Management Operating Systems: The secret to performance improvement
By Jaco Pieterse Principal Consultant, DuPont Sustainable Solutions
Aligning daily actions with corporate goals is a common business challenge, but when companies don’t get it right, any number of problems can result. Too often, companies will apply the same Key Performance Indicators (KPIs) across multiple levels of the business instead of assigning specific KPIs that individuals can act upon at their respective levels; or will focus on lagging drivers rather than leading KPIs that can protect or release value. Companies regularly overlook gaps in the organization that could easily be closed with an effective system, choosing instead to blame poor performance on competency gaps.
When this occurs, the trust relationship between management and workers breaks down, resulting in issues like micro-management. Another common problem occurs when companies neglect planning and reviewing phases, throwing all their energy behind execution. The result is always a mess of firefighting tactics, multiple versions of the truth across different layers of the organization, and time wasted in ad hoc meetings just to share information as opposed to scheduled discussions geared towards driving action and outcomes.
These are just a few examples of what can happen when a company has failed to establish a systematic way of working, aimed at translating its operating strategy into specific and actionable targets throughout the organization. These issues can be easily and effectively rectified through the use of a solid Management Operating System (MOS).
DuPont Sustainable Solutions (DSS) addressed this problem with a mining and metals company that had trouble aligning its front line with its overall business challenges, despite the availability of masses of data and reporting tools and some improvements after field visits by senior management. The business’ front line simply lacked the architecture and systems to support its performance management and decision-making.
Working in conjunction with a client, DSS created a MOS that helped the company achieve stable and predictable operational performance whilst ensuring sustainability of current and future improvement initiatives. The move marked a turning point for the company, which achieved its best performance on front line KPIs within a rolling 12-month period, setting a benchmark for operations within the affected department. The company’s front line gained critical visualization and information flow to support them and a platform to help them deliver on future objectives.
The front line also took full ownership of applicable KPIs and objectives. Recurring failures were addressed through rapid resolutions; there was a significant improvement in critical leading KPIs and a significant risk reduction of top risks.
So, what is a MOS? In short, it’s an aggregate of tools, processes and disciplines required to achieve holistic business objectives. At the core of MOS is the systematic application of these tools to drive business performance through a four-stage cycle called the PDCA, or “Plan-Do-Check-Act”.
The PDCA is a highly effective model for continuous improvement implemented by DuPont in its own manufacturing plants in the United States and used by DSS to help its clients. With this model, one DSS client, Egyptian manufacturer Titan Cement Company, completed a new €150 million manufacturing line on time and with Zero Lost Time Incidents in 6.5 million man-hours, a notable accomplishment given that over 1,300 workers on site had little to no experience working to high safety standards.
A critical component of a MOS is the consistent application across all levels of an organization to ensure sustainability and an accelerated improvement curve. For this reason it must be designed to be simple, intuitive, transparent and readily available. It should clearly outline key objectives for the identified target audience and must link all information shared to the vision and company objectives.
With an elegantly implemented MOS, bureaucratic red tape and wasted time are minimized and sustainable value creation is ensured, as it seamlessly integrates the organization and the associated information flow.
With this in place, it then becomes possible to quickly ascertain existing gaps in any operation and subsequently implement an improvement plan, based on a priority evaluation of the identified issues. This is accomplished through a review of the existing meeting map and plotting meetings based upon their frequency of occurrence and their design intent from a PDCA cycle point of view. Afterwards, evaluating the effectiveness of the identified meetings provides significant insight and a clear roadmap of actions to take in order to close performance related gaps.
A good MOS should ensure:
- Focus on clear and expected outcomes: A MOS facilitates organizational alignment of key risk reduction and business performance priorities and goals.
- Transparency of business priorities and performance: Clear and consistent communication enables the organization to proactively adjust focus and effort toward optimizing business performance.
- Effective cascading and alignment: Operational objectives, linked to strategic goals and company vision, are reflected across the entire organization at the relevant required frequencies. Shortened response times are essential during the execution phase and therefore at front line operations.
- Timely escalation: Challenges are identified rapidly and steered toward quick resolution.
- Integration: A common system is implemented, integrating within the line and across departments to break up silos and achieve common objectives.
- Stabilization and predictability of performance: Processes are stabilized through short interval controls applied to identify KPIs, enabling predictability of performance.
- Establishment of foundation for improvement initiatives: A MOS is a permanent platform – a managing process – on which to implement current and future initiatives in a sustainable manner.
In our experience, it is often easy to identify value release opportunities through a top-down diagnostic; however, the desired value release can only be achieved and sustained when the whole organization, at all levels, is committed to the execution. It then becomes essential to identify KPIs and metrics and cascade them through the organization, clarify roles and responsibilities and build capabilities, define effective meeting structures and associated flow of information, design and implement the required rituals and leader standard work activities, and strengthen the application of problem solving tools while enhancing the continuous improvement process.
This article is part one of a three-part series about the role of MOS in performance improvement. Read part 2: Management Operating System: The cultural underpinnings of an effective MOS and Part 3: Effective MOS implementation as enabler to achieve a predictable operational performance and ensure sustainability
To create a bespoke improvement program that truly meets the needs of your company, contact DSS today.