The Road to Excellence Requires Vision, Time, and Fortitude
“Generally the fire, ready aim methodology does not work well however, there are some areas that don’t require much decision making” – FitzGerald
Michael Treacy and Fred Wiersema & Great Business Performance
Above all the incredibly insightful researchers Michael Treacy and Fred Wiersema determined how to create great business performance. They performed an analysis of business and subsequently were able to group business strategies into three primary areas. Consequently these business strategies lift a business above the competitors. Finally they found that the three strategies were:
- Operational Excellence,
- Customer Intimacy, and
They determined that very good companies focus on one of those three areas and become excellent in that area. Truly great companies do the same thing except that they also become exceptional performers in the remaining two areas. Implement Lean Six Sigma and therefore march ahead in desire to create Operational Excellence, a competitive advantage.
Business Improvement Leads to Operational Excellence
This requires a maniacal focus on decreasing operational costs and thereby increasing the profit margin.
Example: Toyota can deliver a custom configured car to a customer within three weeks, consequently, their nearest competitor takes three months. As you drive around and look at dealerships, look at all the cars on the lot that are inventory. This inventory ages, is fried in the sun, and takes up real estate. Inventory has a quantifiable cost to business. If you can deliver a car in three weeks, where most of the cars in that three-week inventory are already sold, your inventory costs plummet and therefore you are operationally efficient.
Lean Six Sigma, Business Improvement, and Operational Excellence
Lean Six Sigma:
- Increases process flow by removing activities a customer would not pay for,
- Decreases cost by having operators perform less activities, and
- Finally increases quality by performing less activities on a product or service.
Every process contains activities. The activities are either value-added or non-value-added. A simple definition for value-added means that a customer will be willing to pay for it. For example this could include an okay for an order or a processing of a tax return. Alternatively a non-value-added activity could be walking over to getting a stapler or excess signatures. Consequently removing non-value-added activities creates business improvement. Toyota is constantly removing those activities. Non-value-added activities take up much more time than value-added activities subsequently, it makes sense to focus there first. Constantly removing non-value adding activities creates Business Improvement.
A Value Stream determines which process to focus on. The performance of the Value Stream is much more important to know than the performance of an individual process. This is because the Value Stream contains all the processes needed to satisfy a customer demand.
This Presentation Defines the Components of a Business System:
How I See a Business System
This is an overview of the components of a business system. A system can be very complex but the business system following is relatively straightforward.
Firstly this strategic focus is about creating sticky customers that appreciate you delivering exceptional value. Lean Six Sigma uses the Voice of the Customer to guide execution, hence, make customers feel special.
For example: This is case example of a moderate sized town that cares for its citizens. Ft. Wayne, Indiana repairs a pothole within 24 hours of notification, and has an online building permit request system. Both of these services strengthen the connection between the citizen and the cities service providers.
Innovation or Product Leadership
Focus on Innovation and subsequently garner customer loyalty by making sure their customers have the newest, coolest products.
For example: Apple’s leading innovation, Siri, allows you to query phone applications for information. Consequently, competitors have not caught up to this capability yet.
Moreover, the business strategic plan will dictate where to start. As a result of resource availability, work could be performed in multiple areas at once.
Operational Excellence Delivered because Lean Six Sigma accelerates processes:
Lean Six Sigma combined with tools of the Toyota Production System create Business Operational Excellence. Perform near continuous fat removal or as Lean Six Sigma refers to it as Waste.
The Power of a Value Stream:
A a Value Stream is an extremely valuable concept. Toyota operates their system based on Value Streams. Value Streams are powerful and are an important component of every system.
This is a Simple Yet Valuable Business Model
There are many business models and this is yet another one. The concept is relatively simple but the construct has tremendous value. Think of each Value Stream in your company being represented by a knob. The larger the knob the more important it is in the range that it can be rotated over represents your authority or capability to change. Take a look for more detail.
Every Business Wants to Become Agile
Business Agility means that the business can react quickly to changes in its environment. Whether it’s changing direction or reacting quickly to changing market agility is what gets you there. The Toyota Production System is a very agile system. You can either adopt the benefits of the Toyota Production System or you can implement Lean Six Sigma to remove fat or what we call waste and generate a quickly turning business.
Gain Profound Knowledge of your Business Processes and subsequently know where improvement is needed:
Improvement starts with Profound Knowledge. The Toyota Production System gives Toyota Profound Knowledge of every process in their system. They do this with the previously mentioned Value Streams. Once you learn to manage by Value Stream, utilizing the Profound Knowledge it gives you, you will never go back.
In Conclusion, This is Business Improvement
Great Business Performance firstly means Profound Knowledge of your system, building a competitive advantage through Operational Excellence, and constantly removing fat or non-value-adding activities from your system. Finally, the goal is to run a Lean Business System and better the competition.