Survive

Dissatisfied with results produced by today’s scorecards, businesses will adopt new types of these measuring tools. In many organizations, scorecard metrics lead to counterproductive results. In some cases, decisions based on irrelevant or incorrect data fail to justify or support corporate strategies. In the future, management will adopt measurement and improvement systems that will orchestrate day-to-day activities to produce a true alignment to business needs.

Essential for survival in the future will be a system that does more than just monitor overall operations for management. It should also provide the entire workforce with information that can be used consistently up and down the line to make sure everyone’s performance directly supports corporate strategies or becomes a target for corrective action. In other words, only what matters will be measured, and every metric will have an owner who can justify its relevance to an organization’s bottom line.

The red-yellow-green scorecard, which has provided insufficient information and led to costly wrong behaviour, will become history.

More information and reference to:
Forrest W. Breyfogle III is the founder and CEO of Smarter Solutions Inc. (www.smartersolutions.com) and creator of the integrated enterprise excellence measurement and improvement system.

An ASQ Fellow, he’s written widely and spoken at leading conferences. His books include Implementing Six Sigma (Second Edition, John Wiley and Sons Inc., 2003), for which he received the Crosby Medal. His upcoming book will describe the IEE system.

• The pressure of international competition to provide maximum, measurable, predictable, and sustainable bottom-line results will increase for all levels of management. To achieve these, a management system called integrated enterprise excellence (IEE) will integrate excellence throughout an organization by including all lean and Six Sigma projects as well as providing a roadmap to make this possible.
• The enterprise roadmap will help organizations select more productive projects and provide a no-nonsense, integrated value-chain measurement and analysis system to help orchestrate day-to-day work activities and target overall process-improvement efforts.
• This management system will be effective not only for viewing high-level operational and corporate business metrics, but also for providing the tools to solve tough problems. For example, it could help a company use design of experiments to solve an elusive quality problem for a chain of fast-food restaurants, or help a company eliminate a series of interrelated facilities with complicated interactions and improve process flows, thus improving the bottom line.
• This system will provide methods to develop and coordinate a basic set of statistical and nonstatistical tools. The process will enable management to meet growth goals, maximize cash flow, nurture innovation, develop responsive supply-chain dynamics, respond accurately to customer needs, improve employee performance, prevent firefighting, avoid surprises, and predict financial results.
• Selected checks and balances will stay in place regardless of management turnover, changes in competitive conditions, or the economic climate. In taking lean Six Sigma and the balanced scorecard from an individual project orientation to a new level throughout an enterprise, this roadmap will identify flaws in all operational processes and determine whether a process itself is flawed. New systems will be designed with preventive actions in place to avoid firefighting.
• This new approach will use the familiar Six Sigma define-measure-analyze-improve-control project steps to pursue a corporatewide, integrated management system up and down the value chain.
• Individual lean Six Sigma projects will be selected based on their contribution to the bottom line. No longer will projects be selected in isolation of each other, with improvements being made everywhere except along the organization’s critical success paths. No longer will projects focus on harvesting low-hanging fruit, only to see improvement efforts stall soon after.
• All projects will truly integrate lean and Six Sigma methodologies. Scattered and individual pursuits to improve efficiency and quality where needed ¾or not ¾will be avoided if they waste corporate resources that are required elsewhere.
• There will be no Six Sigma without lean, no lean without Six Sigma, and no individual projects that don’t support a company’s corporate strategies and financial goals. This will be true regardless of whether the environment is manufacturing or transactional in nature. All other process improvement tools will be fully integrated.

• Innovative discipline will be routinely integrated with analytics in a balance appropriate for the organization’s particular culture and strategy. Every product and service developed will have an identified market that’s been researched, with the potential clearly understood and the required marketing capabilities available.
• All work will be data-driven and standardized to reduce variability and improve quality. Data will replace hunch, instinct, and emotion. There will be zero-level ambiguity regarding internal and external customer requirements. Material and information flows will be seamless, not uncoordinated or scattered individually throughout an organization.
• Statistical and visualization tools will be used with maximum effectiveness throughout the value chain. Everyone will have the information needed to perform assigned tasks optimally because software will allow even nontechnical employees to use data.
• Critical operational processes will be inherently flaw-free when this discipline is put in place along with a firm management discipline that’s pursued faithfully and professionally. Organizations will be able to more easily distinguish between special cause variability and the far more prevalent common cause variability, and marshal resources to combat common cause variability by moving from unproductive firefighting to fire prevention. (PREVENT instead of CURE/ TREAT)

• New corporate management structures that include a CEIO will produce leaders who are teachers, and teachers who are leaders andprofessionals.
• Managers at all levels will have a full understanding of the Y = f (X) equation. They will no longer believe processes improve simply by setting goals.
• Business performance data will be presented in terms that everyone can understand. For example, “The process is predictable with a 2-percent nonconformance rate that costs the business $200,000 monthly.”
• Decision making will always be based on high-level metrics not bounded by calendar year or quarters. Measurements will be made at two different levels.
• At the operational level, thorough measures of operational components such as defective rates, lead times, on-time deliveries, development times, and safety will be conducted.
• At the corporate level, there will be more accurate and predictable measures of factors that affect finances, such as return on invested capital, operating income, and net profit margin.
• Accounting irregularities will be relics. There will be zero potential for improper movement of resources from one entity to another. Employees will no longer avoid responsibility or use metrics to hide productivity shortfalls rather than monitor them.
• CEO compensation won’t be tied as much to the company’s stock price, and the CEO’s efforts to promote its value, but influenced more by performance toward true and effective governance.
• In contrast with what many businesses experience today, gains from this integrated, enterprise wide structure will be perpetual. The system will stay in place whether there are changes in management, the environment, or the economy.

• The CEIO will emerge from the ranks of today’s Master Black Belts. Certification for Master Black Belts will require a new curriculum, one already emerging at future-oriented training providers. The CEIO will have an equal footing with the chief financial officer, chief information officer, and corporate or operating officers responsible for marketing, manufacturing, and human resources.
• The CEIO will be the officer in charge of the overall enterprise measurement, analysis, and change management system. This is because, more than any other company leader, the CEIO will be best positioned to provide, stimulate, and leverage the agility that businesses will need to accommodate the accelerating changes that will characterize business survival during the next two decades.

• Two decades from now, the business environment will bear little resemblance to what we see today.
• Much has been written about opportunities for marketing to the millions of consumers in emerging markets. Attention should be paid as well to the huge market potential in our own country: the rich, older citizens whose population is growing rapidly and whose life expectancy is increasing.
• Outsourcing of manufacturing, design, and transactional processes will accelerate. But the CEIO will also have to anticipate other upcoming challenges: restraints on business that may be placed by foreign governments, policy changes by the government to soften outsourcing’s disruptions in our labor market, and the higher costs.
• We’ll see exciting new products and services mandated by rising customer expectations and made possible by analytics-based innovation. There will be:
• Speedier cycle times, Mass customization, smaller inventories, and automatic orders and reorders. We can also expect new ways to enter orders, seamless delivery, and a sharp reduction in time between customer feedback and satisfactory problem resolution.
• Indeed, a wide range of products will have built-in quality and reorder sensors. Even our dreadfully inadequate air traffic and health care industries will improve. The design for Quality driven process, such as Six Sigma, will transition to a design of integrated enterprise excellence system. This system will play a far stronger role in business than it does today. Cost control will become critical as price transparency becomes increasingly clear.
• Integrating operations up and down the value chain will result in more challenging supplier qualification requirements. More attention will be given to green manufacturing, workplace safety, child labor, animal welfare, and product safety.
• Score carding will become more sophisticated. Scorecards will allow more penetrating drill-downs, empowering managers with new ways to improve processes, track the results, continually fine-tune, and manage mentoring and training. There will be continuing improvements of scorecards’ desktop publishing tools. Using mouse-overs or right-click actions, managers will learn the source of each metric, how it was calculated, and who owns it. Scorecard formats will lead to less firefighting and more fire prevention.
• Scorecards of the future will allow for easy chart annotation and tracking threaded discussions. The system will be fully web-enabled for design and use without resorting to software plug-ins that might be impeded by network firewalls. It will be unnecessary to initiate separate dashboard projects for different users.

Until recently, success in organizational improvements belonged to those who could control and continuously improve. Now, and increasingly during the next two decades, the future will include leadership by the CEIO.

The CEIO must be strategically aligned with the vision of the Primary Stakeholders. The CEIO must further consider how businesses will look like in the next 20 years.

Considering the following 5 trends that were published by Jacob Borgan in his book “The future of work”, must be considered:

• New Behaviours
• Mobility
• Globalisation
• Millennials
• Technology
• Finance (Click on the KPMG – Finance of the future” for more information on how finances might look like in 2020.