Developing the execution model for Lean Six- sigma strategy by linking two critical forces; ROFO and Knowledge Competency. A study on knowledge workers in manufacturing organizations. By Ah Bee Goh Proposal exam ID # 532152010 30 May 2011. 1 CONTENTS 1. TITLE 2. ABSTRACT 3. PRINCIPLES , THEORY, RATIONALE, AND/OR HYPOTHESIS 4. LITERATURE RESEARCH 5. PURPOSE OF STUDY 6. EDUCATIONAL / APPLICATION ADVANTAGES 7. RESEARCH DESIGNS , SCOPE AND METHODS. 8. LOCATION AND COVERAGE OF INDUSTRIES 9. EXPECTED DURATION AND PLAN 10. CONCLUSION 11. REFERENCES 2 1. TITLE Developing the execution model for Lean Six- sigma strategy by linking two critical forces; ROFO and Knowledge Competency. A study on knowledge workers in manufacturing organizations. 2. ABSTRACT In to- day’s competitive and changing world , it would be hard to believe that organizations do not have a strategy. A strategy is like a plan or a ploy to outmaneuver the competitors. Lean concepts was first developed by Toyota and has now spread throughout the world. Six- sigma was invented by Motorola and American companies which had implemented successfully had reported huge tangible gains. Toyota uses Lean concepts to achieve the number one position in the automobile world. Motorola, GE and Allied Signal implemented Six- sigma successfully. It would indeed be a powerful strategy if any company is able to combine Lean concepts and Six-sigma. To have a great strategy is only one aspect but the other important aspect is to be able to execute it. Many companies fail to execute their strategies ( including Lean Six-sigma). This is indeed a gap many CEOs fail to recognize. Academia and Business Schools have not provided sufficient research to enlighten us why the gap exists in industries. From the author’s experience, this gap can only be addressed when two fundamental forces are present; one is the willingness ( total ownership of the process, ROFO) and the other is relevant knowledge. This two forces are inseparable as the missing of one will result in Lean Six – sigma strategy not executed successfully. The research will focus on 5 categories of knowledge workers and 7 levels of knowledge competency as it is important to understand which category of knowledge workers will require which level of knowledge competency. The ROFO model will apply to transform the willingness of workers into total ownership of the process. Key words: ROFO, Knowledge Management, gaps, Knowledge competency, Total ownership. Execution, Lean Six- sigma, wastes. 3. PRINCIPLES , THEORY, RATIONALE, AND/OR HYPOTHESIS 3.1 Lean Six- sigma strategy Toyota started Lean concepts in the 1950s, whereas Six sigma was initiated by Motorola in 1987. Any company which could combine Lean concepts and Six sigma as a strategy would indeed be ahead of the pack in the industries. To be able to do both is indeed a great challenge for any company. The basic question confronts us 3 to- day is , “ if Lean Six- sigma is a powerful strategy , why is it companies in the world are not pursuing with great intensity?”. From the author’s experience , many companies had pursued but not successful. The issue lies in execution. Lean Six – sigma is like any other strategy a company is adopting . In order to understand why Laen Six- sigma is not successfully implemented , we need to understand why companies cannot execute strategies in general. It doesn’t matter which strategy a company chooses such as marketing, least cost , logistic, innovation and etc , the same implementation challenge applies to all. 3.2 Some insights on failure to execute strategy Companies in their quest to survive spent enormous time and money developing strategies . The strategies are broken down into plans and tactical actions. Very often , when a company fails to compete or survive, the Board of Directors or shareholders would blame that the strategy is not right. Fortune Magazine on 21 June 1999 published an article by Ram Charan and Geoffrey Calvin on “ Why CEOs fail”. It offered the following arguments; i) CEOs are three times likelier to get booted than a generation ago. ii) Those CEOs are not dumb or evil. In fact they tend to be highly intelligent, articulate, dedicated and accomplished. iii) It is bad execution- not getting things done, being indecisive, not delivering on commitment. See fig. 3.2-1. Fortune Magazine on 21 June 1999 published an article by Ram Charan and Geoffrey Calvin on “ Why CEOs failed”. It offered 3 reasons; CEOs are 3 times likelier to get booted than a generation ago. Those CEOs are not dumb or evil. In fact they tend to be highly intelligent, articulate, dedicated and accomplished. It is bad execution- not getting things done, being indecisive, not delivering on commitment. Fig.3.2- 1 4 At the time when this article appeared , there was news that Swissair , the icon of Switzerland was on the brink of bankruptcy and again they blamed it on Mckinsey’s bad strategy ( to- day the airline was taken over by Lufthansa and named it Swiss airlines International).For an organization to move forward , it has to execute actions whether they are strategic or daily operational issues. Most companies blame the top management for not committing enough. There is no doubt that top leaders are the best scapegoats to pick on. It is the author’s opinion that academic research focuses on developing strategies and list lofty tools and techniques for managers to work on. Researchers and management writers suggest strategic plans for action but far too few focus on ,’ how to execute the plan’. There is no lacking on management models , tools and techniques like ; 1. 2. 3. 4. 5. 6. 7. 8. Total Quality Management. Six sigma by Motorola. Balanced Scorecard by Kaplan. Mckinsey 7S model. Business Process Reengineering by Michael Hammer 5 force strategy by Michael Porter. SWOT analysis etc. To realize any plan of actions , it has to be the work of human beings. Only human beings can make things happen and not machines. Why is it so difficult to get human beings to execute tasks ? Douglas Macgregor came up with two theories namely ; 1. Theory X Most people dislike work and they will avoid it if they can. Most people must be forced and threatened with punishment before they will work. They require close direction. Most people prefer to be directed. They avoid responsibility and have little ambition. They are interested only in security. 2. Theory Y Work is a natural activity like play or rest. 5 People are capable of self- direction and self- control if they are committed to objectives. The average person can learn to both accept and seek responsibility. Many people in the general population have imagination, ingenuity and creativity. Douglas’s Theories are two extremes , one is positive and the other is negative on assumptions of human behavior. Again it offers little help in terms of what to- day’s managers need so badly , “ how can we get workers to execute tasks on- time and successfully?”. It is commonplace that these tasks are not tackled successfully as many CEOs have lamented. This is confirmed in Larry ‘s book that the Compaq Board fired the CEO and the same applied to the Lucent’s board . He added that the common explanation is wrong strategy but Larry firmly stated that the real issue is execution. Larry said that it is the GAP nobody knows.The author agrees fully as many if not all are not aware that the real issue is to inculcate a company to have culture of execution. 3.3 Practical examples from industries on execution. 1. Dell computer – Fig. 3.3 – 1. Steven Holzner , author of the book,” How Dell Does IT” devotes one whole chapter entitled “ Always Adapt , Always Execute”, ( Chapter 6 - pages 107 to 128). On 7 of March 2005 , Fortune magazine named Dell Inc. as the most admired company in the United States. “ And you don’t get there unless you know what the heck you are doing”, stated Steven Holzer. Some examples of Dell’s execution are; Dell’s commodities work better when they are delivered. When Dell’s commodities don’t work , they are fixed or replaced faster. Dell keeps less inventory on hand to build its commodities. Dell needs less of a sales force because a large portion of its orders come directly from the Internet. 6 Flawless execution of well- known “Dell Model”. Fig. 3.3 -1 Page 109 2. IBM Louis V. Gerstner, Jr, former CEO of IBM who was credited to turn around the company . He authored the book, “ Who Says Elephants Can’t dance?”. He also devoted a chapter ( chapter 24, pages 229 to 234) entitled , “ Execution – Strategy Goes Only So Far. He offered the following advice; It is extremely to develop an unique strategy to differentiate yoiurself from others. If you have one , it will incur high risk. At the end of the day , most competitors fight using the same strategy. To win, one must execute faster than the competitors. In his own words, “ all the great companies in the world out- execute their competitors day in and day out in the marketplace, in their manufacturing plants, in their logistics, in their inventory- in just about everything they do. Rarely do great companies have a proprietary position that insulates them from the constant hand- to hand combat of competition”. 3. GE 7 Jack Welch- the legendary CEO of GE , authored a book called , “ Winning” and in chapter 6 , titled , “ Hiring- what winners are made of, (pages 81 to 96) “ says he looks for 4Es as ; The first E is positive energy. The second E is ability to energize others. The third E is edge- the courage to make tough yes or no decisions. The fourth E is – execute – the ability to get the job done. The author after working for 40 years in various industries fully agree with the CEOs of GE , IBM , Allied Signal ( Larry Bossidy was the former CEO) and many others that implementation and execution is the most vital issue facing the organizations to – day. What is disturbing is that many still do not realize the importance of execution. Managers are not focusing enough on removing barriers to execution as well as on what should be done to enhance the execution culture of the organization. The author added further that far too many strategy sessions are held on developing strategies and latest technologies as they are fun and exciting to talk about. It is interesting to note that Dr. Lawrence G. Hrebiniak , a professor in Wharton School of Management at university of Pennsylnia has been researching on strategy execution and organizational design and he is just one of a few in the academic circles who truly understands the vital importance of execution. He wrote an entire book titled “ Making Strategy Work – Leading effective execution and change” and he ahs great advice for us; Execution is a key to success. Obviously developing a competitive strategy is not easy but the massive challenges confronting the organization makes it clear to him that, “ making strategy work is more difficult than the task of strategy making”. More will be said about his work in the literature research section. 3.4 Four possible outcomes of Lean Six- sigma execution From the above discussion , it is clear that Lean Six- sigma faces the same challenge as any other strategy a company is adopting. Therefore it is the aim of the author’s research to develop a model for Lean Six- sigma execution. Fig. 3.4 –1 illustrates the possible outcomes of executing Lean Six- sigma. Basically , thee are 4 possible outcomes; A- Remained not executed but activities started half- way. B- Seems to be able to be executed but requires more or twice longer time. C- On-time and successfully executed. D- Remained untouched. The 4 possibilities will be dealt in depth in the author’s thesis. 8 A= remained not executed but activities started half way. Implemnet Lean concepts Execution of Lean Sixsigma Implement sixsigma B=Seems to be able to be executed but need much longer time C=on –time and successfully executed D= remained untouched Fig. 3.4-1 4. LITERATURE RESEARCH 4.1 Related to Lean Six- sigma a) Lean Production Lean Production was originated byTaiichi Ohno, Toyota Executive in the 1950s. Toyota was so successful with this concept that its quality and productivity 9 surpassed that of its competitors, GM, Ford, Chrysler and etc. In Toyota , it is called Toyota Production Systems ( TPS). In 1990, James P. Womack published the book, “The machine that changed the world”, and it soon attracted world wide attention about TPS. Taiichi Ohno ssaid there are 7 wastes in the manufacturing organization as shown in fig. 4.1-1. 7 Wastes In Manufacturing Over Production Unnecessary Over motion Processing S e v e n W a s te s Rejects and Inefficient Transportation Defects Waiting Excess Times inventory Fig. 4.1-1. According to Ohno, over production is the worst as it hides all the other wastes like inventory and quality defects. Inventory is analogous to the water level in a sea, the higher the water level , the better is for the boat to sail through without noticing any obstacles underneath as shown in fig. 4.1-2 What is important is to remove the excess inventory so that water level will be low and the boat will not be able to sail through as all the obstacles are surfaced. The objective is to clear all the obstacles on a timely manner. This is shown in fig. 4.1-3. 10 High inveinnventory hides the obstacles problem High water level conceals the rocks LONG SET UPS UNSTABLE DEMAND 100 meters GENERATING DEFECTIVE PRODUCTS REWOR K POOR HIGH MANPOWER HOUSEKEEPING REQUIREMENTS MACHINE BREAKDOW NS DELAY IN DELIVERIE S MIXED MATERIALS Fig. 4.1-2 – Inventory hides wastes 11 Low water el reveals the rocks UNSTABLE DEMAND LONG SET UPS GENERATING DEFECTIVE PRODUCTS 50 meters REWOR K POOR HIGH MANPOWER HOUSEKEEPING REQUIREMENTS MACHINE BREAKDOW NS DELAY IN DELIVERIE S MIXED MATERIALS Fig. 4.1-3. Low inventory exposes wastes. Basically there are 5 principles of TPS ; 1. Specify value from the stand point of the customers. 2. Identify value stream for each product family. 3. Remove wastes in the value stream so that products can flow smoothly. 4. Enable your customer to pull what they need ( pull system). 5. Continuous improvement to perfection. b) Six- sigma. 12 It was developed by Motorola in the 1980s and has now spread throughout the world. Mathematically , it means if a company achieves 6 sigma , it will attain a quality level no more than 3.4 defects per million (ppm). It starts from +/- 6 sigma with mean centred as shown in fig. 4.1-4. Fig. 4.1-4 Notation; USL- upper specification limit T- target value which coincides with the mean. 13 Fig. 4.1-5 With 6 sigma from the mean indicated by “T”, it reveals that at this point , it is two defects per billion with 50% design margin. In order to cater to design shift , the margin is reduced by 1.5 sigma. This is shown in fig. 4.1-5. At this point it shows 3.4 defects per million. To implement six- sigma , it usually uses the following steps; 14 1. DEFINE- the problem and scope of the work. 2. MEASURE- the current processor performance. Identify what data is available and develop a plan to gather it. 3. ANALYZE- the current performance to isolate the problem. Through analysis , both statistical and qualitative, begin to formulate test hypothesis as well as determining the root cause. 4. IMPROVE- by solving the problem. Brainstorm on potential solutions. Prioritise and implement. 5. CONTROL- the improved process or product performance to ensure the targets are met. Once the solution is effective, the improvement must be sustained and standardized. 4.2 Related to Knowledge management . Knowledge is needed in every action of the organization. Organization must continue to develop the right knowledge in its people so that they can do their jobs well. Knowledge can be explicit or tacit ( Nonaka , Michael Polanyi ) and Nonaka shows a model of knowledge transfer as in fig. 4.2 -1. 4.2a Nonaka model Tacit Tacit Socialization Externalization Linking Explicit Knowledge Internalization i) Combination Learning by Doing Fig4.2 -1 Explicit Tacit Field Building Explicit Explicit Tacit Dialogue Explicit Tacit to tacit - Socialization Tacit knowledge occurs when individuals share knowledge and experiences in the form of mental models without using languages. It is through observations that one learn to acquire tacit knowledge. ii)Tacit to Explicit-Externalisation 15 It is a process of articulating tacit knowledge into explicit concepts. Nonaka believes an effective way is to use tacit knowledge in the form of metaphors and analogies.The externalization mode of knowledge conversion is exemplified by using dialogue or collective reflection. iii)Explicit to explicit- Combination This mode of conversion involves combining different bodies of explicit knowledge. Individuals come together to exchange ideas . This is normally achieved through media ,, documentations, meetings or telephone conversations etc. By combining and sorting of explicit knowledge , new knowledge can occur. iv) Explicit to tacit- Internalization It is the process of embodying explicit knowledge into tacit knowledge. It is strongly related to “ learning by doing”. One way for tacit knowledge to happen is to ensure that knowledge is verbalized or stored in the form of documents which a easily understood by others. It can also in the form of oral stories 4.2b -Single loop and double loop learning- by Chris Argyris. Chris Argyris lists two models of learning ( Fig. 4.2-2). i). Model I- theory in – use. It deals with defensive reasoning and routines. If we asked people the rules they use to govern their actions, they will tell you as what Chris Aryris calls “ esposed theory “ of action. But this espoused theory of action has very little to do with their day to day action. He coins a term calls theory – in use which is different from the espoused theory. Why? People consistently act inconsistently, unaware of the contradictions between their espoused theory and their theory in use. He names this theory in – use as model I and it rests on a set of governing variables. ii) Model II. Model I deals with deeply entrenched with defensive routines but model II intends to correct it , It will motivate people to move away from model I to model II. Model II fosters double loop learning. 16 Single and double loop Governing variables match actions consequences mismatch Single loop Double loop Fig. 4.2- 2 4.2c) Learning in action by David A. Garvin. Three critical issues must be addressed first before a company can become a learning organization. They are; Meaning of learning organization. He defines a learning organization is an organization skilled at creating, acquiring, and transferring knowledge, and at modifying its behaviuor to reflect new knowledge and insights. Management. Management need to set clear guidelines for practice, filled with operational advice rather than high sounding aspirations. Measurement. We need better tools to measure learning. This is to ensure benefits have been obtained from learning. He encourages the use of Balanced Score Card (BSC) by Kaplan and Norton. He listed are five main activities for learning organizations such as ; 1. Systematic problem solving. 17 It uses the philosophy and methods of the Total Quality Movements e.g PDCA, fishbone charts etc. 2. Experimentation. This activity is concerned with systematic searching of new ideas and knowledge. It uses scientific method and it bears similarity as the problem solving technique but it is more concerned with expanding the knowledge horizon rather than reacting on the problem just detected. 3. Learning from past experience. The objective is learn from past mistakes and make sure they are not repeated in the future. Boeing, Xerox use such techniques. 4. Learning from others. Not all learning occurs inside organization. Outside knowledge is equally important. 5. Transferring of knowledge. For learning to happen , it has to be spread quickly throughout the organization. Organization gains a lot if knowledge is broadly shared rather than shared among a few individuals. 4.2 d) The Balanced Scorecard (BSC) by Kaplan and Norton. In 1992, Professor Kaplan and Norton came up with the concept of Balanced Scorecard (BSC). They stress that what you measure is what you get. The BSC is a measurement system which includes not only financial measures but also an integrated set of measurements that link to strategy of the company, customer, internal process and employee performance and system performance (fig. 4.2-3) Kaplan and Norton advocate that if you can’t measure it , you can’t manage it. 18 Financial Customer Vision Mission Strategy Learning and growth Internal Business process Fig. 4.2- 3 4.3). Related to willingness ( ROFO model) 4.3.1 The ROFO Model by Ah Bee Goh ROFO stands for ; R- responsibility. O- ownership. F- focus. O- on- time corrective action. Goh has worked in industries for a few decades and he has encountered many situations that problems that are obvious and can be solved promptly remain unsolved for days or sometimes even weeks and months. In his search for answer, he realizes that people are generally responsible for what they do. The disturbing point is that if people are responsible , why is it that problems are not corrected on- time?. He realizes that there is a fine difference between 19 responsibility and ownership. The difference is best explained by using the coffee powder example. The coffee powder example. Imagine a Swiss customer is visiting an organization, let’s say AB company Ltd . at 9 am. A cup of coffee has to be served. Before a cup of coffee can happen, the following events must occur; 1. Coffee powder to be bought yesterday. 2. Sugar and creamer must be bought and be ready yesterday. 3. Water to be boiled early this morning. Suppose the secretary discovers that at 8.00 am that there is no coffee powder available (event 1 has not occurred). The person who is responsible for replenishing the coffee powder is the purchasing clerk and not the secretary Obviously the purchasing clerk has missed her duties. What would the secretary do?. She has two options; Option 1: Does nothing and informs her superior that no coffee can be served as the office clerk had failed to purchase the coffee powder. Option 2: Immediately on her own initiative, goes out to purchase the coffee powder and prepare the cup of coffee. Later, she informs the office clerk that she has missed purchasing the coffee powder and would appreciate she takes appropriate action the next time. If the secretary takes option 1, two unfavourables will occur; Option 1 Outcome Unfavorable 1 -The office clerk gets blamed for not doing her job well. Unfavorable 2-The Swiss customer will not be satisfied as he is not being treated as a guest. He has traveled 10,000 miles to come to AB company and it will be a horrendous experience for him if AB company cannot organize a cup of coffee on- time. How would the customer think ? What impression will he harbour ? Certainly he will not believe that AB company will deliver the goods on- time. If the secretary takes option 2, she behaves in a ROFO manner and this is exactly what the management wants her to act. By taking 20 option2, the customer is oblivious of what is happening but the important point is that the cup of coffee is being served on- time. The secretary takes full ownership of the entire process and ensures that the final objective is fulfilled. In accordance to ROFO model , even though the secretary has served the cup of coffee , her action is still incomplete as what she does is only reactive i.e on-time correcting the problem and this is only the first part . The other part of the duty is to make sure that the same mistake will not be repeated and it refers specifically to “prevention”. She has to inform the purchasing clerk politely that she has corrected the problem and trust her ( purchasing clerk) that she will not miss replenishing the coffee powder. If the secretary were to take option 1, she will not be penalized as it is not her duty to replenish the coffee powder and if we examine further, it reveals that she is also behaving in a responsible manner as ; she discovers the problem and she informs her superior on- time. It is not her duty to replenish the coffee powder. The irony is that the cup of coffee remains not served even though she has behaved responsibly. Therefore she has to expand her responsibility so that she will own the entire process. Fig. 4.3.1a illustrates the entire process. Action 1 Ownership Focu s Responsi bility Ownership she goes out to buy coffee powder herself generate on-time correctiv e action Action 2 she politely informs the office clerk about the missed purchase ©AB Goh 1991 Fig. 4.3.1a 21 Another strength of the ROFO model is that when individuals practicing it , an environment is created for team learning as in the above coffee powder example ; the secretary learns to take ownership and the purchasing clerk learns not to repeat the mistake in a friendly and co- operative spirit. In accordance to GOH’s thinking, people tend to behave in accordance to the job description he has been given when he first enters the factory door. In short, people believe that they are only responsible for what is written in the job description. It is always GOH’ s assertion that being responsible is not good enough. He argues that too many unsuccessful events have happened not because people are not behaving in a responsible manner but because people are not keen to take full ownership of the entire process. GOH states that if organization is able to cascade ROFO throughout the entire company , it will use much less resources than their competitors . For example , ROFO was applied so successful in one company ( Leica Intruments Singapore Pte. Ltd) that its entire quality department ( about 40 staff including quality manager , engineers and inspectors) was disbanded as the control of quality is in the hands of the workers. Production workers own it. The main advantages of ROFO are; a) Teaches people to take full ownership of the entire process b) On – time reacting to the problem. c) Take preventive actions so that problems will not recur. d) Team learning. e) Create a co- operative spirit throughout the company. f) Do away with politicking in company. g) Resources are appropriately allocated and as a consequence use less resources than necessary. Fig. 4.3.1b shows the team learning concept. From this figure , if a staff is confronted with a problem/ task that requires typical knowledge ( indicated in blue arrow) , he will search for the appropriate staff with the right knowledge to assist him in solving the problem/task . This is indicated in blue arrow. The ROFO cycle continues until the whole task is successfully executed. 22 1 Requires more than one action Team learning Team learning Staff with Right knowledge 1 Team learning R Team learning Tasks completed successfully and on – time. O Gaps still unclosed O Fig. 4.3-1b – The ROFO model F Team learning 4.4 Related to the execution literature. Two books are relevant , one is written by a CEO and the other is by a Professor in University of Pennsylvania. 4.4.1. Review on the the book , “ EXECUTION” by Larry Bossidy and Ram Charan. Larry Bossidy , Chairman and former CEO of Honeywell International (Fortune 100 company), says that most companies fail because they are not able to execute well. He studied leaders in organizations and he said that they placed too much emphasis on what some call high level strategy, on intellectualizing and philosophizing , and not enough on execution. Execution is not only the issue facing business to- day , it is also something nobody explains well. He said that many talked about strategy which could be easily developed by anyone by just employing the right consultants. This is the gap many victims have fallen to. To him, execution is simply not something that gets or do not get done. Execution is a specific set of behaviours and techniques that companies need to master in order to have competitive advantage. Many CEOs lost their jobs because they do not understand the true meaning of execution. In the year 2000, forty CEOs of the top 200 companies in Fortune 500 list were either fired or made to resign. This trend keeps continuing. When companies fail to deliver on their promises, the most apparent explanation is the CEO’s 23 strategy is wrong or not appropriate. In Larry Bossidy’s thinking strategies fail because of poor execution. He has many examples to illustrate such as ; 1. When the Compaq board fired the CEO, the board chairman and founder Ben Rosen painfully explained that the strategy was fine and the change as said by him was “ in execution…….Our plans are to speed up decision making and make the company more efficient”. 2. When Lucent’s board dismissed CEO Richard McGinn in October 2000, his replacement, Henry Schacht, explained ; “ Our issues are ones of execution and focus”. If execution is so important, why is it people don’t get it? To be sure most are not oblivious to it but what most do aware is its absence. This is what he terms a GAP nobody knows. To understand execution, he lists 3 points; 1. Execution is a discipline and integral to strategy. 2. Execution is the major job of the business leader. 3. Execution must be a core element of an organisation’s culture. Larry Bossidy recommends 3 building blocks to help organizations to execute better; 1. Building block one- The leader’s 7 essential’s behaviuor. a. Know your people and your business- Leaders have to live their businesses. b. Insist on realism- Realism is the heart of the matter. To begin with, a leader must be realistic himself. He must not hide problems and pretend nothing is wrong c. Set clear goals and priorities- Efficient leaders focus only a few priorities that his staff can grasp d. Follow through- Leaders must follow through the process on all the priorities set. There is no point is setting objectives if leaders are not taking them seriously. Larry indicated that many meetings are held but many left without knowing what are the firm conclusions and the next concrete steps to take. There are no accountabilities assigned. e. Reward the doers- If you want people to produce the results, you must reward them accordingly. f. Expand people’s capabilities through coaching- Normally , a leader possess a wealth of knowledge and it is important such knowledge is passed to his people. g. Know Yourself- Everyone requires strength of character. Larry calls it emotional fortitude. One must be honest and dare to remove poor performers. 2. Building block two- Creating the framework for cultural change. a. Larry refers software as the culture of the company. The hardware of the computer is useless without the software. Most efforts at cultural change fail because they are not linked to improving the business’s outcomes. You must create a culture of execution. 24 3. Building block three- The job no leader should delegate – getting the right people in the right place. Larry emphasizes that three core processes are vital for execution. They are ; 1. The people process- making the link with strategy and process. The people process is more important than either the strategy or operation process. Eventually it is the people who make things happen. If the people process is not right , nothing good will happen in the company. 2. The strategy process- making the link with people and operations. They must know the “ hows” to execute. 3. The operations process- making the link with strategy and people. 4.4.2. Review on the research work which is compiled into a book entitled ” Making Strategy Work- leading effective execution and change” by Lawrence G. Hrebiniak Basically , it deals with the following execution model; 1. Developing a model to guide execution decisions or actions. 2. Understanding how the creation of strategy affects the execution of strategy. 3. Managing change effectively , including culture change. 4. Understanding power or influence and using it for executice success. 5. Developing organizational structures that foster information shring, coordination, and clear accountability. 6. Developing effective controls and feedback mechanism. 7. Knowing how to create an execution- supportive culture. 8. Exercising execution- biased leadership. Professor Lawrence is a firm believer that “ execution” is key to any strategy success as in the above model , he stresses the term , “ execution” appears in 6 out of his 8 items listed above as a model. Like Larry Bosssidy , he streses the importance of developing a culture of execution as depicted in fig. 4.3- 1. 25 culture behavior Organisational performance Feedback and change Fig. 4.3 - 1 There should be clear clarification of everybody’s role , responsibility and accountability.Performance measures are used as the basis of responsibility and accountability as shown infig. 4.3-2. Measurable objectives Accountability for Performance against objectives Execution success Fig. 4.3-2 4.4.3 Review of the research by Nithin Nohria , William Joyce and Bruce Roberson on the topic, “ what really works” . It was a groundbreaking research carried out over a 5 year period over 160 companies on what really makes companies successful. They found four primary practices which are; 1. Strategy- Devise and maintain a clearly stated strategy. No matter whay strategy you adopt, whether it is low cost through lean manufacturing or 26 great customer satisfaction, key is to be clear about the strategy and consistently communicated through the employees and other stakeholders. 2. Execution- Develop and maintain flawless operational execution. How you execute is more important than what you execute. They found no relationship by just embracing one strategic item like outsourcing with another e.g financial performance .And neither did success depend on ERP systems , CRM or the tools and technologies. The real essence is disciplined attention to operations. 3. Culture- Develop and maintain a performance – oriented culture. Create a culture of high performance and incorporate it with fun as well. Reward high achievers directly. They studied 90% of the winning companies strictly linked pay to performance while only 15% of the losers did the same. 4. Structure- build and maintain a fast, flexible, flat organization. There is nothing wrong with bureaucracy , procedures and red- tapes but too- much of them can impede progress. What is important is to have a structure that is simple and link to employees ,vendors and customers. There is no particular structure separates the winners. 4.4.4. Review on an article by Warren G. Bennis and James O’ Toole.- “ How Business Schools Lost Their way”. Both stated business schools are on the wrong track. Here are some highlights; 1. There are a lot criticisms that business schools are not teaching the stuff will help the industries. 2. The graduates are ill- prepared to grapple with the complexity and real life issues that are challenging the industries. 3. These criticisms come not only from employers, students and employees but also from distinguished professors ( from prestigious universities) like Dipak Jain ( Kellog School of management), Henry Mintzbeg from Mac Gill university as well as Deans of other universities. 4. Many professors of management who taught business curriculum had never set foot inside a real business. 5. They engaged too much of “ scientific rigour” that is not relevant to the day to day managing of the business. 6. Employers are frustrated that their freshly minted MBAs even those from the best schools lack skills their organizations need. 4.5 Further discussion on the overall literature research From the above literature review , it can be separated into two classes; one is about knowledge management (KM) and the other is about execution. We have no shortage on researches on knowledge management (KM). KM theories are abundant and many academic models have emerged through research and practices. Knowledge organizations or learning organizations (Dave Bennet and Alex Bennet, 2003, Peter Drucker, 2002, Peter Senge, 1990, I. Nonaka, 1991, Arie De Geus 1997, Johan Roos and Leif Edvinson , 1997 etc) will play a key role in the 27 success or failure of a business. Some even elaborated knowledge frameworks and activities such as capture, retain, exploit and transfer etc ( Alavi, 1997, Arthur Anderson and APOC, 1996, Holsapple and Whinston, 1987, Leonard- Barton 1995, I . Nonaka 1991, Szulanski, 1996, Van Der Spek and Spijkervet, 1997, Wiig, 1993 and etc). Included in KM are technologies that help to assimilate knowledge ( Daniel E. O’ Leary, 2003, Susan Conway of Microsoft, 2003, Geoffrey P. Malafsky, 2003, Paul Gray and Sean Tehrani, 2003 etc). It is undeniable that KM researchers had indeed raised the awareness of the importance of knowledge as a competitive asset in organizations. Many models have sprung up , some are useful ( Nonaka, 1991, Chris Argyris, 1999, David Garvin , 2000, Kaplan and Norton, 2001 ) whereas others are still very academic in nature. Nonaka model helps the industry practitioners to propagate knowledge. There is no doubt that we need knowledge to execute tasks or a company strategy but the basic question remains; “ Is knowledge alone or to what extent , help to execute a strategy successfully?. There are many companies that have great deal of knowledge and yet they fail in business e. g General Motors went bankrupt in 2009 and IBM was in deep trouble in the early 1990s and Swiss Air was taken over by Lufthansa in 2000. The basic question is , “ is KM alone sufficient to execute a strategy, if not what is it?”. If we turn our discussion to the topic of execution , we will soon realize that not many researchers research on it . One point is clear , highly successful companies such as GE, Dell, Walmart , Toyota etc will tell you that the key lies in executing the strategies successfully. Toyota was able to implement its TPS strategy successfully and by far is the number one company leading the world in this field. GE, Motorola and Allied Signal implemented Six- sigma successfully and reaped huge benefits. Jack Welch (GE), Larry Bossidy( Honeywell) , Louis Gerstner( IBM) who were CEOs of global companies all agreed that “execution” is key to success and not by having a brilliant strategy. Larry Bossidy even went further to say that it is a “ gap” nobody knows. They wrote books based on their experiences and therefore cannot be generalized as it is not based on scientific research. Nithin Nohria and his colleagues completed a ground breaking research that successful companies are able to maintain a flawless operational execution. His research falls short of answering us ; 1. What needs to happen first before a flawless operational execution can happen? 2. Are successful companies effective in implementing KM theories? 3. How do CEO, top and middle managers as well as rank and file workers play a role in maintaining a flawless operational execution? Are there any unique roles they play which separate them from other less successful companies?. In another groundbreaking research by Lawrence G. Hrebriniak , he states that execution is key to any strategy. He offers some highlights such as developing a behavioral culture for organizational performance and having clear accountability and roles established. His research has no doubt heightens the awareness of execution culture but falls short of revealing to us what motivates staff 28 to fulfill totally the defined roles and responsibilities. The author has encountered countless situations in his working experience that staff failed to deliver despite clear responsibilities have been assigned. In another paper by Jeffrey Pfeffer and Robert I. Sutton , it states that in today’s modern world of business , there is no shortage of knowhow and yet people still cannot complete tasks successfully. There is too much talk and too little action. They coined the term, “knowing –doing gap” which means knowing a lot but doing little. Most people use smart talk to substitute action. If tasks which are consider not difficult cannot be done , how could one expect strategy to be executed successfully. As the author’s title suggests , Lean Six- sigma strategy consists of two sub strategies ; Lean Production and Six- sigma and how could companies implement them successfully if simple tasks in organizations are not done timely. Whether we call it “ inability to execute or knowing- doing gap , it doesn’t matter as it boils down to the calling that universities and Business Schools need to do more research on this area. Universities have not been helping much for practitioners in industries and no wonder a recent title by Warren Bennis and James O’ Toole , “ How Business Schools lost their way” is really fitting. Therefore it is the author’s objective that by researching on the forces that drive the execution of Lean Six- sigma strategy successfully , it will heighten the awareness that academic researchers and Business Schools need to do more in the subject of executing strategy. 5. PURPOSE OF STUDY The purpose of the study is to develop an operations model for executing Lean Sixsigma strategy in organizations. As the title suggests, the failure of on execution of strategy could be attributed to the twin forces (fig.5.0-1); 1. Lack of relevant knowledge (F1). 2. Lack of willingness (F2). The research will explore whether these the twin forces as mentioned are indeed the main factors . This research is covered at practitioners’ level. The research hope to explore also in the absence of one of the twin forces , what will be the impact in executing the tasks ; will it still be successful or not?. 29 F1 AND F2 FULFILLED F1-LACK OF KNOWLEDGE GA P GAP CLOSED F2- WILLINGNESS FIG. 5.0-1 In the research paradigm, F1 becomes the knowledge competency and F2 becomes ROFO. This is shown in fig. 5.0-2 Knowledge competency Willingness (ROFO) Leads to Execution of Lean 6- sigma Fig. 5.0-2. 6. EDUCATIONAL/ APPLICATION ADVANTAGES 30 The following are the educational and application advantages; 1. Industry leaders will have a better understanding that “ knowledge” is key to future competitive advantage. 2. Industry leaders will understand that the GAP that Lean Six-sigma or other strategies are not executed successfully will lead the company to a spiral of downfall performance. They will also realize that the vital GAP has been ignored by industry leaders for a long time. 3. Many would agree that knowledge is vital but few have a firm grasp of how to capture and how to transfer. This research will expose the traditional ways of thinking about knowledge as inefficient. 4. In the academic arenas, it will show that implementation is very important for industry success and more research will be encouraged in the culture. For example in strategy development , consultants help to come up with an excellent strategy , but when it comes to implementation , it offers little help other than the detail plan of activities . The “ hows” and “whys” are missing. 5. Most would assume that when a clear plan is developed, people will behave responsibly and make it happen. This is far from being so as this research is intended to study whether being just responsible is enough to make things happen. 6. It exposes to the researchers that research on “why execution is not successful “ will be more meaningful to practitioners. 7. The Lean Six- sigma if successfully implemented will give rise to; a. Big savings in cost of good ( can be between 10% and 30%) b. Low inventory. c. On- time delivery to customers improved d. Quality in Parts per million (PPM) . Companies which have successfully implemented Lean Six- sigma have reported quality at less than 5 PPM. e. Uses less manpower and factory space. 8. Industry leaders will have a better understanding that “ knowledge” is key to future competitive advantage. c. To implement Lean concepts and Six- sigma , it requires that knowledge on Lean and Six-sigma should be developed differently for each category of workers. For example, one would not expect supervisors and front- line workers to grasp hypothesis testing concepts and ANOVA. To implement them , it needs learning systems formally set up in the organization as well as understanding of learning behaviour. 9. Lean Six- sigma will enable the organization to have competitive advantage particularly in the areas of cost , quality and delivery. Inventory level will be low and quality will be in the parts per million. Typically productivity improvements for Lean cells are in the region between 10% and 20% or even higher as some had reported 30% to 50% gain. Quality improvements can be significant as some had reported yield improvements of more than 30%. 10. The number of workers employed are much lower after implementation of Lean Six- sigma. It can be between 10 % and 30% lower without jeopardizing the output. 31 11. Finally,if the research proves that the twin forces will close the GAP , it will pave the way for future competition among the industries. 7. RESEARCH DESIGNS , SCOPE AND METHODS. The structure of the study is shown in fig. 7.0-1 Structure of the study Observations Interviews Experiments Quantitative Survey questions Qualitative Descriptive Observe emerging patterns Normative Random sample plus control groups will be applied. ANOVA and interaction effects will be studied Structure interview with two persons per category of knowledge workers In agreement with experiments and interviews Correlative Impact Both methods will be compared to deduce the results Fig 7.0-1 7.1 The research will cover a number of manufacturing factories 1. There will be a classification of knowledge workers in each factory as follows; 32 Category 1- Managers- Managing Directors and those top managers reporting to him directly. They are normally , HR manger, R&D manger, sourcing manager, Quality manager, Financial controller, Production manager etc Included also are middle managers who report directlyto the top managers. Category 2- The Professionals- They are the accountants., engineers, sourcing specialists, planners, tooling specialists , designers and HR executives etc. They report normally to either the top or middle managers. Category 3- The Supervisors- They are the ones who have the expertise at the shop floor level and they supervise the production workers to ensure that they produce efficiently . Category 4- The technicians- They are the repairers and maintenance of machines. They also assist the engineers to carry testing of products and recording of data. Category 5- The Front line workers- They are the workers who assemble the parts into a final product ready to deliver to customers. 33 7.2 Next is the classification of knowledge competencies in the organizations as shown in table 7.2a; Levels Skills/ competency/ knowhow 0 Don’t have any idea 1 Basic concepts. Very fundamental knowhow of the job. E.g Ability to assemble in accordance to simple instructions like tightening screws in sequence. Being aware of Lean Concepts. Six- sigma knowledge= no knowledge at all 2 Procedures knowhow. Understand the procedures as specified by the company . E.g assemble the choke into the housing without scratching or breaking the wire. Perform an electrical function and able to read whether test is passed within tolerance or failed to fulfill the tolerance. Basic understanding of lean concepts Six- sigma knowledge= basic such as awareness Problem solving skills and knowhow. This is first level and requires only basic simple tools to solve the problems like PDCA, Pareto chart, 5 why analysis etc. Also at this level , the problems presented are assumed not complex. Reasonable understanding of lean concepts and its applications. Six – sigma knowledge = good grasp of the underlying principles . Ability to apply onto manufacturing processes and use six- sigma analytical skills. Strong foundation of statistical reasoning and principles. 3 4 Research / experimental experience in problem solving and presenting solutions. This is the second level of problem solving skills . Some detail analysis is required using advance statistical methods ;ike ANOVA and hypothesis testing. Co- 34 ordinating and project management skills are required. In – depth understanding of Lean concepts and can lead and implement the lean project successfully. Six- sigma knowledge= In- depth understanding of six-sigma principles . Ability to use six – sigma problem solving methods and apply across a variety of problems / issues. Very analytical based on scientific reasoning. 5 Creativity and innovation skills/ knowhow etc in problem solving and executing the tasks. This is the advance level of problem solving skills . Problems confronted are complex and may require the search of external knowhow. Co- ordinating and project management skills are required. Besides level 4 Lean concept knowledge, it now includes the ability to continue the Lean concepts to perfection. Six- sigma knowledge = the same as level 4. 6 General management skills/ knowhow. It is a combination of all the levels of the skills ( Levels 1 to 5). Important skill is the ability to allocate resources and make relevant and right decisions when confronted with simple to complex problems. Coordinating , leading , coaching , managing skills are required at this level. Fig. 7.2a 7.3 It is important to note which levels of knowledge competencies should an organization wish to endeavour for its staff . It cannot be that every category of staff will possess the 6 competency levels . A detail analysis will be required to equip which category of knowledge workers with the required levels of knowledge 35 competency. This will be done through interview , author’s personal experience and observations. 7.4 Definition of Knowledge Competency. It is defined as shown in fig. 7.4-1. Six- sigma Lean concepts experience knowledge Knowledge competency analytical On – the job skills Problem- solving managerial Fig.7.4-1 There are basically 4 skills and each is basically defined as follows; 1. Analytical- it refers to the ability to analyse , deduce from the data and problems presented and make useful conclusions. 36 2. On- the job – basically refers to front line , production and technical workers such as , soldering and welding skills, assembly skills and etc. 3. Problem solving- Good knowledge and understanding of using scientific tools such as fish- bone diagram, Pareto analysis, Statistical Process Control tools, PDCA, 5 WHY analysis and etc in solving problems. 4. Managerial – Ability to mobilize workers to perform the required tasks as well as in executing the Lean Six- sigma strategy. It deals with daily making of decisions and allocation of resources efficiently. 7.5 .Scope – the research scope will be expanded by revising fig . 3.4-1 . The revised model of the scope is shown in fig. 7.5 -1. 7 levels of knowledge competency 5 categories of knowledge workers F1=knowledge Execution Of Lean Sixsigma A= remained unsolved B=Solved but not on- time F2=willingness C=on -time Internalization of ROFO D= remained untouched Fig. 7.5- 1. revised research model 7.6 Research methods/ data This is obtained through; 1. Secondary data. 2 Interview. 3. Observations. 37 4 Survey questions 5. Experiments. 7.7 Testing of hypothesis. Using the model of fig.7.5-1 , the following hypothesis will be set up; 1. F1 influence H0: F1 has no influence on “A” H1: F1 has influence on “A” The same hypothesis set up for all other factors ; B , C, & D. 2. F2 Influence H0 : F2 has no influence on “A” H1 : F2 has influence on “A”. The same hypothesis set up for all others factors : B, C, &D. 3. F1 & F2 influences H0: F1 &F2 have no influence on “A”. H1: F1&F2 have influence on “A”. The same hypothesis set up for all other factors : B, C, & D. 7.8 Basically the testing of hypothesis will answer the following 6 questions ( refer fig. 7.8-1; 1. Does high ROFO spirit with low knowledge competency lead to successfully execution of Lean Six – sigma? ( Pos 1) 2. Does high ROFO spirit with high knowledge competency lead to successful execution of Lean Six- sigma strategy? (Pos2) 3. Does high knowledge competency with low ROFO spirit lead to successful execution of Lean Sigma strategy ? ( Pos 3) 4. Does low knowledge competency with low ROFO spirit lead to successful execution of Lean Six- sigma strategy? (Pos 4). 5. Does ROFO spirit alone lead to successful execution of Lean Sixsigma strategy? 6. Does knowledge competency alone lead to successful execution of Lean Six- sigma strategy? 38 H Pos 1 Pos 2 ROFO Pos 4 H = high Pos 3 L= low L L Knowledge competency H Fig. 7.8-1 8. LOCATION AND COVERAGE OF INDUSTRIES It will be carried out on manufacturing industries as follows: 1. 2. 3. 4. 2 companies in Lamphun , Thailand. 3 companies in Singapore. 1 company in Hungary. Possibly 1 company in Germany. 39 9. EXPECTED DURATION AND PLAN The plan is shown in table. 9.0 -1a. Since fig. 9.0-1a is not revealing the overall view , an alternative and complete view is shown is shown in fig. 9.0 -1 b. 1 2 3 4 5 YR1/ MTHS 6 7 8 9 10 11 12 1 2 3 4 5 YR2/MTHS 6 7 8 9 RESEARCH PROGRAM 1.Literature review 2. Initial research topic 3.Review with supervisor 4.Framing of research questions 5.Verify with supervisor 6.Decision of topic 1st yr project/review 7 Work on 1st yr project 8.Refine research topic 9.Write up proposal 10.Final framing of research questions 11.Conduct interviews 12Send out survey questions 13.Data analysis 14.Re-intereview and confirmation 15. Verify with supervisor 16.Treatmentof data;survey vs interview 17. Review with superviisor 18.Write out detail report 19.Publish paper 20 Final presentation of thesis Fig. 9.0 -1a. Partial view. 40 10 1 1 2 3 4 5 YR1/ MTHS YR2/MTHS YR3/MTHS 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 RESEARCH PROGRAM 1.Literature review 2. Initial research topic 3.Review with supervisor 4.Framing of research questions 5.Verify with supervisor 6.Decision of topic 1st yr project/review 7 Work on 1st yr project 8.Refine research topic 9.Write up proposal 10.Final framing of research questions 11.Conduct interviews 12Send out survey questions 13.Data analysis 14.Re-intereview and confirmation 15. Verify with supervisor 16.Treatmentof data;survey vs interview 17. Review with superviisor 18.Write out detail report 19.Publish paper 20 Final presentation of thesis Fig. 9.0-1b Overall view 10. 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