How to Build a Strategic Transformation Practice
- 1. HOW TO BUILD A STRATEGIC TRANSFORMATION PRACTICE James Woolwine
- 2. CMMI Capability Maturity Model Integration (CMMI) is a process improvement training and appraisal program and service administered and marketed by Carnegie Mellon University and required by many DoD and U.S. Government contracts, especially in software development. Carnegie Mellon University claims CMMI can be used to guide process improvement across a project, division, or an entire organization. CMMI defines the following maturity levels for processes: Initial, Managed, Defined, Quantitatively Managed, Optimizing. Currently supported is CMMI Version 1.3. CMMI currently addresses three areas of interest: Product and service development — CMMI for Development (CMMI-DEV), Service establishment, management, — CMMI for Services (CMMI-SVC) Product and service acquisition — CMMI for Acquisition (CMMI-ACQ). CMMI originated in software engineering but has been highly generalized over the years to embrace other areas of interest, such as the development of hardware products, the delivery of all kinds of services, and the acquisition of products and services. The word "software" does not appear in definitions of CMMI. This generalization of improvement concepts makes CMMI extremely abstract.
- 4. LEAN MANUFACTURING/PRODUCTION Lean manufacturing or lean production, often simply referred to as "lean", is a systematic method for the elimination of waste within a manufacturing process. Lean also takes into account waste created through overburden and waste created through unevenness in work loads. Working from the perspective of the client who consumes a product or service, "value" is any action or process that a customer would be willing to pay for. Essentially, lean is centered on making obvious what adds value by reducing everything else. Lean can be seen as a set of principles whose goal is cost reduction by the elimination of waste. These principles include: pull processing, perfect first-time quality, waste minimization, continuous improvement, flexibility, building and maintaining a long term relationship with suppliers, automation, load leveling and production flow and visual control.
- 5. LEAN ENGINEERING Lean Engineering is a concept developed to increase the efficiency of engineering departments within manufacturing companies. It is the continual process to increase the amount of valid engineering data (Engineering Intelligence) produced per dollar invested. The process involves an honest review of the current situation, followed by a series of adjustments to address inefficiencies one at a time. Each incremental step is planned out and justified before changes are made. This "success and repeat" method works to gain the confidence of all the team members from top management on down to the base worker.
- 6. LEAN ENGINEERING/MANUFACTURING It is important to note that, while both Lean Engineering and Lean Manufacturing focus on improving efficiency and share some of the same concepts, all the concepts are not the same. Lean Manufacturing is a proven process used to increase the production efficiency of a manufacturing shop. Attempts to use Lean Manufacturing principles in an Engineering department are met with only minimal success. This is largely due to the fact that Lean Manufacturing increases efficiency through inventory control and production process improvements and Engineering doesn't have inventory and in most cases is not a "production" environment. The intention is to use Lean Manufacturing concepts where they make sense and adjust or add new concepts that make sense within Engineering.
- 7. LEAN ENGINEERING REVIEW Engineering Review The first step in the Lean Engineering process is to have an honest review of the current situation within Engineering. This involves defining Engineering's role within the larger organization as well as identifying the Resources and Processes that make up Engineering. Defining Engineering's Role To define Engineering's role within the larger organization a few major questions need to be answered. Who is Engineering's Customer? One of the concepts borrowed from Lean Manufacturing is to define Value based on the customer's perspective. In Lean Engineering we need to determine who Engineering's customer is in order to determine the Value of tasks performed and deliverables created. Most Engineering departments have a number of customers ranging from the shop floor to purchasing to the end customer.
- 8. LEAN ENGINEERING REVIEW What does Engineering Produce? Once we've determined who Engineering's customer is we need to take a closer look at exactly what Engineering produces. Engineering deliverables usually include drawings, specification documents, Bills of Material and so on. As a whole we will refer to this type of information as Engineering Intelligence. It is the physical or digital record of the organization's Intellectual Property. How do you measure your Engineering Intelligence production? Before any improvements can be made, it is first important to understand what is being improved. In order to improve engineering though-put we first have to measure that through- put. Determining a unit of measure should be done at a business level rather than a department level. This is a difficult task, as all measurable items, such as the number of drawings, jobs, estimates, etc. do not all have the same Value. As mentioned earlier it is very important in a Lean process to determine Value from the customer's perspective. Keep in mind, often these customers are internal customers. The Formula for Generating Engineering Intelligence Philosophically speaking, in order to generate any output, Resources must be used in a Process over a certain amount of Time. Resources + Processes + Time = Output
- 9. ITIL/ISO/DEMING ITIL, formerly known as the Information Technology Infrastructure Library, is a set of practices for IT Service Management (ITSM) that focuses on aligning IT services with the needs of business. In its current form (known as ITIL 2011 edition), ITIL is published as a series of five core volumes, each of which covers a different ITSM lifecycle stage. Although ITIL underpins ISO/IEC 2000 the International Service Management Standard for IT service management, there are some differences between the ISO 20000 standard and the ITIL framework. ITIL describes processes, procedures, tasks, and checklists which are not organization-specific, but can be applied by an organization for establishing integration with the organization's strategy, delivering value, and maintaining a minimum level of competency.
- 10. ITIL/ISO/DEMING It allows the organization to establish a baseline from which it can plan, implement, and measure. It is used to demonstrate compliance and to measure improvement. Responding to growing dependence on IT, the UK Government's Central Computer and Telecommunications Agency (CCTA) in the 1980s developed a set of recommendations. It recognized that, without standard practices, government agencies and private sector contracts had started independently creating their own IT management practices. The IT Infrastructure Library originated as a collection of books, each covering a specific practice within IT Service Management (ITSM). ITIL was built around a process model-based view of controlling and managing operations often credited to W. Edwards Deming (sometimes credited with the post-WW2 Japanese economic miracle).
- 11. WHAT SHOULD A CONSULTING COMPANY DO? Develop an evaluation methodology/company assessment process Should be free Should be done within a short period of time Assess every company for process maturity Based on the evaluation, offer needed remediation services The delivery mechanism will be very different for each company…sometimes software, sometimes process, sometimes people, and sometimes structural/procedural Very few consulting companies both implement, consult, and transform companies
- 12. WHERE TO BUILD A TWO-WEEK ASSESSMENT MODEL Engineering Manufacturing Global Supply Chain Sales Finance (Are the days of the 3 day close over?) Profitability Marketing Organizational Internal Communication Governance (Maintain the change) Customer Satisfaction NPS (Net Promoter Score)