Functional Process Improvement Fundamentals
Department of Defense
"If you don't know where you are going, how will you know when you get there?"
BASICS OF STRATEGIC PLANNING
An old paradigm, which most of us have been functioning under for years, says that you apply automation to existing processes to make them more efficient and effective. The new paradigm says that you must improve processes first before considering technology and that these processes must be in line with the strategic and business plans of the organization. Therefore information plans must be merged with strategic and business planning.
This chapter begins to familiarize you with the basic concepts of strategic planning and how those concepts fit within the overall intent and purpose of the FPI program.
There are numerous definitions of and approaches to strategic planning. However, most have a core set of products that allow an organization to begin its journey to a better understanding of how it operates and why it exists. This chapter will start the process of helping you determine your organization's reason for being. It is only after you have identified why you exist, can you begin the improvement process.
Why does the organization exist? If you can't answer this question, your organization may not be adding value to the DoD mission.
Today's Pressures and The Need for Planning
Today's pressures and rapid changing environment require flexibility in management and flexibility in systems to support these changes.
More Power to User
Declining Cost, Increased Availability
Demand for More Information
Demand for More Technology
More Computer Literate
BENEFITS OF STRATEGIC PLANNING
To establish stability in an uncertain world.
To capitalize on the rapid changes in technologies.
To evaluate limitations.
To look for opportunities.
To maintain competitive advantage.
What Strategic Planning Delivers --
An assessment of business trends - How the functional mission is changing.
An assessment of corporate trends - DoD and Component directions.
An assessment of technological trends - What will be economically feasible for the future.
A plan that is aligned with the vision and objectives of the organization.
A plan to satisfy the critical information requirements of the organization.
Benefits For The Organization.
Focus on critical areas for mission success.
Improve resource utilization.
Establish business priorities.
Establishes overall direction.
Benefits For Information Managers.
Acquire more business expertise.
Enhance corporate image and perception of information management.
Gain credibility with and cooperation of functional managers.
Links success of Information Management with the success of functional organizations.
COST OF POOR PLANNING
Loss of competitive edge.
Crisis management - reactive rather than proactive.
Diverse directions and redundancy.
At the mercy of outside influences.
Automated information systems that are out of date and do not meet the needs of customers
IMPORTANCE OF STRATEGIC PLANNING
Strategic planning begins the process of truly understanding your function. Without this understanding, no measurable improvements can be made. This has become a very important step in the FPI methodology because it forms the foundation upon which all other procedures and actions are taken during process improvement.
So, let's take a look at an overview of the steps necessary to perform strategic planning for our function.
Secure Executive Commitment
Executive commitment must be obtained before any strategic planning effort can begin. This should be through information/decision briefings - initially to the top executive officer and then to the remaining top executives. Briefings should address:
Concepts and principles of TQM
Concepts and principles of FPI
DoD policy and requirements
Functional management process (DoD 8020.1-M, Ch 2)
FPI Management Framework
Project management considerations
Arrange site visits to organizations committed to TQM/FPI. Seeing is believing. If top executives can see the benefits that similar efforts produced in other organizations, they will be more likely to support the effort. Moreover, executives can discuss lessons learned.
A written charter must be developed which clearly defines the scope and extent of the project. This charter is signed by the top executive officer.
Secure explicit commitment to launch project. Executive commitment is essential for the success in strategic planning. The top executive in the organization must personally endorse and support the effort as HIS/HER effort. In a civilian environment this will be the chief executive officer. In a military environment, it is the commanding officer. If the top executive officer does not endorse and get involved in the process, it is not likely the effort will succeed. The top executive must be committed to the extent that he/she fully supports the dedication of resources to complete this effort. The top executive must be fully informed of the dollar and human resources that will be necessary to accomplish the effort.
The importance of executive commitment cannot be over stressed. If the executives of the organization do not give their complete approval and involvement in the strategic planning process, the organization will tend to interpret the planning process as a waste of time, therefore, the effort does not succeed.
Confirm or Define Functional Mission and Vision
Identify higher authority mandates/constraints.
Review DoD relevant policy
Review applicable DoD directives (8000 series)
Review DMRD requirements/constraints
Identify current resource availability.
A determination needs to be made as to the dollar and manpower that is and will be available to the organization.
Develop or redefine the mission statement.
The mission statement defines what the purpose of the organization is. It identifies in general terms the operations of the organization, often identifies major products and services, and for whom the product and services are provided. The mission statement must take into account the available resources in the development of mission statement.
Develop a statement of values and beliefs.
Values and beliefs put the heart into the mission statement. It identifies the manner in which the organization will carry out the mission. Often these statements begin with the phrase: "We believe in...."
Develop vision statement.
A vision statement defines the future direction of the organization; i.e., where the organization wants to go. The vision statement defines how the mission will be accomplished in accordance with its values and beliefs.
Potential sources for identifying future vision are surveys, annual report, interviews, Commander's Narrative in programming and budgeting documents, long range planning documents.
How to develop a vision statement:
An assumption is an estimate of a future development and assessment of the impact, e.g., downsizing, relocation, consolidation, resources, higher headquarters policies.
Draft a Future Vision - How the function should be defined in the future.
The future vision of an organization should be inspiring - something to which employees can relate. It should also be exemplified by the organization's leaders. It must provide direction for the organization - where the organization is going. And, something that is very important to the success of implementing the vision is that it should be believable - more than baseball and apple pie.
Test vision statement for consistency and efficacy.
Is vision consistent with higher authority mandates and constraints?
Can vision be accomplished with current resource availability?
Does vision statement embody stated values and benefits?
Revise mission and vision statements as appropriate.
Develop the Strategic Plan
Once the mission and vision are established, strategic planning identifies the customers that will be served by the processes performed by the organization. Customers are identified based on the existing products and services identified in the mission statement. Particular care should be taken to identify all potential customer areas that may be opened as a result of the vision statement. The vision statement may take the organization in different directions with a different set of customers. Organizations have both external and internal customers.
External customers are located outside of the organization. These are the "ultimate" customer; i.e., the customers that must be satisfied for the organization to survive.
Internal customers are located within the organization. These customers are no less important than external customers because internal customers are dependent upon these products and services to support their external customers.
Establish critical customer requirements and needs.
The current level of service is analyzed. A matrix can be developed identifying which products and services are provided to each customer. In identifying customers it is helpful to separate them into two groupings: Primary Customers and Other Customers. This will be useful in determining the prioritizing needs. The list of customers are identified in the left hand column and the list of existing products and services identified in the top row. See Figure 3-7.
Customer surveys and interviews are useful in providing an indication of what products and services they are interested in and the level of satisfaction in the quality of existing products and services.
Another matrix can be prepared to identify new products and service needs, products and services no longer required, and products and services which require improved quality. Customers are again identified in the left column and customer needs are identified in the top row. Indication can be made in each block as to the relationship between customer and need:
"V" - indicates very strong relationship
"S" - indicates strong relationship
"W" - indicates weak relationship
"." - indicates no relationship
Figure 3-8. Customer Need Matrix.
Prioritize customer requirements and needs. Based on surveys and interviews with customers, existing and potential products and services should be prioritized. This will assist in identifying what are the important areas of concentration for vision achievement. It also will be useful in determining which processes should be analyzed for potential improvement.
Current and potential competitors should be identified and ranked according to potential threat. Competitors are those organizations which provide comparable products and service or have the potential to provide the products and services needed by your organization's customers.
Test customer requirements and needs against mission statement. Identify inconsistencies. For example: What customer needs cannot be supported within the existing mission? What missions are no longer supported by customer needs?
Resolve mission/customer requirements and needs inconsistencies. Determine what changes in mission are necessary to support customer requirements and needs.
Develop a prioritized list of customer requirements that will be met by the new mission.
Revise the vision statement, if necessary. If there is a significant change in the direction of the organization to meet customer needs, the vision statement may have to be revised.
Identify subject areas that support customer requirements. Products and services to support customer needs are grouped into related subject areas. These subject areas may or may not resemble the existing structure of the organization.
Develop goals for satisfying customer requirements. Goals are to be developed for and grouped by subject areas. Goals are high level statements of intent that specify achievements expected of the organization in meeting customer requirements. Normally goals do not specify time-frames nor are they quantifiable.
Goals should address:
- Customer satisfaction
- Resource conservation
- Management development and performance
- Employee development and performance
- Public responsibility
- Resource conservation
- Management development and performance
- Employee development and performance
- Public responsibility
Critical Success Factors (CSF) are then developed. Interviews should take place with those key managers who can best articulate the CSFs needed to achieve mission and goals of the organization. Identified in the interviews should be ways in which CSFs can be measured. Other potential sources of CSFs are program and budget reports, audit reports, and management study reports. Once identified, CSFs should be prioritized. CSFs can be identified by asking the following:
What are those things that must go right for the mission to succeed.
What are those things that are necessary for the organization to stay competitive.
What must be changed to achieve the organization's vision and goals of the organization.
Test goals and CSFs against mission, values and beliefs, and vision statements to assure consistency. Make necessary revisions.
BENCHMARKING AND BEST PRACTICE ANALYSIS
"Benchmarking" is the process of finding comparative measures in the processes, services and products of your organization. "Benchmarks" are the quality levels in the processes, services, and products in organizations that lead their industry or field. Professional standards may also be used as benchmarks.
Benchmarking corporate goals and performance measurements is a useful tool in refining the strategic plan. It is especially useful in setting meaningful goals. For instance, until Roger Bannister broke the four-minute mile, it was thought to be impossible for a human to run that fast. Now the four-minute mile is a benchmark for aspiring runners.
Process improvement projects should only be undertaken if the strategic plan is in place, up-to-date, relevant, supported by leadership, and if all project improvement team members understand and support the objectives of the strategic plan. Otherwise, process improvement should begin at the strategic planning level.
Benchmarks can be found in private and public organizations that do the same type of work that your organization does. A list should be made of potential organizations for analysis. Included in your list could be competitors, "Malcolm Baldrige Award" winners, and "Deming Award" winning organizations.
Benchmarks may be identified by examining available benchmarking databases, interviewing customers, interviewing functional area experts, or researching literature.
Best practice analysis involves an examination as to what are the optimum
practices that will elevate your organization to the level of quality exhibited by the industry leaders.
Goal statements should be validated against benchmarks and best practices data. Goals should be refined and CSFs modified as appropriate.
Some steps in benchmarking/best business practice analysis:
Conduct competitive analysis
Examine available benchmarking databases
Interview functional area experts
Validate goals statements against benchmarking best practices data
Refine statement of goals
The strategic planning phase delivers a set of business goals and requirements which are expressed in terms of customers (process beneficiaries) and customer needs. This phase takes into account, or guides the development of, the organization's mission, vision, values and beliefs. The strategic plan defines what an organization is all about; who it will serve, what needs it will fulfill, and under what terms it will operate (values and beliefs).
The strategic plan must be consistent with the constraints placed upon the organizational unit by higher authority. This means that no element of the strategic plan can conflict with the mission, vision, values and beliefs expressed by higher authority. Benchmarking to develop corporate goals and performance measurements is considered a part of strategic planning.
We didn't go into a great deal of depth in explaining strategic planning. However, it is very important that you understand the critical link planning has to the FPI process. Only after you know where you are going, can you begin to ask "How am I going to get there?"
Activity - Student Exercise (Chapter 3)
SUMMARY REVIEW QUESTIONS
1. Why is Strategic Planning so important to the success of an FPI project?
2. What are the key aspects of Strategic Planning?
3. What is benchmarking and how can it be used during the Strategic Planning process?
The business plan becomes the specification document for process analysis and design which follow business planning. Indeed, the business plan determines what processes an organization must have to fulfill the strategic plan, and which of these processes will be performed-in-house and which will be out-sourced.
It should be obvious that process analysis and design should not be considered until and unless an approved business plan is in place. The process itself must be justified by the business plan before process improvement considerations become relevant.
Other than the first time a process is redesigned, this will normally only occur under two conditions:
The mission of the organization changes
The impact of a new technology demands it
The old paradigm says that you apply automation to existing processes to make them more efficient and effective. The new paradigm says that you must improve processes first before considering technology and that these processes must be in line with the strategic and business plans of the organization. Therefore information plans must be merged with strategic and business planning.
The old paradigm says that information management is the sole responsibility of the Information Manager. The new paradigm says that all managers are information managers and they must manage information in the same way they manage other resources. Some say that now the Information Manager is merely a "technology provider" for the organization. That is to say he provides the technology to support the information plans of the functional community. The SIP paradigm says that the Information Manager, must assume full responsibility on the executive staff of the organization and must be a full participant in information planning and in strategic and information planning as well.
Executive Commitment -- Concepts and principles of TQM and FPI...
Let's begin with a question that is on most everyone's mind. That is, "How does this concept of functional process improvement (FPI) differ from total quality management (TQM)?" We will attempt to answer that question by looking at a brief comparison of FPI and TQM.
FPI and TQM are based on the same principles. However, FPI uses different methodologies than traditional TQM methodologies in resolving the some of the same basic problems.
Both FPI and TQM focus on improving the business process. However, TQM utilizes industrial management engineering methodologies, e.g., Statistical Process Control (SPC) methodologies. In addition to using these methodologies, FPI utilizes information engineering (IE) methodologies (e.g., IDEF, ABC, FEA) to improve the business process.
Both FPI and TQM focus on Supplier-Producer-Customer Relationships. However, TQM looks at quality factors in supplies provided by supplier and services and products provided customer. FPI looks at the informational relationships and requirements.
Both FPI and TQM utilize functionally directed teams of business and technical experts to solve process problems. Both approaches use teams that are made up of functional and technical experts to resolve business process problems. TQM uses the Process Action Team (PAT) approach and FPI uses a similar study team approach which uses both functional and technical experts to resolve problems.
Both FPI and TQM emphasizes continuous process improvement. Both TQM and FPI are continuous efforts to achieve excellence through business process improvement.
FPI is an approach in the implementation of TQM for the Information Age.
TQM is product of Industrial Age. It uses industrial engineering methodologies that have been very successful in improving blue collar production. However, the application of these methodologies to the white collar environment to improve business processes has not always been successful.
FPI is a product of the Information Age. It uses Information Engineering methodologies which are well designed for the white collar environment.
TQM and FPI can be used in conjunction for business process improvement. When processes are identified for improvement in an organization, both TQM and FPI methodologies can be applied. Therefore, FPI efforts should be coordinated and integrated with the TQM program in a manner that best meets the needs of the organization.
So, how does FPI differ from TQM? The answer really lies in the approach or methodology used to implement improvements.
Those starting an FPI project should become familiar with both philosophies. Arrange site visits to organizations committed to TQM/FPI. Seeing is believing. If top executives can see the benefits that similar efforts produced in other organizations, they will be more likely to support the effort. Moreover, executives can discuss lessons learned.
A written charter must be developed which clearly defines the scope and extent of the project. This charter is signed by the top executive officer
Secure explicit commitment to launch project. Executive commitment is essential for the success in strategic planning. This is the same for TQM as well as FPI. The top executive in the organization must personally endorse and support the effort as his effort. In a civilian environment this will be the chief executive officer. In a military environment, it is the commanding officer. If the top executive officer does not endorse and get involved in the process, it is not likely the effort will succeed. The top executive must be committed to the extent that he is fully supports the dedication of resources to complete this effort. The top executive must be fully informed of the dollar and human resources that will be necessary to accomplish the effort.