, the European Centre for Business Excellence. He is also Emeritus Professor of Business Excellence at Leeds University Business School. Over 30 years he has researched and consulted in all aspects of quality management, strategic process management and business improvement in literally thousands of organisations. He has directed several large business research projects in Europe which have brought him into contact with a diverse range of organisations. Professor Oakland and his team have completed numerous advisory assignments and management development programmes in their field, the aim of which has been to bring the practical application of best practice within the reach of top management in all types of organisations. He is author of several best selling books, including: Total Organisational Excellence; Total Quality Management, Oakland on Quality Management, Statistical Process Control and Production and Operations Management. He has written hundreds of papers, articles and reports on various topics in these and related fields. Oakland Consulting, in its original form, was created by Professor Oakland over twenty five years ago (1985) and now operates throughout the world, helping organisations in all areas of business improvement. Professor Oakland is a Fellow of the Institute of Directors, Chartered Quality Institute and Royal Statistical Society. He is also a Member of the American Society for Quality.