Live Learning Center. Solution-Driven Integrated Learning Paths. Make the Most of Your Educational Experience

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1 Solution-Driven Integrated Learning Paths Educational Sessions Lean Global Supply Chain Basics of Operation Management Demand Management, Forecasting, and S & OP Professional Advancement Special Interest Topics Plant Tours Networking Events/Peer Interaction Materials for Sale at the APICS Bookstore Make the Most of Your Educational Experience Develop a Learning Plan Assess your learning needs Use teamwork Prepare to learn Create your own Action Plan Live Learning Center Sync-to-Slide

2 Randall Schaefer, CPIM, is an industrial philosopher and independent consultant. He is a veteran speaker at APICS events and other manufacturing-based organizations. Schaefer is editor of APICS magazine's Lessons Learned department and is a contributing author to the Society of Manufacturing Engineers' handbook, Material and Parts Handling in Manufacturing. Six Steps to Effective Change Management Steven A. Melnyk PhD, CPIM Randall Schaefer CPIM Introduction The Western Electric Story

3 What is the lesson of this story? Change management is vital Change management is futile Change management may fail Unions can be self-destructive Trick question there are 2 lessons 1. Change management is vital 2. Change management may fail Main Points of this Presentation A poorly thought out, poorly structured, and poorly implemented change process will always fail A well thought out, well structured and well implemented change process may fail but your chances for success are better

4 It Starts with Frustration The sources of frustration are infinite For change to occur, the frustration must be strongly felt by someone in authority There is a six-step process for managing change Step 1 Frustration Reconnaissance A Confirm the frustration is justified Evaluate current, quantitative (numerical) data? Evaluate qualitative (expert opinion) data? Informed opinions may be more valuable than numerical data that only validates the frustration B - Define an alternative and how to get there Describe a desirable, high-level alternative to the condition causing the frustration Describe, at a high level, actions that will take you from the current frustration to the desirable alternative

5 C Find a Champion Respected, task driven, organizational skills, access to resources, authority Need not be the person who first recognized the need for change If your company has no one fitting the above description, then you must go outside the company to find the champion If you cannot Assure yourself, and those above you, that there is good reason for the frustration Describe an alternative to the frustration and a high level action plan to get from where you are to where you wish to go Identify anyone in the organization qualified to lead the change and management will not look outside the organization then FORGET IT

6 Step 2 Determine if its Wise to Go Forward A Determine if peers/superiors will support the change and change process The status quo generates a powerful inertia Top management must be convinced that the status quo costs more than the change It is harder to maintain support for the change process than the change itself Is your management willing to back up words with actions? B Determine the necessary resources Resources will be required; they will cost money Enthusiasm for the change + natural concern for costs = temptation to underestimate the required resources Time, not money, is often the constraint Required time seems excessive to those anxious for the benefits of the change but not involved in the process Multiple changes will conflict for resources C Present the change as consistent with the corporate culture An organization s culture is the source of its stability A change that would clash with the corporate culture a make-to-stock company wants to become make-to-order with selectable options Change leaders must be sensitive to subtle differences in how the change is presented

7 D - Develop the implementation plan Turn your list of required activities (from step one) into a high level implementation plan of sequenced activities, prerequisites, assigned responsibilities, and deadlines At minimum, the plan must be: * valid * acceptable * defensible * feasible If mgmt. support, resources, or implementation plan appear inadequate, what should you do? Go forward; do it with less because that s the answer to everything nowadays Go forward; do as much as possible with the available resources Give up Go forward; depend on the organization to provide resources as you progress Give Up Research shows that when a change fails, most organizations end up worse off than if they had done nothing When a company launches changes with enthusiasm and abandons them as quickly, it burdens future changes with an expectation of failure

8 Step 3 Develop keystone metrics Keystone metrics are a limited number of performance indicators used as reference points The content of the keystones identify the broad intent of the change The data they display shows how the change is progressing Goal double inventory turns Which metric is the keystone? 1 Average setup time for manufactured parts 2 Days supply of inventory 3 Qty. of purchased parts carrying minimum buy quantities 4 Average through-put time for manufactured parts Days supply of inventory is the keystone Average setup time for manufactured parts Qty. of purchased parts carrying minimum buy quantities Average through-put time for manufactured parts are detailed metrics that that would be developed to support the keystone metric

9 Clarify the keystone with a gap analysis Keystone gap analysis fulfills 4 important functions 1. Defines where we are 2. Defines how far we have to go to get to where we wish to be 3. Becomes the basis for measuring progress 4. Becomes the basis for creating reasonable expectations Reasonable expectations are vital to maintaining top management support Expectations must address: Where we wish to be How long we will take to get there The pace of change The path of change if the pace is non-linear Step 4 Develop Detailed Metrics Detailed metrics communicate what each individual must do to support the change Detailed metrics keep people focused and coordinated Detailed metrics show the progress of activities necessary to support the change Detailed metrics must: be verifiable and quantifiable use easy to understand standards clearly state acceptable/unacceptable results be presented in a format meaningful to those responsible for results

10 Goal Convert the factory to lean production Which is the bad metric? 1 Percentage of employees convinced that lean is vital to the future of the company 2 Percentage of manufactured parts with secondary routings 3 Percentage of suppliers capable of delivering just-intime 4 Percentage of manufactured parts with SMED capability Bad metric -- Percentage of employees convinced that lean is vital to the future of the company Difficult to gather the data Each employee would have to be questioned each time the metrics were posted Impossible to verify Would require you to believe what they tell you Impossible to quantify How much conviction constitutes convinced? Beware of metrics distortion People fear change because it is an opportunity to fail The greater the change, the greater the temptation to attach a less threatening interpretation to the change Remember the telephone game? Assure that the people s understanding of the change does not become watered down

11 Step 5 Sell and manage the change Selling the change refers to generating acceptance throughout the organization Convincing employees to support the change is the most important part of managing the change Do the usual things - articles in newsletter, open meetings to address employee concerns, etc. Selling the change will result in employees divided by the 10/10/80 rule Anticipate the 10/10/80 rule 10% - the supportive few will immediately see the benefits and actively support the change 10% - the nasty few will invent reasons to be uncooperative and will speak against the change at every opportunity 80% - the passive majority won t care about the change but will go along as long as management supports the change Focus on the 80% Early success can convince the 80% Change projects have several components You cannot address them all at once It is tempting to first address components that promise the biggest reward It is prudent to first address components with low complexity, low cost, short lead time and a high probability of success

12 To transform a company into a lean operation, which activities should be addressed first? Layout fabrication departments into work cells Create assembly lines capable of mixed model production Identify which machines and dies must be made SMED capable and estimate the cost for each Determine the costs of eliminating order minimums for purchased parts Implement a preventive maintenance plan for all workcenters Determine which manufactured parts should be stocked and which ones should be managed via lean techniques Which activities should be addressed first? Determine which manufactured parts should continue to be stocked and which ones should be managed via lean methods Determine the cost, if any, of eliminating order minimums for purchased parts that carry minimums Publishing the metrics The leader must periodically publish the metrics and be prepared to answer questions about them Never hide a metric because it is trending in the wrong direction When metrics trend wrong, and management continues to support the change, it sends a powerful message to employees

13 Step 6 Intervene when necessary When a metric is out of control: Judge whether the cause was foolish expectations or process failure Correct foolish expectations Judge whether process failure was smart failure or stupid failure Metrics - smart and stupid process failures Smart failures Everyone did the right thing but results were not as anticipated because something was overlooked when the metric was developed Change the process and/or metric Stupid failure An employee deliberately fails to do the right thing and results reflect it Discipline the employee; terminate if the attitude continues KNOW THE DIFFERENCE SMART FAILURES VS. DUMB FAILURES knowing how to manage each is vital to successful change management

14 Discipline is vital Tolerating an uncooperative employee shows other employees that management is not serious about the change It encourages others to take shortcuts, not follow instructions or snipe at the change Out with the old Intervene to stop employees from continuing old processes Inertia will convince Mary she must continue her old processes until Joe first changes his It may be necessary for Joe to change processes before Mary but it s not an acceptable excuse Out with the old Mary must not be allowed to hunker down with her old, comfortable processes She must notify the change leader that Joe is holding her up Joe should be disciplined for not changing his processes as instructed Mary should be disciplined for not alerting management that Joe was causing her delay

15 Final comments When you ve finished these six steps, you ll have done everything to maximize the chances of your change being successfully Implemented Evaluated the initial frustration Evaluated the wisdom of going forward Developed a few keystone metrics Developed detailed metrics to support the keystone Sold the change to employees and managed the details of the change Intervened when necessary This does not assure success but makes it more likely Final comments If you have done an excellent job on each step, your odds increase even more Excellence seems to attract luck to you and cooperation from others Contact info Steven A. Melnyk, PhD., CPIM Melnyk@MSU.edu Randall Schaefer CPIM Rschaefer@magimfg.com