Strategy Deployment Linking Lean to Business Strategy (Production)

Definition:
Strategy Deployment is a process that ties senior leadership into enterprise-wide
business-improvement practices.
Policy Deployment:
It translates corporate strategy into measurable objectives.
Hoshins:
The action plans generated from policy deployment process.
(Roberta S. Russell, operation management fourth edition P#48)
Strategy Deployment originated with "Hoshins Kanri" which was a core part of the
leadership-control practices of TQM (Total Quality Management). The name Hoshins
Kanri is variously translated as Hoshins Planning/Policy Deployment/Management by-
Policy. At its core it is an annual planning process that develops enterprise-improvement
plans, and then includes a monthly review process.

There is a great deal of discussion of what to measure/how to measure (we all know our
accounting systems are not very helpful-and even misleading-when it comes to cost
management, for instance). Some of this effort has led to the balanced scorecard
approach. During my career, I was often working in a corporate system that seemed to
measure so many things that it tended to ensure you did not go backwards. But it also
tended to make it difficult to go forwards. These complex measurement approaches
consumed a tremendous amount of management time and focus (preparing for monthly
operations reviews/conducting reviews, etc.), but resulted in a kind of measurement
gridlock, where you were concerned that focusing on one measurement would lead to the
deterioration of some other measurement. This consumed lots of time but resulted in little
to no actual improvement.

Over the ensuing years, Hoshins Kanri has evolved further to become the most important
linkage between improvement philosophies/practices and the enterprise business strategy.

There is a great deal of discussion of what to measure/how to measure (we all know our
accounting systems are not very helpful-and even misleading-when it comes to cost
management, for instance). Some of this effort has led to the balanced scorecard
approach. During my career, I was often working in a corporate system that seemed to
measure so many things that it tended to ensure you did not go backwards. But it also
tended to make it difficult to go forwards. These complex measurement approaches
consumed a tremendous amount of management time and focus (preparing for monthly
operations reviews/conducting reviews, etc.), but resulted in a kind of measurement
gridlock, where you were concerned that focusing on one measurement would lead to the
deterioration of some other measurement. This consumed lots of time but resulted in little
to no actual improvement.

Example:

Toyota has demonstrated an exceptional ability to differentiate between the forest and the
trees, and the company's approach to measurement is typical and innovative. Other than
measures relating to totally new products or services, Toyota's True North metrics cover
all aspects of improvement-and impact all the key lines on income statements and
balance sheets-while focusing on only four key metric areas. The four key areas are:
Human Development, Quality, Cycle Time, and Cost/Productivity. Human Development
(HD) is encompassed in the Toyota phrase "we build people, before we build cars."

The foundation for success is the skill and motivation of the human resources of any
organization. In a manufacturing operation, the HD measurements might include safety
performance. For any organization on a lean path, HD measurements would include
measuring the breadth and depth of week-long Jishukin improvement events (also called
kaizen events). The Quality metric is driven by customer-based measures-customer
quality issues and customer-loyalty measures. The Cycle-Time metric is built around how
long it takes to provide enterprise-wide capability to customers-end-to-end cycle-time
improvement. And the Cost metric is primarily focused on Productivity improvement.
The assumption about cost is that the organization should first be focused on improving
its own value-added cost (total cost less outside purchased material), over 90% of which
is driven by how many people it takes to deliver value to customers.
Toyota typically has a hierarchy-HD is first, Quality next, Delivery/Cycle Times after
that, and Cost/Productivity, last. On any given decision, a manager knows that he will
give up his cost performance to sustain HD, Quality, and Delivery performance. If he still
is unable to meet his metric goals, he would sacrifice Cost and Delivery to sustain HD
and Quality. On the other hand, Toyota would expect countermeasures to be taken so
that, over a year's time, all four metric areas would show double-digit improvement rates
(typically 10-30% every year).

Now consider the income-statement impact of a lean transformation. The top line of the
income statement sales growth-is driven upward by improvement in quality and
responsiveness (including new-product development times). Studies by George Stalk and
Thomas Hout (Competing against Time, published by the Free Press) have shown that for
most businesses, if you can consistently reduce your customer lead time by ¾ (75%), you
will grow at 2-4x your industry growth rate. This is a blind spot for most management
teams. I assume that it's due to the belief that they cannot fundamentally improve their
responsiveness. But the net outcome is that management focuses on the inventory
reductions that result from flow, while missing the really big impact that comes from
growing at 2-4 times your normal growth rate.

http://findarticles.com/p/articles/mi_qa3618/is_200603/ai_n16123417/ visited at
4/10/2009

Services:

Business executives spend a great deal of time creating a meaningful “vision” for the
company, and develop strategic plans based on that vision. Often, however, only a few
key executives are aware of the vision and the plan. Is it any wonder that people and
organizations seem to have conflicting goals and agendas?
To effectively fulfill the vision, companies must align their people, processes and
activities with that vision. Without this alignment, different functions or departments will
follow their own, often conflicting, goals and impede the organization’s progress.

• Crystallize your vision

• Develop an actionable mission statement
• Identify critical success factors and
• Align goals, activities, people and processes to chart a course for business
success.

http://www.procompass-ms.com/strategy.html visited at 4/10/2009