Change vs. Improvement | Operational Excellence Quick Hits
Quick Hits share weekly tips and techniques on topics related to Operational Excellence. This week’s theme relates to Organizational Performance Part 8: Change Management Decisions. We hope you enjoy the information presented!
Speaker 2: (00:06)
In today’s session, we’re going to talk about change management. So change management is an important element of the management decision-making, that the organization needs to do as they’re transitioning towards operational excellence. So of course, part of the key decision-making is understanding what to do, and also more importantly, what not to do. So if the company has developed the right KPIs, which are the key performance indicators, then each change we should be able to map to what is the effect on the KPIs. So if the change doesn’t map to moving the needle on one of the KPIs or multiple KPIs, then you need to ask yourself, is it really something that we should be doing?
Speaker 2: (00:53)
So there’s tons of opportunities in the organization to make changes. The problem is not every change is going to translate into an improvement. So what we need to do is focus on the changes that actually translate into improvement.
Speaker 2: (01:09)
And we’re looking at improvement from a global perspective, not isolated to a specific department or a specific process. So of course, part of the change management system is this change management matrix. We’re going to have people that don’t understand why we need to change, but we’re going to have some people that understand the negatives of not changing. So these are the people that can be your best internal advocates, because these are the things that they’re fighting every day, that are biting them in the butt, preventing them from getting better performance. So we look at these as the alligators. Then what we want to do is the positive change is the pot of gold. What are we trying to achieve as the organization? And we’re tying these initiatives to the KPIs in the organization.
Speaker 2: (01:58)
We also have the risks, which are the negatives from the change. So to be a complete solution, we need to make sure that these negatives of change are addressed before we implement the solution. Otherwise they’ll block the improvement. And of course let’s not stop doing the things that we do well. So these are the positives of not changing. So continue to do things we’re doing well, eliminate the things that we’re not doing well, minimize the risks of the change and achieve the pot of gold.
Speaker 2: (02:30)
So to understand what we should focus on and what we should not focus on, we use the five focusing steps. So the first step in the five focusing step is to identify the system’s constraint. So of course we need to know, where is the system constraint? Is it internal to the company, or is it external to the company? Because of it’s an internal constraint versus an external constraint, the actions that we’re going to take are totally different.
Speaker 2: (02:58)
Second step is decide how to exploit the constraints. So before we exploit the constraint and open up the constraint, we need to understand what things we can do to get more capacity from the constraint. And before we implement those, we need to understand the effects on the system. So the third step is subordinate to all non-constraints to the constraint. So depending on what your decisions are and how you’re going to exploit, you might have to go take some activities and subordinate before you implement the actions of the constraint, if you want to maintain stability and keep the constraint in a fixed location within the organization.
Speaker 2: (03:39)
Step four then, is to elevate the constraints. So implement the actions that you decided in step two. And then lastly, it’s the constraint’s broken go back to step one. So you can actually control where you want the constraint to be.
Speaker 2: (03:52)
So systematically, you can move it to a strategic location in the company, or you can keep it where it is, if it’s the best position for the constraint for the overall organization. So one key here is don’t let inertia become the constraint. I’ve seen so many companies that implement some improvements, they get significant gains, and then they become complacent. So complacency is a dangerous thing. Don’t become complacent. Once you become complacent, things will start to stagnate and then actually start to drift backwards. So this is the session on how to focus, where to focus, where not to focus and more importantly, how to manage change as you’re transitioning through the operational excellence journey.