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Managing on Purpose: a presentation on strategy deployment (hoshin) by LEI COO Mark Reich

(Sept. 27 Update: Reich, who managed strategy deployment in North America at Toyota, will teach an in-depth workshop on hoshin, October 24, 2016, at the annual AME conference: http://bit.ly/AmeHoshin There still are some seats available.)

"Managing on Purpose," the forthcoming book by Mark Reich, shares a strategic approach -- hoshin kanri-- that connects the work of individual problem solving that was explained in "Managing to Learn" by LEI CEO John Shook to the problems of the organization.

Hoshin planning is a strategic framework aimed at creating an organization capable of sustained high performance. It does so by establishing and executing strategic initiatives throughout an organization by focusing people on innovation which is supported by continuous daily improvement; while developing capability through the strategic delegation of responsibility and the subsequent self-development.

Practicing hoshin requires a fundamentally different mental model than the prevailing approach of most organizations. Unlike the top-down command-and-control organization in which a few key leadership people set the direction for the company based on boardroom-generated data, leaders engage and align the entire organization continually, both vertically and horizontally. This requires a PDCA management structure which recognizes that process is as important as results.

Mark Reich
As COO, Mark oversees day-to-day operations at LEI, including marketing, finance, strategy, publishing, conferences, and training. He also supports new product development and leads the Co-Learning Partners program, assisting companies engaged in lean transformation.

Before coming to LEI, he spent 23 years at Toyota in Japan and North America, most recently as general manager of the Toyota Production System Support Center (TSSC). As a hands-on GM, Mark directly implemented the Toyota Production System (TPS) or managed its implementation in a variety of industries, including automotive, food, furniture, and healthcare, among others.

Mark doubled the number of companies supported by TSSC from 20 to 40. He transitioned it from for-profit to nonprofit status so it could better support its original mission to strengthen North American manufacturing and help any organization interested in implementing TPS. He expanded the client base beyond manufacturing to hospitals, schools, low-income food distribution, and nationally prominent nonprofits

Previously, he was assistant general manager of the corporate strategy division where he managed and implemented Toyota's North American strategic (hoshin) process, designed jointly with Toyota’s Japan headquarters.

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Managing on Purpose: a presentation on strategy deployment (hoshin) by LEI COO Mark Reich

  1. 1. Managing on Purpose Mark Reich © 2016 Lean Enterprise Institute. All rights reserved.
  2. 2. Managing on Purpose © 2016 Lean Enterprise Institute. All rights reserved. 2 1) Connect the work of individual problem solving that was explained in Managing to Learn to the problems of the organization 2) Address challenges organizations face to build alignment and develop bottom capability to solve challenging organizational problems LEI will publish a book on organizational alignment: Managing On Purpose Individual Problem Solving/PDCA Organizational Problem Solving/PDCA
  3. 3. What Problem Is Legal Sea Foods Trying to Solve? Shrink the Lead Time For the Entire Value Stream from Processing to Serving The Processing Center The Restaurant Long Lead Time
  4. 4. What Problem Is Legal Sea Foods Trying to Solve? The Processing Center The Restaurant Reduced Lead Time Result = Fresher Fish!
  5. 5. Before After
  6. 6. Legal Sea Foods – Improved Guest Experience © 2016 Lean Enterprise Institute. All rights reserved. 6
  7. 7. 1. What problem is SunPower trying to solve? Values: a.k.a. “our culture and how we conduct ourselves every day” Energy Cost Carbon Solar Energy, Waste, Water 2016 2019 2016 2019 Positive Impact on People Mission: a.k.a. “the work to be done” Purpose: We change the way our world is powered 7© 2016 Lean Enterprise Institute. All rights reserved.
  8. 8. © 2016 Lean Enterprise Institute. All rights reserved. 8 Lean Transformation Framework – 5 Dimensions
  9. 9. The Transformation Questions © 2016 Lean Enterprise Institute. All rights reserved. 9 1. What is our purpose ,what value to create, or what problem are we trying to solve,? 2. How do we do and improve the actual work? 3. How do we develop the capabilities we need? 4. What management system and leadership behaviors are required to support the new way of working? 5. What basic thinking or assumptions underlie this transformation?
  10. 10. Why do organizations struggle to sustain a transformation? Most common reasons we see: 1) Spread lean broadly, not deeply 2) Focus only on results or KPI, not building capabilities 3) Run as a program, not built into management culture  Not full alignment across the organization  Not tied to organizational purpose © 2016 Lean Enterprise Institute. All rights reserved. 10 Management is not aligned to organizational purpose!
  11. 11. Why do organizations struggle to sustain a transformation? • People at all levels – from the CEO to the front line worker - must feel aligned and connected to all levels of the organizational purpose • We need a mechanism – a management system – to align people to purpose © 2016 Lean Enterprise Institute. All rights reserved. 11 Management is not aligned to organizational purpose!
  12. 12. 5 Myths of Strategy Execution 12 Myth 1: Execution Equals Alignment Myth 2: Execution Means Sticking To The Plan Myth 3: Communication Equals Understanding Myth 4: A Performance Culture Drives Execution Myth 5: Execution Should Be Driven From The Top Reference: Harvard Business Review, March 2015 Issue
  13. 13. 5 Myths of Strategy Execution 13 Myth 1: Execution Equals Alignment Reference: Harvard Business Review, March 2015 Issue Myth 4: A Performance Culture Drives Execution Myth 5: Execution Should Be Driven from the Top “If Managers believe that hitting their numbers trumps all else, they tend to make conservative performance commitments.” “When Managers cannot rely on colleagues in other functions or units, they compensate with a host of dysfunctional behaviors – duplicate effort, let promises to customers slip…” “Frequent and direct intervention from on high encourages middle managers to escalate conflicts rather than resolve them…”
  14. 14. What is Lean’s Alternative? © 2016 Lean Enterprise Institute. All rights reserved. 14 • How do we build alignment to corporate objectives across the organization? • How do we build capability for bottom up innovation(kaikaku)? • How do we drive towards a aligned objectives, not merely towards targets? • How do we align purpose to people and the culture?
  15. 15. © 2016 Lean Enterprise Institute. All rights reserved. Lean Transformation Framework How to Align These? Purpose Basic Thinking
  16. 16. © 2016 Lean Enterprise Institute. All rights reserved. Lean Transformation Framework Purpose Basic Thinking What Management System and Leadership Behaviors are needed?
  17. 17. © 2016 Lean Enterprise Institute. All rights reserved. Hoshin links the Framework Hoshin Connects Organizational Purpose to Basic Thinking
  18. 18. © 2016 Lean Enterprise Institute. All rights reserved. Hoshin links the Framework Hoshin Connects the work to the people
  19. 19. Hoshin Breaking Down Company Problems and Solving Them at Each Level 19 Company Hoshin Department Hoshin Group/Individual Problem Solving Think Why at Each level Team Member Motivation Horizontal Alignment A3 A3 A3 A3
  20. 20. © 2016 Lean Enterprise Institute. All rights reserved. 20 Hoshin 1)Ties the front-line problem solving(A3, etc.) to the organizational objectives 2)Aligns leadership vertically and horizontally to the organizational objectives
  21. 21. Legal Sea Foods – the Traditional Management Way © 2016 Lean Enterprise Institute. All rights reserved. 21 “Legal Sea Foods Ice Cream!” The RestaurantsThe Processing Center HQ “The 2nd Floor” Aligned? “Popcorn Shrimp!” Make the Ice Cream? Space Available? Outsource? What’s the recipe for Popcorn Shrimp? The 1st Floor
  22. 22. Legal Sea Foods – the Aligned Hoshin Way © 2016 Lean Enterprise Institute. All rights reserved. 22 The Processing Center The 1st and 2nd Floors ALIGNMENT! What problem our we solving for our customer? Let’s define our priorities together The Restaurants
  23. 23. 23 Provides vision and direction a) Reflect on Performance b) Define annual objectives c) Align as a team Clarify problem to be solved with each objective –A3 Coaches and Guides Roger Roger’s Team Hoshin Catchball at Legal Sea Foods 1 23 4
  24. 24. Managing on Purpose © 2016 Lean Enterprise Institute. All rights reserved. 24 1) Connect the work of individual problem solving that was explained in Managing to Learn to the problems of the organization 2) Address challenges organizations face to build alignment and develop bottom capability to solve challenging organizational problems LEI will publish a book on organizational alignment: Managing On Purpose Individual Problem Solving/PDCA Organizational Problem Solving/PDCA

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