Leadership System 2.0: Management and Leadership System 2.0, #2

Copyright © 2020 by Forrest W. Breyfogle III

Published by Citius Publishing, Inc., Austin,

Texas: www.citiuspublishing.com

All rights reserved. No part of this book may be reproduced by any mechanical, photographic, or electronic process, or in the form of audio recording; nor may it be stored in a retrieval system, transmitted, or otherwise be copied for public or private use—other than for fair use as brief quotations embodied in articles and reviews—without prior written permission of the publisher.

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Paperback ISBN: 978-1-7352882-2-2

E-book ISBN: 978-1-7352882-3-9

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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

Management 2.0: Discovery of Integrated Enterprise Excellence

Table of Contents

Foreword

Preface

1 The Accident

2 What Bad Processes Mean to Good People

3 Season of Discontent

4 Buy-In

5 Roll Out

6 Deployment

7 Ownership

8 Projects

9 Leveraging the Gains

10 Epilog

11 Appendix A: Application of IEE Techniques

11.1 Application of IEE Techniques

11.2 Overcoming Issues with Executive-retreat Formulated Statements

11.3 30,000-foot-level Performance Metric Reporting

11.4 Business Leadership Performance Metrics, Reporting, and Goal Setting

11.5 Benefits of IEE Value Chain

11.6 Benefits of IEE Data Analyses

11.7 IEE Organizational VOC Feedback

11.8 Lean Six Sigma’s Background and IEE Enhancements

11.9 Benefits of IEE over a Traditional Lean and Six Sigma Deployment

11.10 IEE Implementation of Business Management Approaches

11.11 IEE Addressing Business Culture and Risks

11.12 General Application of IEE 30,000-foot-level Metric Reporting

11.13 Technical Aspects of 30,000-foot-level Reporting

11.14 Enterprise Performance Reporting System EPRS-metrics and EPRS-IEE Software

11.15 IEE Training

11.16 IEE Deployment Options

12 Appendix B: Web Pages for IEE Articles, Video, and Software

13 Appendix C: Datasets, Scorecards, and Companies

14 Appendix D: How-to-IEE Books and Assistance

14.1 IEE Implementation Books

14.2 IEE Implementation Assistance

15 Acronyms

16 Glossary

17 References

18 Acknowledgments

Foreword

For decades, Forrest Breyfogle has been creating and writing about processes that companies have embraced. Fortune 100 companies to small and emerging businesses have greatly benefited from his thoughts and teachings. While Lean Six Sigma concepts continue to be his foundation, Forrest is continuing to move the edge toward better measurements and scorecards. His wisdom leadership has grown with each passing year. He thinks beyond the traditional corporate dashboard.

What if companies focused on root causes that lead to higher quality and lower costs? What if companies abandoned traditional incentive compensation that often leads to destructive behaviors? What if companies adopted and embraced an enlightened approach to measurements that focused on things that really matter?

In this book, he approaches questions like those I have asked above with new energy and innovation. Forrest has always been convinced that there is a better way to lead and manage businesses. He continues to be committed to fresh ways of looking at complex issues and of challenging people to think outside their comfort zones.

I have known Forrest for twenty years and have known of his work for much longer. I am amazed by his intellect and drive to make things better. I believe you will experience the same wonder when you read his book.

Earl Maxwell

Retired CEO of St. David’s Foundation and Retired Leading Partner of Maxwell Locke & Ritter LLP

Preface

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, frequently encountered organizational business management issues. Resolution to these problems requires that organizations do things differently. This book deliberates on many common-place business management issues that can lead to unfavorable, if not destructive, organizational behaviors and what to do to resolve the problems.

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 consume a lot of resources 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.

In this book, Jorge and his wife have an automobile accident. Jorge’s wife is critically injured in the accident and transported to a hospital near where the accident occurred. This hospital has many process problems, which could impact her survival. During his wife’s recovery, Jorge reflects on what he did at his Harris Hospital to address similar business performance metrics and process improvement needs. This book describes many details for implementing IEE in a variety of organizations.

This book’s storyline includes many application situations for IEE; however, there are more IEE concepts and metric reporting applications that need sharing in this writing. Rather than bog down the book’s storyline, Appendix A contains additional application illustrations of IEE techniques and information.

Instead of merely providing a theoretical description of IEE and its benefits, included also is a description of how organizations can use an Enterprise Performance Reporting System (EPRS) software methodology to implement the described IEE techniques.

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.

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.

This book 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 B, 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.

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, as described in Chapter 6 of this book.

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

The many provided website linkages provided in Appendix B offer much additional how-to information about the application of the described techniques, including 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.

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-book2-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: Appendix B, Web page 1 (video link)

IEE overview article, Positive Metrics Poor Business Performance: How does this happen?: Appendix B, Web page 2 (PDF copy)

IEE 9-step business management system: Figure 6.3

IEE value chain at Harris Hospital: Figures 6.4—6.14

IEE value chain in non-profits, school districts, government, and for-profit companies: Chapter 9

EIP (Enterprise improvement plan) example: Figure 6.15

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

Characteristics of Successful IEE Master Black Belts and IEE Black Belts: Figure 4.3; Appendix B, Web page 15 (PDF copy)

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

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

IEE Deployment at Harris Hospital with EPRS software: Chapter 6

SmarterSolutions.com additional information about IEE methods: Appendix B, Web page 11

Over 80 ‘IEE implementation experiences and discussions,’ not included in the novel’s storyline: Appendix A

IEE implementation books: Appendix D

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 B provides more than twenty website links for additional information about the implementation of the IEE techniques described in this book. Appendix D includes books that provide IEE, how-to methodology implementation details.

This book is a derivative work of Lean Six Sigma in Sickness and Health (Breyfogle and Salvekar 2004). Also, this novel is a continuation of the Harris Hospital IEE implementation story initiated in the book Management 2.0: Discovery of Integrated Enterprise Excellence (Breyfogle 2020).

The organization, Harris Hospital presented in this book, is fictitious. As the author, I have created many situations that need a smart resolution. 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.

Randomly generated data were used to create the illustrative metric reporting figures.

Acronyms, Glossary, References, and Registered Marks

The glossary and acronyms sections of this book provide reference material for increasing the understanding of unfamiliar statistical and non-statistical 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 in this book, authorization is granted to you to refer to these marks in a manner that is consistent with the standards set forth herein by Smarter Solutions, Inc., but any and all use of the marks shall inure to the sole benefit of Smarter Solutions, Inc. Smarter Solutions is also a registered mark of Smarter Solutions, Inc.

Author

The author solicits your comments and improvement suggestions for this book. He is also available to discuss the application of the described techniques, which is his passion.

Forrest W. Breyfogle III

Smarter Solutions, Inc. (SmarterSolutions.com)

[email protected]

1 The Accident

What a beautiful Saturday, Jorge Santos exclaimed to his wife as he sped along the two-lane highway, one hand on the wheel and one elbow out the window.

Couldn’t agree more, his wife Sandra replied, smiling at his enthusiasm as she looked out onto the passing scenery, 75 degrees with a light breeze—a perfect day for golf.

Jorge wrapped her small hand in his, and they drove on in silence, appreciating each other and the beautiful day ahead. They had been living it up the past year, or so, Jorge reflected, spending more and more time together. A big part of that credit went to his hospital’s Integrated Enterprise Excellence (IEE) Implementation. His job as Senior Vice President of Harris Hospital had become a lot less stressful and a lot more rewarding since they had implemented the IEE business management system. Both profitability and customer satisfaction were up, which made him look great. The smoother running operation also meant he had more time to spend with his wife and friends on the golf course!

On top of all that, his friends now call him the Professor, a title humbly accepted as a compliment. It all began when he started casually telling them about IEE on the golf course over three years ago. Eventually, they had decided to push for implementing IEE at their own companies, and it was as much a success for them as it had been for Jorge. Now they were all reaping the rewards together.

Just then, his thoughts were interrupted by a semi-truck coming from the other direction, which blew past them on the narrow highway, rocking the happy couple’s car.

Sandra gasped, Holy cow! That was close!

Sure was! Jorge agreed, scowling at the disappearing truck in the rearview mirror. That guy ought to be more careful. These old two-lane highways are so narrow. You’ve your seatbelt on, don’t you?

Sandra tugged at the belt around her chest, "Got it. Jorge, look at this next car coming—he’s awful close, isn’t he?"

Jorge saw the car too, and Sandra was right—his left tire was practically rolling right down the double yellow line in the center of the two-lane highway. It made him more than a little uneasy, so he slowed down and got as far over to the shoulder on the right as he could without letting his tires hit the gravel. The oncoming car was a black sedan, and when it was about 100 yards away, Jorge saw that it had begun to swerve into his lane a little, then a little more.

Sandra gasped. The rest was in slow motion for Jorge as he watched the approaching car weave violently back and forth, tires smoking. Jorge slowed to almost ten miles an hour and pulled onto the gravel shoulder of the road, but the car swerved at them like a heat-seeking missile. The last 100 yards closed in a blurry flash of screeching metal. Jorge caught a glimpse of the driver the final second before impact—it was a woman, middle-aged, slumped over the steering wheel, seemingly unconscious.

Jorge leaned back and gripped the wheel as the sedan slammed into them head-on with a horrendous crash, and then everything went black.

Jorge awoke to a young woman who shook him lightly by the shoulder, Are you okay? Mister, Mister, can you hear me?

Jorge realized that his eyes were open long after he opened them. He was in shock. He wondered why the woman’s eyes got so big when he first raised his face to her. Why did she cover her mouth like that? The sound of her voice outside the smashed car door window faded away then. Everything became quiet and still. His heartbeat and breathing were the only things he could hear in the next moments.

The airbag in the steering wheel had deployed during the crash and now lay deflated in his lap—a thin blanket of powdery white plastic, marred only by a few dark red droplets of blood. The sight of it made him aware that something was running warmly, quickly, down his forehead. He touched his fingers to the wound he found there and winced. Acrid smoke from the airbag deployment filled the air. Voices slowly worked their way into his consciousness.

He looked next to him and saw Sandra lying limp in her seat, seatbelt still secure, deflated airbag rustling against her unconscious form. The airbag lying across her legs was red—very red. A blast of adrenaline washed through his system as he recognized the redness as blood, and concern for his wife overtook everything else. She was unconscious and injured about the head and face. He wasn’t a doctor, but he’d worked in a hospital long enough to know that head and neck injuries are the most dangerous. Jorge struggled to free himself from his seatbelt so that he could lean over far enough to check her breathing.

As though from far away, but now getting closer and closer, he heard the woman outside the window pleading with him, Mister, don’t move her! Don’t move her! The ambulance is on its way! He heard the sirens approaching in the distance.

He put his ear to her mouth and could just barely feel her warm breath. He took her wrist in his hand and pressed her pulse. She was alive.

Good, he thought, that’s good, and he assured his unconscious wife, You’re gonna be ok. You’re gonna be fine.

A trickle of blood crept into the corner of his eye.

He cursed and looked into the partially shattered and dangling rearview mirror to see how badly he was hurt. That’s when he first saw the long, deep gash running across his forehead, so deep that he thought he could see some bone down there, and then he turned white and passed out for a second time. Although he’d worked in a hospital for years, significant amounts of blood still made him a bit squeamish.

Sir! Sir!

Jorge’s eyes flickered as he struggled with consciousness. The first thing that Jorge did was look to his right and saw that his wife was not in the seat next to him.

Where’s Sandra? he asked groggily, still disoriented.

She’s being put into the ambulance, said the paramedic, a large balding man with a grave but compassionate face and a deep, steady voice. He held a compress to Jorge’s forehead.

That was when Jorge noticed that his car door had been removed, which was how the paramedic was able to lean over him. Then he saw the red and white ambulance lights, and the blue and red police lights, flashing dimly in the daylight. He realized that he must have lost some time somewhere.

To spot Sandra, he looked past the highway patrol officers looming behind the paramedic, taking notes in small pads, talking on radios. The smell of burnt rubber again filled his nostrils, and the squawk of police radios filled the air. Finally, he saw Sandra, just twenty feet from him, on the other side of the tow truck and police cars, as she was being loaded into the back of an ambulance.

Is she going to be all right? he asked, attempting to get out of the battered car.

The pear-shaped paramedic held him firmly in place. Easy, he said, Not so fast. She’s sustained some serious injuries, but she’s breathing, and she’s got a strong pulse. We’re taking her to City Hospital…

City? No, no…we go to Harris Hospital…

Sir, Harris is more than a half-hour from here. City Hospital is only ten minutes away, and we’ve already called it in.

Jorge didn’t like it, but the