In recent years, the concept of strategic deployment (SD) has gained considerable attention not only as a means to more effectively mobilize the entire enterprise based on an integrated suite of growth initiatives, but also to harness the strategic development process as a means to filter competing project initiatives (along with their relative financial costs) against the strategic direction of the company. Business leaders have often employed a bifurcated approach to business management. Broad-based strategic objectives guide future growth and marketplace offerings while tactical cost accounting policies attempt to impose fiscal discipline and short-term financial health. This approach, out of necessity, often promotes a complex tactical management process in which cost goals and strategic objectives are never properly reconciled.
Deeply rooted in the classical Japanese philosophy of Hoshin Kanri, Strategic Deployment seeks to combine the desired roadmap to success with the governing principles of waste elimination. Hoshin, referring to an organization’s compass, and Kanri, emphasizing the concepts or management control, yield a brutally efficient process through which senior leaders can actively manage an organization’s future direction and ultimate financial success. Strategic deployment, through its simple combination of clear disciplines and methodical follow-up routines, can offer organizations of all sizes and growth clear advantages not commonly associated with more traditional strategic design and cost management techniques.
By design, strategic deployment fosters clear alignment between strategic goals and the multi-functional resources required to for integration and achievement. Through the strategic filter, strategic deployment provides a logical waste elimination capability that ensures scarce financial and organizational resources are funneled to their highest strategic use. Complete integration and alignment of proven lean management concepts and disciplines translate strategic objectives into innovative, tactical business process changes driving institutionalized waste and excess costs from the business.
At its core, SD, consistent with its Japanese heritage, is an annual journey through which senior management commits the entire organization to achieve breakthrough levels of financial and marketplace performance. SD also attacks waste that typically prevents the achievement of such breakthrough performance levels by evaluating the current business on two fundamentally different levels: 1. On-Business Analysis: in order to identify, confirm and implement breakthrough performance levels, senior managers first rise above day-to-day management routines and focus on those marketplace drivers and future customer requirements that will drive the very purpose of the enterprise. 2. In Business Execution: through confirmation of the enterprise purpose, senior managers then earn the right to channel resources “in” the business to enact new policies, processes and tactics designed to directly support SD initiatives through Lean principles.
Significantly more than a controlled compass, SD is a comprehensive one-year series of planning and implementation events designed to achieve strategic, long-term breakthrough objectives beyond historical measures. At its highest level, SD offers a five-tier methodology designed to seamlessly match on-business strategic requirements with tailored in-business lean capabilities: 1. SD operates on a one-year cycle that attempts to realize process-driven results beyond a traditional financial budget; 2. SD focuses on the development and implementation of long-term (3-5 years) breakthrough objectives designed to deliver superior financial results; 3. SD links strategic breakthrough objectives to specific organizational resources. 4. It aligns cross-functional resources with the organization based on their certified ability to support (and achieve) breakthrough objectives. 5. Systematically monitors, manages and controls resources in order to convert the strategic plan into reality.
Integral to the SD process is the great emphasis placed on two highly proven and effective tools again highly rooted in Japanese management theory:
Kaikaku (“radical improvement”): Often considered the radical path to improvement, Kaikaku disciplines drive total value stream design up to and including replacement of existing processes that prevent achievement of breakthrough objectives.
Kaizen (“incremental, continuous improvement”): Within a given value stream, Kaizen concepts and disciplines drive incremental, continuous improvements where waste is methodically eliminated and costs are reduced to the largest degree possible.
Not to be confused with common “stretch goals” that commonly result in short term-only performance improvements, breakthrough objectives are those goals that are logically tied to strategy, represent significant financial improvements over historical levels and allow the organization to achieve sustainable and scalable performance levels. In short, senior managers are tasked, through the SD process, to select the three or four breakthroughs that will yield world-class performance levels consistent with the very purpose of the organization.
Annual improvement priorities (“AIP’s”) are process-based priorities that require improvement, implementation or outright replacement in order to achieve each breakthrough objective and thus convert strategy to operational success. Generated each year, AIP’s impose a powerful discipline on the organization that systematically evaluates, accepts or rejects potential improvement projects (and their associated financial and organizational costs) based strictly on their support of all breakthrough objectives. In addition to balancing AIP selection against each breakthrough objective, they are also cross-matched against their estimated financial benefits and implementation complexity.
Clear, articulate strategies drive the creation of three to four breakthrough objectives designed to convert strategy into operational success. Each breakthrough objective drives the development and filtering of two to three AIP’s that attack the value stream drivers of each breakthrough objective. At this stage, SD will most likely have the following structure:
Published strategy outlining future enterprise purpose,
Three to four corporate breakthrough objectives,
Six to eight corporate API’s tied directly to breakthrough objective value streams,
Six to eight corporate-level AIP team leaders responsible for AIP achievement (along with their associated cross-functional team members).
To carry SD to its logical and most successful completion, senior managers must now ensure that SD is “cascaded” throughout each component of the enterprise (subsidiaries, plants, divisions) so that the entire enterprise is properly mobilized to achieve all breakthrough objectives and complete the conversion of strategy into operational success. When cascading SD and AIP’s down through the enterprise, local units are all required to develop their AIP’s and stress test them against their ability to support and achieve each corporate AIP. Again, implementation costs are minimized as only those AIP’s most closely linked to breakthrough objectives are approved with resource commitments.
Copyright 2010 QBS, Inc.