Saturday, May 18, 2013

Focus and Leverage Part 212

In our last posting we said we would look at an example of how to develop an Intermediate Objectives Map so that we can ultimately construct an improvement plan.  In this posting we will walk you through the step-by-step development of our IO Map based upon a real case study.  The company will, of course, remain anonymous.

Suppose you were working for a company who wanted to become a more profitable one.  You assemble the CEO and other key members of his or her staff to develop an effective plan to achieve this goal of enhanced profitability.  After much discussion and dialogue, this group agrees on a Goal as “Highly Profitable Company” and place it inside the Goal box (see partial IO Map below). As mentioned previously, this goal has been written as a terminal outcome that this company has already achieved.  The next layer of the IO Map is the Critical Success Factor (CSF) level.  Like the Goal, the CSF’s (normally no more than 3 to 5) are worded as though they were already in place.  You ask the question,  “What must we have in place if we are going to achieve our Goal?” The first response you is “We know that we must have highly satisfied customers,” so you place the response in the first CSF box.  The next response you hear is “Throughput must be high and growing,” so you place this response in the second CSF box. A third response you hear is, “A stable and involved work force,” so you add it to the third box. The fourth response you hear is that “Operating Expenses must be low and stable,” so you add that one to the fourth CSF box.  The last response you hear is, “Minimal raw material inventory,” and you add it to the fifth CSF box.  This group believes that if these five CSF’s are achieved, then they will surely become a highly profitable company.

It is important to remember that if you are able to achieve your Goal without one (or more) of the CSF’s, then it really wasn’t a CSF.  For example, suppose your Goal was to create a fire.  We know from our early school days that there are three requirements for having a fire….namely fuel, a spark and air.  Fuel, a spark and air are CSF’s for having a fire and if you remove one of them, a fire will not happen.  The same is true for our company example.  Because the IO Map is a necessity–based logic structure, it is read in the following way: “In order to have a highly profitable company, I must have highly satisfied customers along with the other four CSF’s.

Directly beneath the CSFs are a series of Necessary Conditions that must also be in place in order to achieve each of the CSFs. So once again you start by asking the same question as you did for the CSF’s, “What must be in place to achieve each of the CSF’s?” and you place each response inside a new entity box directly beneath the appropriate CSF box.  For example, suppose the first response you hear is, “In order to have highly satisfied customers, we must High On-Time Delivery,” so you add it to the first NC box.    Remember, the NC’s represent actions that must be completed to achieve each individual CSF and form the basis for your company’s improvement plan.  You then might ask, “Is this all we need to have highly satisfied customers?”  Another response might be, “We need excellent Quality and Customer Perceived Value,” so you add both of these to the boxes below the first CSF.  At this point, you continue asking the same question for each of the other CSF’s to accumulate the first level of NC’s (see partial IO Map below). 

So now you have all of the CSF’s and the first level of NC’s, but you’re not yet finished.  Suppose that someone asks, “How are we going to achieve a high on-time delivery rate?”  Where do you display the answer to this question?  It is perfectly acceptable to have more than a single level of NC’s, so if you received an answer to that question as, “We must have Buffer Management in place and functioning.”  You then create another box below the high on-time delivery one and add the buffer management comment to it. When your team is satisfied that it has identified all of the NCs (at all levels) to achieve each of the CSF’s and ultimately its Goal, you then turn to the next phase of how to use the IO Map to analyze your organization’s state.  In a fully completed IO Map you should have 3-5 CSFs and no more than 2-3 layers of NC’s. Please understand that these are guidelines, so you could have more than 5 CSF’s and more than 3 layers of NC’s, but not many more of each.  Here is our completed IO Map.

In our next posting we will demonstrate how to use this completed IO Map to assess your organizations current reality with respect to achieving the goal of becoming a highly profitable company.

Bob Sproull


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