Tuesday, July 20, 2010

Metric Waste

“Metric Waste”
Do you have a ton of metric waste; an overabundance of key performance indicator (KPI)?
Many facilities today have become metrics collectors, never throwing away metric and generating reports with lots of data but no real useful information. It gets to a point in many facilities that they have full time equivalent (FTE) head count just collecting metrics data and generating reports. These metrics and reports may never be viewed or used to make business decisions or check on organizational progress.  Does this sound familiar? Let us look at a few points to consider when building a metric strategy.
Most levels of the organization can manage no more than ten metrics at one time. So, if you look at an organizational chart and assign your metrics, can you limit them to ten at each level? Some metrics will exist at multiple levels and you must keep that in mind as you complete this exercise. The best way to look at your metrics is to start at the top with the metrics that address the facility’s vision and purpose. Then your can tier or cascaded down from that goal forming a tree of metrics that measure what is important to each level. When you complete the cascading metrics you should find that each levels metrics are supported by the level below.
Secondly, a portion of the metrics should be driven by the current improvement strategies. For example, if you are trying to improve work order history, one of your maintenance level metrics could be percentage of work orders containing follow up comments or notes. This will drive organizational focus on that portion of the improvement strategy until it becomes the new norm.
The third point to remember is that metrics are not “holy metrics”. We don’t have to keep them forever. We put them in place to insure change or prevent change. When insuring change you may find that you gather and measure more often however when preventing change you can measure at a lesser frequency because they should not change as quickly. The key here is to look at the trends. If the metric value very seldom changes much this could mean that the change that the metric is driving is now ingrained in the culture and is the new way of doing business. This is the point where you can eliminate the metric or extend its frequency of observation to the metrics standard you use for preventing change. Once we eliminate a metric we can then add a new one to our dashboard that addresses a change that we are trying to make or a process we are trying to understand.
The forth point to consider is leading versus lagging indicator. If you are managing based off of only lagging metrics it is attune to diving a boat while only looking at your wake. If you practice this philosophy you could find yourself happily driving into an oncoming freighter sized problem with no real warning.
If you are going to bench mark your metrics with other facilities then the definitions and data sources become very important but if you are using them internally only then you can concentrate on the delta and look for improvement or change. If you are looking for standardization one great source is the Society for Maintenance and Reliability Professionals (SMRP). They have a great new metrics compendium that provides all the details you need on sixty plus common use metrics.
In the end, metrics are just tools and should be used when you need them. They should provide a look at the future and not just the past and there should not be thousands of them in play all at once. If you design your metrics strategy with a bit of thought you can eliminate the wasted time and resources and have a much more effective program that drives business results.

Friday, July 9, 2010

Dynamics of Sustainable Change for Leaders

Change is never instantaneous. The change process happens in stages, for both groups and individuals.  The five stages, represented by Roman numerals (figure 1), stand for the following:

Stage I = Discovery: Don’t know what they don’t know.
Stage II = Discomfort: Don’t like all this change.
Stage III = Development: Don’t know if we will ever get there.
Stage IV = Demonstration: Don’t want to go back to the old way.
Stage V = Defend: Don’t want organization changes to derail the new way of doing business.

Each stage has characteristics and leadership needs that change as you progress. Many leaders miss this point and struggle when an individual’s needs change.
Let us look at Stage I Discovery, where the participants are hearing about the changes for the first time and trying to get a clear picture of what is about to occur. There is some excitement because this is something new but limited understanding of what it is. Think about the last time you were party to a new piece of software or a new tool, at first, what feelings did you have? Now as we move through the stages think about how you traveled through them with your change. Interestingly in the beginning you will typically see a bump in performance of the systems or process you are about to change based on the Hawthorne effect. The Hawthorne effect states that as we focus attention on the system, it will perform at a higher level due to that attention. As a leader in this stage you need to provide clear direction and encourage the enthusiasm that exists by providing as much information as possible.  Ensure that you tell those who will be affected by the change about what is in it for them and why the success of the change should be important.
As they move into stage II, discomfort will occur. Some even call this stage the “valley of despair.” Here the affected will begin to complain about the process and the changes. They will find reasons to miss meetings that pertain to the changes and will profess their love for the old way of doing business. This is by far the toughest stage and the most important from a leadership stand point. The leader must support the change in decree and deed. We will talk about more of the requirements of this stage in the leadership section but the key point to remember is that leaders must show focused support and unwavering direction.
As the Development Stage III progresses, and the affected individuals begin to develop confidence, the results and the return on investment will begin to materialize. This is a stage where the leader no longer has to be as directive in style and can assume a role that looks more like a coach.   Key traits of this stage include individuals no longer asking for solutions but instead asking to bounce ideas off of the change leaders. The leader will need to focus on highlighting the successes that have occurred and using them to keep building the confidence of the group.
In Stage IV Demonstration, the group or individual has reached the level where they can demonstrate the new way of doing business to others. They are gurus if you will because they no longer need anyone to tell them what to do our how to do it. They still need the change leaders to support them but now it is by giving them opportunities to shine. One key warning for leaders is to not overload these folks just because they can do it or they will burn out. This is a common problem at this stage.
In Stage V Defend, the team is defending the change against both entropy and organizational changes. All organizations have some variability in the results they receive from improvement initiatives. This occurs naturally as leadership changes or production requirements fluctuate. In figure one Stage V, We show good sustainable change as a dampened sine wave. It is shown in green. As the sine wave undulates the process adherence varies and the return on investment also changes. In a facility that has not addressed each of the 5 elements of change, the process can look more like the red or blue lines. In each of these cases, the return on investment expected and shown as the shaded green area is taken away due to the organizations ability to adhere to the new business processes that have been put into place. Leaders at this stage are less important if the change process has been well executed and ingrained into the new culture but that does not mean that they should not be involved at all. Leaders should be monitoring progress and sustainability through the use of metrics or balanced score cards while making sure new individuals in the organization get a proper on boarding into the new business processes. Continuous improvement efforts should be part of stage five to off-set any losses and keep a focus on sustainable change.
Each of the stages has its own unique issues and solutions. However, if you stay focused on your people and apply the correct leadership styles, you can help them move through the process in the most expedient manner while making the project results materialize quicker.