Management 2.0: Management and Leadership System 2.0, #1

Copyright © 2020 by Forrest W. Breyfogle III

Published by Citius Publishing, Inc., Austin,

Texas: www.citiuspublishing.com

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Paperback ISBN: 978-1-7352882-0-8

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Other Books by Forrest W. Breyfogle III

Statistical Methods for Testing, Development, and Manufacturing

Implementing Six Sigma, Second Edition: Smarter Solutions Using Statistical Methods

Solutions Manual, Implementing Six Sigma: Smarter Solutions Using Statistical Methods

Managing Six Sigma: A Practical Guide to Understanding, Assessing, and Implementing the Strategy That Yields Bottom-Line Success

Wisdom on the Green: Smarter Six Sigma Business Solutions

Lean Six Sigma in Sickness and in Health: An Integrated Enterprise Excellence Novel

The Integrated Enterprise Excellence System: An Enhanced, Unified Approach to Balanced Scorecards, Strategic Planning, and Business Improvement

Integrated Enterprise Excellence, Vol. I: The Basics: Golfing Buddies Go Beyond Lean Six Sigma and the Balanced Scorecard

Integrated Enterprise Excellence, Vol. II: Business Deployment: A Leaders’ Guide for Going Beyond Lean Six Sigma and the Balanced Scorecard

Integrated Enterprise Excellence, Vol. III: Improvement Project Execution: A Management and Black Belt Guide for Going Beyond Lean Six Sigma and the Balanced Scorecard

Solutions Manual: Integrated Enterprise Excellence Volume III: Improvement Project Execution

Lean Six Sigma Project Execution Guide: The Integrated Enterprise Excellence (IEE) Process Improvement Project Roadmap

The Business Process Management Guidebook: An Integrated Enterprise Excellence BPM System

Leadership System 2.0: Implementing Integrated Enterprise Excellence

Table of Contents

Foreword

Preface

1 The Starting Point

2 The Mexico Meeting

3 Methods

4 Initial Issues

5 Continuing Problems

6 The Discussion

7 It’s in the Details

8 Turning Point

9 Improvement

10 Enlightenment

11 Making Progress

12 It was good to relax. The 19th Hole

13 Epilog

14 Appendix A: Web Pages for IEE Articles, Video, and Software

15 Appendix B: Datasets, Scorecards, and Companies

16 Appendix C: How-to-IEE Books and Assistance

16.1 IEE Implementation Books

16.2 IEE Implementation Assistance

17 Acronyms

18 Glossary: Golf Terminology

19 Glossary

20 References

21 Acknowledgments

Foreword

A friend, who is a finance executive at a semiconductor company, told me he was involved with a cost-cutting initiative handed down from upper management. My friend’s functional area of the business was a fabrication (fab) line at a plant in Texas. An examination of operating expenses showed a significant expenditure for air conditioning, especially in the summer. The building’s current air conditioner setting was 71.3 degrees Fahrenheit. My friend asked the plant engineers about raising the temperature a couple of degrees to save some money. The plant engineers immediately called a meeting and showed him yield curves; for every 0.1 Fahrenheit degree of change, there would be a drop in yield at the factory. The cost of the yield drop would far exceed the savings in air conditioning costs. It is not unusual for semiconductor fabs to understand their processes that well, with this degree of precision.

Well, it turns out that there are tools for your business that can deliver real insights into precisely what your processes can provide, even if your business is distant from semiconductor fabrication. Organizations that can benefit from these business tools include healthcare, manufacturing, services companies, and virtually any other for-profit or non-profit organization, including school districts and government agencies.

You used tools your whole life; tools have enabled you to do things better or even allowed results that would be otherwise impossible. You used tools in your home shop and your professional career. Sometimes tools are physical things; other times, they are software-based.

Yet, many executives who have risen to their level often lead their organizations based on what others have done, and lots of digging through data and reports to try to figure out what is really happening in their business. When the inevitable frustrations set in, firefighting occurs, the pressure increases, and results are tentative at best. The core of the problem is the lack of practical tools for executives to understand the underlying capabilities of their processes and the steps needed to improve those processes.

Forrest Breyfogle, with his Integrated Enterprise Excellence (IEE) system, provides the tools every executive needs. Forrest has spent the better part of his career studying how business processes operate and which tools and techniques work and the limitations of each. He now offers a structured approach for use company-wide to identify and drive actions that get results. In this book, he introduces these concepts in a novel format. Four golfing buddies share insights from their respective industries and from the issues they face. This book is written with a backdrop of golf to increase the understanding of IEE concepts and benefits from the methodology. This book presentation approach lets Forrest weave in IEE concepts, also showing how lesser techniques fail executives.

So why not just publish a book that details these IEE techniques? Well, Forrest Breyfogle has written that book and several books on various aspects of the topic. The first book, initially released in 1999, Implementing Six Sigma, is considered by many a definitive book on the implementation of Lean Six Sigma concepts and is used as a textbook in many universities. Several other later published books provide the details of implementing IEE. However, this book is needed because too many executives don’t understand that they require tools to run their organizations.

Executives may think that current management tools like red-yellow-green scorecards are sufficient, but these tools can lead to harmful consequences. Conversely, to produce the best results, one should have advanced tools and skills and know-how to use them appropriately and with precision. That brings the challenge of educating many top executives about these tools in an accessible way. This book fulfills the need by first presenting business challenges from different industries that every executive can identify with. He then illustrates associated frustrations from ineffective tools and their poor results. Forrest follows by demonstrating how to achieve success through the IEE Business Management System.

I have worked at two companies two decades apart, where each set a record for the fastest growth in the Fortune 500. Both were primarily engineering- and manufacturing-focused at the time. Many of the top performers started as engineers before they advanced to upper management. What became a common occurrence was that these engineers, masters of rigorous technique and expert users of tools, wanted to wing it as managers. Many of these managers failed in their new roles – they had been up-and-comers as they advanced through the technical-skill ranks but petered out when they went into management. These people were just as smart after promotion as they were before. The problem was that there was not a clearly defined set of tools for these new managers to use to analyze processes and lead their teams.

This book is that vehicle to help many in an organization understand that they need to use the right tools to improve their area of responsibility, just as they used the most effective tools when they started their careers.

For leaders such as CEOs, General Managers, Senior VPs, and Division Heads in any organization, the tools described in this book bring clarity and mechanisms to drive the right, efficient, improvement behavior to their core processes.

Once you’ve studied this book, in written or audio form, you will want to share it to help others understand and get excited about how IEE techniques can improve their company’s performance while lowering the stresses from firefighting and unsatisfactory results.

Imagine thoroughly understanding what your processes are capable of, and the steps needed to address process improvement. Imagine knowing that if your people present this information to you, it means that they are productively involved with analyzing and improving processes. You will have a company that regularly improves, can see those results in real gains, and has operational productivity. And as a leader, you’ll develop a culture based on objective analytics and tangible results.

IEE is the system that you need, providing the tools that get results. Enjoy this book and share it with your friends and colleagues.

Bob Ashenbrenner

President

Durable Mobility Technologies, LLC

Preface

Many well-respected companies such as Circuit City (Galuszka 2008), GE (Bloomberg 2019), K-mart (Egan 2015), and Sears (Colvin and Wahba 2019) have experienced a significant decline or completely collapsed.

Other esteemed corporations such as Dell (Hess 2010) and Wells Fargo (Wolff-Mann 2019) made news headlines because they set and gave focus to the achievement of organizational measurement goals that led to harmful behaviors.

Companies have replaced their CEOs with an expectation to improve the company’s bottom-line but instead experienced problems, including a short-term tenure. (Sullivan 2007 and Wiersema 2002).

BP’s Gulf of Mexico oil spill (Broder 2011) and Blue Bell Ice Cream’s listeria contamination (Axelrod and Rand 2015) are two examples of the dreadful consequences, including death, which can occur when esteemed companies do not respond to operational issues in a timely fashion.

Why did I write this book? Management at these companies had good intentions and many highly skilled people. Still, they lacked an objective, repeatable, and focused set of processes that would have shown management the real state of their business. They had used either ad-hoc management or ineffective methods that did not deliver predictable business improvements.

There are some major elephant-in-the-room business management issues that no one seems to be addressing. In my opinion, this not-talked-about elephant is an underlying component of many past and current business problems. Presented in a story format, I discuss many over-the-years observed organizational practices. This dialogue includes resolutions to numerous unfavorable, if not destructive, methods commonly used in organizations.

This book provides a no-nonsense next-generation business management system that minimizes the risk of organizations doing bad things. Besides, the described methodology provides direction for establishments to move toward the achievement of the 3Rs of business; that is, everyone doing the Right things and doing them Right at the Right time.

This book, written as a novel, describes an enhanced business management system called Integrated Enterprise Excellence, which has an abbreviation IEE, pronounced I-double E. The IEE system offers much flexibility, including a means for effectively managing an organization remotely.

IEE provides a comprehensive 9-step system that CEOs, Presidents, General Managers, executives, managers, leaders, practitioners, and others can use to resolve elephant-in-the-room management issues such as:

Business goals not being met.

Scorecards leading to harmful, if not destructive, behaviors.

Persistent day-to-day firefighting problems.

Business strategies that are very generic and/or difficult to translate to organizational work environments.

Lean events and other improvement projects that can consume a lot of resources but often do not offer a quantifiable benefit to the business as a whole.

Lean Six Sigma process improvement deployments that have improvement projects, which are either not completed in a timely fashion or make substantial financial claims that are questionable.

Whether documented or not, an organization has processes for executing work. These processes have output responses (Ys) and inputs (Xs). This relationship can be expressed mathematically as Y=f(X); that is, a process Y response is a function of the Xs that impact a process-output response. Organizations often give focus to managing the Ys without giving much attention, if any, to improve the Xs or the process that can lead to the enhancement of a process’s output response. Y-Management can lead to very harmful organizational behaviors, including playing games with the numbers to make situations appear better than they are.

Leadership often has the desire to improve an organization’s key performance indicators (KPIs) or to achieve its objectives and key results (OKR) quickly. This metric performance enhancement aspiration can lead to the setting of specific, measurable goals for a future time-period. However, often these measurement objectives are arbitrarily set with no mention about improving the underlying processes that can lead to performance measurement response enhancements so that there is long-term, business-as-a-whole benefit. A meet-the-numbers style of running a business is Y-Management and can result in many forms of unfavorable organizational behaviors and lack of sustainability. IEE provides a system for overcoming Y-Management issues.

This book follows four successful friends who met in graduate school while pursuing their MBAs. Now they meet for golf outings to continue their friendship, discuss their careers and compete in a friendly golf game for the price of a meal. The challenges they face in business and their personal lives are all too familiar. Golf provides an intriguing metaphor for the game of life, with its complexities and challenges, changing conditions, chances for creativity, penalties, and rewards. Moreover, golf is the game most often associated with the business.

Hank, Jorge, Wayne, and Zack share their experiences and pursuit of improvement in their organizations during golf outings. During these rounds of golf, they discover powerful new insights that help them see how they can improve their games, both in business and golf, through the IEE business management system.

Book Overview

Many traditional business practices give focus to the achievement of vague but well-intended executive-retreat-developed strategic statements that often have wording like ‘expand production capacity’ or ‘develop global logistic capabilities.’ Common-place business management methodologies that target the execution of hard-to-get-your-arms-around, organizational-handed-down strategies can lead to harmful, if not destructive, behaviors.

Everyone should be well aware that organizations need to improve and adapt to survive. Because of this aspiration, a business may undertake a process improvement program such as Lean or Six Sigma; however, often, these process improvement program undertakings are not long-lasting. The reason for this occurrence is that, when leadership undertakes a program self-assessment, they often find that they cannot see a tangible big-picture positive financial impact from the conducted process improvement program’s efforts. Far too often, process enhancements from an improvement program occur in silos, where there is little if any positive impact on the big picture.

This book also describes organizational issues that commonly occur with tried-but-not-so-true techniques like strategic planning, the balanced scorecard, red-yellow-green scorecards, table-of-number reports, hoshin kanri, and Lean Six Sigma programs. There also is an explanation of fundamental issues with statistical control charting, process capability analyses, and acceptable quality level (AQL) sampling quality tools and what to do differently to address the problems.

The tools in an automobile mechanic’s toolbox can be handy. However, a mechanic must know not only how to use their tools individually but also be able to apply the right tool correctly at the most appropriate time when addressing a vehicle issue. Similarly, many business management and process improvement tools can be very beneficial; however, not unlike an automobile mechanic, the people in an organization must know when and how to use specific tools for the management and improvement of an organization.

This book provides a roadmap for the wise utilization and execution of business management and improvement tools, both at the enterprise and process-improvement-project level. Described, for both manufacturing and transactional processes, is the use of traditional statistical and non-statistical techniques so that there will be whole-enterprise benefits.

Proven techniques for improving an organization’s bottom-line and better addressing customer wants, needs, and desires include analysis of variance (ANOVA), analysis of means (ANOM), brainstorming, cause-and-effect diagram, design of experiments (DOE), 5 whys, Gemba Walk, general linear model (GLM), hypothesis testing, kaizen event, kanban, Lean, muda, Pareto charts, plan-do-check-act (PDCA), poka-yoke, regression analysis, scatter plot, total productive maintenance (TPM), value stream mapping, visualization of data, and wisdom of the organization (WOTO). Chapter 9 of this book provides a discussion between Jorge and Hank about the use of a web page. This page uses hyperlinks directed toward the application of these tools in an enhanced IEE Lean Six Sigma process improvement Define, Measure, Analyze, Improve, and Control (DMAIC) roadmap.

This book also describes the benefits and usage of the 9-step Integrated Enterprise Excellence (IEE) business management system. Among other things, IEE provides a means to create and report 30,000-foot-level operational and satellite-level financial performance metrics, which separate common-cause variation from special-cause events. When only common-cause variation is present in a process-output response, the IEE high-level 30,000-foot-level performance-metric reporting methodology utilizes data from the recent-region-of-stability of a process’s output response to provide a predictive statement estimate. When a provided 30,000-foot-level futuristic statement is undesirable, this metric enhancement need pulls for the creation of a process-improvement project. This IEE approach for improving a Y response gives focus to enhancing the associated Xs and processes that impact the magnitude of a Y’s response level.

Appendix A, Web page 13 provides access to software for creating 30,000-foot-level and satellite-level reports described in this book. The author intends to have a no-charge licensing fee for this software.

In Chapter 7, there is a discussion about the Positive Metrics Poor Business Performance: How does this happen? article (Reference Appendix A, Web page 2). Provided in this article is an overview of the IEE system. The article-described IEE value chain offers a means to structurally link, through hyperlinks, organizational 30,000-foot-level and satellite-level metrics with the processes that created them. Organizations can use the described Enterprise Performance Reporting System (EPRS) software to provide automatic updates to high-level IEE value-chain performance metric reports throughout the business.

This book presents a blended analytical and innovative approach for creating an enterprise improvement plan (EIP). An EIP graphic shows organizational 30,000-foot-level IEE value-chain metrics that, when improved, will enhance an organization’s overall satellite-level reported financials. In IEE, all value-chain measurements have an owner who is responsible for the performance metric’s response and associated process enhancement efforts.

IEE offers an operational excellence system for providing products and services. IEE provides a framework for orchestrating and supporting systems such as integrated management system (IMS) and Quality, Health, Safety, and Environment (QHSE) management. IEE not only can work in conjunction with standards such as ISO 9001, ISO 45001, and ISO 14001 but also provide a holistic infrastructure that supports compliance and continual improvement for these programs. The IEE system can provide the framework for ISO 9001 certification and total quality management (TQM) implementation.

The IEE system offers a vehicle for implementing Deming’s management philosophy and achievement of the Baldrige Award and Shingo Prize. IEE can be used to enhance an organization’s Toyota Production System (TPS) and quality management system (QMS) implementation efforts.

Appendix A provides many website linkages that offer additional how-to information about the book described techniques. Included in this appendix is application software for applying the methodologies.

Comparison of IEE to Other Systems

Figure 0.1 provides a comparison of the IEE system to taught methodologies in a typical MBA program and traditional organizational deployments of Six Sigma, Lean, and the original balanced scorecard methodology.

This figure summarizes the benefits of IEE; however, as highlighted in the table, the IEE business management system is different. This book describes and highlights the benefits of these differences.

Main Characters in the Book

Hank is one of the four golfing MBA friends. As a VP, he works at Hi-Tech Computers, which has been using its Lean program to execute kaizen events to reduce organizational waste.

Zach is one of the four golfing MBA friends. As a VP, he works at Z-Credit Financial, which has been using the balanced scorecard to improve the execution of the organization’s strategic statements.

Wayne is one of the four golfing MBA friends. As a VP, he works at Wonder-Chem, which has been using Lean Six Sigma to execute improvement projects to reduce costs.

Jorge Santos is one of the four golfing MBA friends. As a VP, he works at Harris Hospital, which discovered and successfully implemented the Integrated Enterprise Excellence (IEE) business management system.

Janice Davis is the CEO of Harris Hospital. She has an MBA degree.

Ron Wilson facilitates IEE deployments in organizations.

Reader’s and Listener’s Guide

For the audio version of this book, the book’s figures, acronyms, glossary, and references can be downloaded from SmarterSolutions.com/iee-audio-book1-supplemental-material. Figures in this supplemental material are larger than those provided in this book. Readers of this book can use this additional information to examine a figure’s smaller printed details more closely.

When explaining IEE and its benefits in this book, there are references to a few figures and web page links. To avoid disrupting the book’s flow by referencing a figure number or another portion of this book for each reference occurrence, readers and listeners of this book can use the following to locate the referenced information.

IEE one-minute video: Figures 7.1 and 7.2; Appendix A, Web page 1 (video link)

IEE overview article, Positive Metrics Poor Business Performance: How does this happen?: Figures 7.3 – 7.14; Appendix A, Web page 2 (PDF copy)

IEE 9-step business management system: Figure 6.1

IEE value chain in Positive Metrics Poor Business Performance: How does this happen? article: Figures 7.9-7.11

EIP (Enterprise improvement plan) example: Figure 7.12

IEE Define, Measure, Analyze, Improve, and Control (DMAIC) project execution roadmap: Figure 9.3

Capturing Voice of the Customer: Appendix A, Web page 7

Enterprise Performance Reporting System metrics (EPRS-metrics) software: Appendix A, Web page 13 (30,000-foot-level metric-reporting software)

Enterprise Performance Reporting System IEE (EPRS-IEE) or (EPRS) software: Appendix A, Web page 14 (IEE system software that includes IEE value chain with automatic metrics updating)

SmarterSolutions.com web pages for additional information about IEE methods: Appendix A, Web page 11

IEE implementation books: Appendix C

This book references computer hyperlinks. Access to these links could be through a desktop computer, notebook computer, tablet touch screen, or smartphone. A click of a mouse or some other variation of the word click describes navigation through these hyperlinks.

Author Comments

Process improvement and other business practitioners often state that IEE concepts look great, and they believe their organization could benefit much from utilizing the methodology. These individuals then continue saying that the problem that they have is that IEE concepts need to be presented to people much higher in their organization’s hierarchy than where they reside.

To address this valid point, in addition to an e-book and paperback book offering, an audio-book version of this book is available that IEE proponents can suggest to others. Business leadership, executives, and others who have constraints for book-reading time might listen to this book on their commute to and from work or during exercise workouts.

Another frequent question is how to receive more information about implementing IEE. Appendix A provides more than twenty website links for additional information about the implementation of the IEE techniques described in this book. Appendix C includes books that provide IEE, how-to methodology implementation details.

This book is a derivative work of Wisdom on the Green: Smarter Six Sigma Business Solutions (Breyfogle, Enck, Flories, Pearson, et al. 2001) and Integrated Enterprise Excellence Volume I (Breyfogle 2008).

The organizations, Harris Hospital, Hi-Tech Computers, Z-Credit Financial, and Wonder-Chem, presented in this book, are fictitious. As the author, I have created many situations that these four company’s employees, Jorge, Hank, Zack, and Wayne, need to resolve smartly. The described circumstances may have fabrication in the book’s storyline; however, I have observed all the basic presented scenarios at some point in time in my career.

Except for the four permission-granted organizational scorecards, randomly generated data were used to create the illustrative metric reporting figures.

Acronyms, Glossary, References, and Registered Marks

The glossaries and acronyms sections of this book provide reference material for increasing the understanding of unfamiliar statistical and golfing terms. The reference section of this book offers additional resources for the reader or listener of this book.

Integrated Enterprise Excellence, IEE, Enterprise Performance Reporting System, Satellite-level, 30,000-foot-level, and 50-foot-level are registered service marks of Smarter Solutions, Inc. In implementing the programs or methods identified