Fat Results from Lean Implementation – Part 2

Understanding Reactive Management of Process Performance

Organizations demonstrate reactive behavior when process improvement is a reaction to historical performance data.

On the reactive management chart, actual performance can be charted to show if it falls above or below the baseline or “should.” Any departure from the baseline, whether it is above or below, can be designated as a “deviation.” If performance is above the baseline, further opportunities are explored by identifying the root cause for the superior performance so that it can be replicated to sustain the improvement. If performance is below the baseline or there is a trend for downward performance, the gap or deviation in the process metric is analyzed for root cause so that it can be removed to improve performance. Root cause analysis is pursued through a three-question lens:

  • Is there a deviation?
  • Is the cause unknown?
  • Do we want to know the cause?

If the answers to all three questions are affirmative, the organization should conduct a root cause analysis. This analysis leads to identification of causes and development of multiple alternatives. Action is taken on the best-balanced choice with risks assessed.

Why do we term this as reactive? It is reactive because the process improvement analysis is based on historical data. Some precipitating changes in the past have led to a performance deviation, and attempts to remove it or replicate it are being made as a reaction to this altered state. This is the low-hanging fruit of performance improvement. An organization following this route can quickly ramp up its performance by making the “should” or upper level the “best demonstrated practice.”

The critical success factors for reactive process management include:

  • Understanding process performance goals
  • Monitoring the baseline
  • Being specific! Managing from overly broad or inaccurate data will create costly cost/time overruns

Typical gains of 15-20% productivity, reductions in work-in-process inventories, and reduction in floor space and travel times are examples of the low-hanging fruit that well-executed lean events can reach in the early phases of an organization’s lean journey.

Understanding Proactive Management of Process Performance

Proactive management of processes generally begins in phase II of a lean program. This can be found in organizations where lean is not an ad hoc, one-off initiative—lean principles have been embraced and structured programs are in place.

At this point, the improvements from the phase I or “reactive phase” have helped create a new, improved baseline. A new “should” is identified for continuous improvement in the next phase of the lean journey. In this stage, improvement teams work beyond the previous “best demonstrated practice” and move into uncharted territory.

In the reactive state, the team looked at cause and effect. In proactive mode, attention shifts to the “likely cause” and “likely effect.” Lean teams in this phase spend time shaping the future. Kepner-Tregoe defines the rational processes for these activities as Potential Problem Analysis and Potential Opportunity Analysis.2

In Potential Problem Analysis, the team addresses the likely cause of a process performance decline by taking preventive actions. If the likely cause does occur, despite preventive efforts, the team is prepared for damage control with planned contingency actions. The team sets “triggers” for these actions that act as warning lights or the signal to launch contingency measures that reduce the impact of the likely effect.

Potential Opportunity Analysis helps teams explore the future for better-than-planned process performance. In such cases, the teams need to decide about promoting the likely cause—they want more of it so process performance exceeds expectations. They take actions and set triggers to capitalize on the potential effect. When things do go better, they are prepared to take full advantage of the opportunity. Unfortunately very few teams are proactive enough to exploit things that go better than planned.

A lack of data and precedence can be a barrier to proactive management. But data and precedence exist if you seek information on the cause or effects of the same or similar processes.

The chart of managing flow time opportunity provides an example of the proactive management of a process. A lean team charged with improving flow time may focus on multiple likely approaches that reduce the work content on the critical path or remove elements from it. Each approach can be analyzed for potential opportunity by identifying likely causes, taking promoting actions, and planning actions that will capitalize on process flow time improvements.

People Management in Lean Projects

Lean brings change in the way people relate to processes within the organization. Change can hurt people both with its magnitude and speed, and it can be stressful. This is especially true if the improved productivity resulting from lean implementation creates a perception that fewer hands will be required at the workplace.

Expanded responsibilities, team ownership of a process, and the emphasis on disciplined flexibility that characterize lean programs often lead to resistance. Monetary rewards can only go so far to overcome this resistance.

The lean journey can be seamless and less painful when the management of people’s performance systems are an integral part of the lean program. To fully grasp the reactive and proactive people management aspect of lean projects, it helps to know the elements that can affect people performance and the drivers that can help manage behavior.

In its most simplistic fashion, human performance fits nicely into the process track of low end, high end, and a “should” or baseline level of performance. If there is a performance gap, the true cause should be as identifiable as the gap in any other type of performance.

Unfortunately this is easier said than done. The challenge in people performance management is that, while the “actual” can be obvious, the “should” is often not clear, not commonly understood, or not communicated.  At Kepner-Tregoe we recommend using a rational approach to increase the likelihood of getting the “should” behavior—also known as performance—in lean projects. We call this approach the “Performance System.”

How the Performance System Drives Project Behavior

The Performance System model provides a practical, useful framework that clarifies human performance. Using this model, managers can construct and analyze each component as it relates to an employee, team, or work group, and then improve and align it to support performance expectations. Tracing its roots back to the early years of behavioral science research by B.F. Skinner, we’ve validated this model in numerous project and work environments. The five components of the performance system model are:

  • Performer: the individual or group expected to behave/perform
  • Situation: the immediate setting or environment in which a Performer works, such as the project environment
  • Response: the behavior (also known as performance) of the Performer
  • Consequences: events that follow the response and increase or decrease the probability the Response (behavior/performance) will occur again, given the same Situation
  • Feedback: the information that Performers receive about progress toward their goals; it helps guide their Response (behavior/performance)

The five elements of the performance system are interlinked and should not be considered or administered on a stand-alone basis. Lean projects that impact an entire organization require a performance system hierarchy that is mapped to the organizational hierarchy. This clarifies the organizational dynamics and integrates both people goals and organization goals.

The Performer is usually an individual but can have a broader definition as a team or larger organizational unit. This broader definition is most useful in lean implementation.

The Situation refers to the immediate environment or setting in which the Performer works—the lean project team, the department, or business unit of which the Performer is a member. Three key elements describe the Situation—performance expectations, signals to perform, and the work environment. Each element of the Situation impacts an individual’s or lean project team’s behavior.

Consequences are events or conditions that follow a Performer’s Response and increase or decrease the probability that the Response will occur again, given the same Situation. Consequences can be encouraging or discouraging to increase or decrease the probability of future Responses.

Feedback is a critical component of the lean project performance system. It provides Performers with performance-based information about progress toward the organizational goal of lean enterprise. Comparison of actual performance to the plan guides the Performer in maintaining or modifying Responses/behavior.

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