a competitive excellence strategy that drives the right ... · 14. strength 15. durability of...

A Competitive Excellence StrategyThat Drives the Right Kind of

Change

Dr. Mark J. KiemeleAir Academy Associates

Waterton “Change” ChallengeBridgend

13 March 2008

©2008 Air Academy Associates, LLC. Do Not Reproduce.

Simplify, Perfect,Innovate

Agenda

• The Dilemma of Change

Page 1©2008 Air Academy Associates, LLC. Do Not Reproduce.


• A Competitive Excellence Strategy

• Necessary Key Principles and Concepts

The Dilemma of Change

“It is not necessary to change. Survival is notmandatory.” W. Edwards Deming

“Change is inevitable—except from a vending machine.”


Robert C. Gallagher

“Faced with the choice between changing one’s mindand proving that there is no need to do so, almosteveryone gets busy on the proof.” John Kenneth Galbraith

CAVE People:Nothing in the world will empowerthese. Seal off the cave so noneof the 80% drift in.

Pioneers:Training alone canempower these.

Settlers:Training alone will not empower these.

Readiness for Change: the Frontier Model



empower these.

.10

.80

.10

To move an organization forward,management must act on these,setting/declaring expectations andaligning the rewards and recognitionstrategy with accountability andexpectations.

Evolution(Exploration)

Principal Domains in Competitive Excellence


Simplify, Perfect, Innovate

Page 4

Preservation(Exploitation)

Biological S-Curve of Products and Services

decline

Extending theLifecycle

maturity

ProductAndServiceMaturityLevel

Preservation (Exploitation)



Page 5

adolescence

birth

pre-conception

conception

Time

obsolescence

death


Foundation is a Strategy Based on Knowledge



Page 6


The Five Forces That Shape IndustryCompetition

Rivalry

BargainingPower ofBuyers

Threat ofNew Entrants



RivalryAmongExisting

Competitors

Bargaining Powerof Suppliers

Threat of SubstituteProducts or Services

Commercial Aircraft Industry

Source: Michael Porter, HBR, January 2008

Profitability of Selected U.S. IndustriesAverage ROIC, 1992 - 2006



Page 8

Source: Michael Porter, HBR, January 2008

Competitive Excellence

• Means knowledge about and eliminating theconstraints throughout the entire concept tocommercialization value stream.

Where is the biggest constraint in concept to commercialization?



Where is the biggest constraint in concept to commercialization?

(1) good concepts good development bad production

(2) good concepts bad development good production

(3) bad concepts good development good production


Re-engineering

DFSS

TRIZ

Kaizen Events

Aligning the Initiatives with the Strategy

Innovation



Page 10


Balanced Scorecard

TPSTQM

TOC

Six SigmaCMMI

ISO

Lean

TRIZ


Re-engineering

DFSS

TRIZ

Kaizen Events

Synchronizing

Innovation



Page 11


Balanced Scorecard

TPSTQM

TOC

Six SigmaCMMI

ISO

Lean

TRIZ

The Result of Synchronization



Page 12

The Completed Model



Page 13

Necessary Key Principles and Concepts inCompetitive Excellence

Understanding why Variation is the Enemy

Separating Signal from Noise

Knowing the Difference Between Correlation


Knowing the Difference Between Correlationand Causality

Making Products, Processes, Services, andStrategy Robust to Noise

Infusing Systematic Innovation

Why is Variation the Enemy?

Because the customer never sees theaverage.

Customers see only the variation in aproduct or service.


product or service.


Because the customer never sees the average.

Customers see only the variation in a productor service.


Variation creates bias and distorts the truth.

y = f(x) = x2x

Expected Value Analysis Example

6

2


What is the mean or expected value of the y distribution?


Because the customer never sees the average.

Customers see only the variation in a productor service.


Variation creates bias and distorts the truth.

“The signature of mediocrity is NOT theinability to change, but chronicinconsistency.”

Jim Collins

Author of “Good to Great”


Being able to distinguish between randomvariation and special cause

Separating significant effects from theinsignificant ones


insignificant ones

Example: Jim Collins in “Good to Great”

Example: Human Resources Case Study

Modeling The Drivers of Turnover

Process of

Deciding to

External Market Factors(Local Labor Market Conditions)

Local Unemployment Rate

Local Employment Alternatives

Turnover Rate

Company’s Market Share

Organizational Characteristicsand Practices



Stay / Leaveand Practices

Supervisor Stability

Lateral / Upward Mobility

Layoff Climate

Employee Attributes

Time Since Last Promotion

Education Level

Job Stability History

Correlation vs. Causality

70

80

Cit

yP

op

ula

tio

n(1

000's

)



50

60

100 200 300

Number of Storks

Cit

yP

op

ula

tio

n(1

000's

)

A plot of the population of Oldenburg, Germany at the end of each yearagainst the number of storks observed in that year, 1930-1936.

Source: “Statistics for Experimenters”by Box, Hunter, and Hunter. (1978)

Oracle (Best Guess) Approach to Testing

W = Wetting Agent (1=.07 ml; 2=none)

P = Plasticizer (1=1ml; 2=none)

E = Environment (1=Ambient Mixing; 2=Semi-Evacuated)

C = Cement (1=Portland Type III; 2=Calcium Aluminate)

A = Additive (1=No Reinforcement; 2=Steel)

Y = Strength of Lunar Concrete



Run W P E C A Y

1 1 2 1 1 1 5

2 1 1 1 1 1 63 2 2 1 1 1 54 2 1 1 1 2 65 1 2 2 2 2 76 1 1 2 2 2 87 2 2 2 2 2 10

8 2 1 2 2 1 11

Evaluating the Effects of Variables on Y

A

E = C

What we have is:

What we need is a designto provide independent

estimates of effects:



A

C

E

How do we obtain this independence of effects?

Controllable:Plug Pressure (20-50)

Controllable:Bellow Pressure (10-20)

NuclearReservoir

Robust (Parameter) DesignSimulation* Example



Bellow Pressure (10-20)

Controllable:Ball Valve Pressure (100-200)

Noise:Water Temp (70-100)

Reservoir Level (700-900)Reservoir

LevelControlProcess

* From SimWare Pro by Philip Mayfield and Digital Computations

Necessary Key Principles and Concepts inCompetitive Excellence

Understanding why Variation is the Enemy


Knowing the Difference Between Correlation and Causality


Making Products, Processes, Services, and Strategy Robustto Noise

Infusing Systematic Innovation

An Innovative Conceptual Design Technique(TRIZ: Theory of Inventive Problem Solving)

TRIZ: Teoriya Resheniya Izobretatelskikh Zadatch

Founded by Genrich Altshuller (1926 – 1998), aRussian patent inspector, in 1946

Provides a systematic approach to invention/innovation



Provides a systematic approach to invention/innovation

39 Problem Parameters (Weight, Strength,Temperature, etc…)

40 Inventive Principles

Built a 39 X 39 Contradiction Matrix which is populatedby the inventive principles

Source: INsourcing Innovation by Michael Slocum, et al

1. Weight of moving object

2. Weight of non-movingobject

3. Length of moving object

4. Length of non-movingobject

5. Area of moving object

6. Area of non-movingobject

7. Volume of moving object

14. Strength

15. Durability of moving object

16. Durability of non-movingobject

17. Temperature

18. Brightness

19. Energy spent by movingobject

20. Energy spent by non-moving object

Altshuller’s 39 Problem Parameters

27. Reliability

28. Accuracy of measurement

29. Accuracy of manufacturing

30. Harmful factors acting onobject

31. Harmful side effects

32. Manufacturability

33. Convenience of use

34. Repairability

35. Adaptability



7. Volume of moving object

8. Volume of non- movingobject

9. Speed

10. Force

11. Tension, pressure

12. Shape

13. Stability of object

moving object

21. Power

22. Waste of energy

23. Waste of substance

24. Loss of information

25. Waste of time

26. Amount of substance

35. Adaptability

36. Complexity of device

37. Complexity of control

38. Level of automation

39. Productivity


1. Segmentation2. Extraction3. Local Conditions4. Asymmetry5. Combining6. Universality7. Nesting8. Counterweight9. Prior Counter-action10. Prior Action

18. Mechanical Vibration

19. Periodic Action

20. Continuity Of UsefulAction

21. Rushing Through

22. Convert Harm IntoBenefit

23. Feedback

30. Flexible Film Or ThinMembranes

31. Use Of Porous Material

32. Changing The Color

33. Homogeneity

34. Rejecting AndRegenerating Parts

35. Transformation OfPhysical And Chemical

40 Inventive Principles



10. Prior Action11. Cushion In Advance12. Equipotentiality13. Inversion14. Spheroidality15. Dynamicity16. Partial Or Overdone

Action17. Moving To A New

Dimension

24. Mediator

25. Self-service

26. Copying

27. An Inexpensive Short-life Object Instead Of AnExpensive Durable One

28. Replacement Of AMechanical System

29. Use A Pneumatic OrHydraulic Construction

Physical And ChemicalStates Of An Object

36. Phase Transition

37. Thermal Expansion

38. Using Strong Oxidizers

39. Inert Environment

40. Composite Materials


Contradiction Matrix Cross Section



TRIZ Problem-Solving Method

2ax b x + c = 0

General Problem General Solution

2ax bx c 0 2x= -b± b -4ac 2a/40 Inventive

Principles



Specific SolutionSpecific Problem

Abstraction(39 Problem Parameters)

Specialization(Analogic Thought)

23 x 5 x 2 0 2x 1,3

Key Take-Aways

Much too often, luck is misinterpreted as skill.

All of us at one time or another are fooled by randomness.

It is not a sin to be affected by noise, but it is a sin not toknow how to go about separating fact from fiction and thendoing so.

The growth in available information has been exceeded only



The growth in available information has been exceeded onlyby the expansion of noise.

Science has only recently begun its fight againstrandomness.

A powerful Competitive Excellence Strategy with all thenecessary parts is the first step in fighting through this “halo”of noise and randomness.

Get the facts! It is difficult to make good decisions if onecannot tell the difference between opinion and fact.

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